In the global battle against financial crimes, an effective Anti-Money Laundering (AML) regime is not only a regulatory necessity but also a measure of a nation’s institutional strength. While Pakistan has taken commendable steps toward aligning with the Financial Action Task Force (FATF) recommendations, particularly post its removal from the FATF Grey List in 2022, the role of the judiciary in this process remains a critical, yet underdeveloped, pillar.
Recent India-Pakistan skirmishes following a terrorist attack in India have once again escalated tensions, with India urging FATF to reconsider Pakistan’s status and place it back on the Grey List. In the face of this aggressive diplomatic push, it has become even more crucial for Pakistan to maintain meticulous compliance with FATF provisions to counter such political pressures and safeguard its financial credibility.
In the current geopolitical climate, where financial compliance is as much a diplomatic shield as a legal obligation, the judiciary must rise as a frontline defender
The judicial arm is not just responsible for enforcing AML laws but also for ensuring timely and credible convictions that serve as a deterrent. Delays in court proceedings, lack of specialized benches, and limited capacity in financial crime adjudication are the challenges being faced by stakeholders.
As of 2021, the Federal Board of Revenue (FBR) had registered 215 FIRs under the AML Act involving 267 individuals. While investigations in only 44 cases were completed, over 170 remained under process. Furthermore, while Rs. 235 billion in properties were confiscated and Rs. 76 billion worth of tax evasion was uncovered-with 640 bank accounts frozen-the actual number of convictions resulting from these cases is disproportionately low, underscoring the disconnect between investigation and judicial enforcement.
A key reason behind this inefficiency is the insufficient training of judges and prosecutors in handling complex AML cases. While initiatives such as the UNODC-supported workshops in 2023 and 2024 for Anti-Terrorism Court judges and prosecutors in Islamabad and Karachi are positive developments, they are far from sufficient in scale.
In comparison, countries with robust AML frameworks have institutionalized specialized judicial mechanisms. For example, Singapore amended its Corruption, Drug Trafficking and Other Serious Crimes Act in May 2023 to include rash and negligent money laundering as punishable offences, thereby lowering the threshold for prosecution. Similarly, the UK has developed focused financial crime courts and inter-agency coordination mechanisms, though even there, enforcement remains a challenge.
What sets advanced jurisdictions apart is not just stricter laws, but a judiciary that is empowered, resourced, and specialized. Pakistan’s judiciary, in contrast, still operates on traditional models ill-suited for handling modern financial crimes. The absence of financial crime benches or fast-track courts leads to procedural bottlenecks and excessive adjournments. There is also no consolidated national database for AML case tracking, making inter-agency collaboration cumbersome and disjointed.
To address these gaps, Pakistan must consider immediate reforms: establishing specialized financial crime benches, institutionalizing judicial training, modernizing court technology, streamlining case management systems, and launching a nationwide AML judicial dashboard.
Pakistan stands at a critical juncture. The country’s AML machinery is gradually modernizing, but without an equally capable judiciary, these efforts may falter. In the current geopolitical climate, where financial compliance is as much a diplomatic shield as a legal obligation, the judiciary must rise as a frontline defender-not a lagging link-in the battle against money laundering.
The writer is a seasoned banker with extensive experience in Corporate and Retail Banking across Pakistan, Bahrain, and South Africa.