Pakistan has assured the International Monetary Fund (International Monetary Fund) that it will strengthen coordination between government agencies and improve oversight of cross-border trade transactions, following revelations of a large-scale alleged money laundering scheme involving solar panel imports.
An official inquiry has found that nearly Rs. 70 billion may have been laundered through over-invoiced imports of solar panels between 2017 and 2022. The findings have prompted the government to tighten monitoring mechanisms as part of its commitments under ongoing IMF-supported reforms focused on anti-money laundering and counter-terror financing.
Prime Minister Shehbaz Sharif has constituted a supervisory committee to oversee disciplinary action against officials accused of failing to detect or prevent the alleged irregularities. According to a government notification, the committee will monitor accountability proceedings linked to the case.
The move follows an inquiry into suspected trade-based money laundering, where investigators allege that thousands of import documents were over-invoiced, enabling illicit fund transfers abroad. The report estimates that around 6,232 import entries were manipulated, resulting in approximately Rs. 69.5 billion being moved out of the country through the financial system.
Trade-based money laundering typically involves manipulating trade invoices—such as overstating import costs or understating export values—to shift money across borders under the guise of legitimate commerce.
As part of its assurances to the IMF, Islamabad has pledged to improve data sharing among key institutions, including better coordination between foreign exchange reporting systems, customs records, and import payment data. Authorities say the goal is to detect suspicious transactions more effectively at both macro and transaction levels.
The inquiry described the episode as a systemic institutional failure, citing weak coordination, regulatory gaps, and inadequate enforcement. It found that multiple agencies, including financial intelligence and regulatory bodies, did not flag or act on warning signs in time.
The Financial Monitoring Unit was criticized for weak analysis of currency flows and suspicious transactions, while the Securities and Exchange Commission of Pakistan was accused of allowing the registration of shell companies with limited scrutiny of financial disclosures.
The report also pointed to weaknesses in banking supervision, alleging that commercial banks processed inflated import payments without adequate post-transaction verification. The State Bank of Pakistan was criticized for delayed enforcement actions and insufficient inspection rigor, with penalties reportedly imposed only after external intervention.
The inquiry has recommended disciplinary proceedings against officials across multiple departments, including customs, taxation, financial intelligence, and anti-money laundering authorities. It has also suggested criminal investigations against bank officials allegedly involved in facilitating suspicious transactions.
To oversee follow-up action, the prime minister’s supervisory committee—headed by Establishment Division Secretary Barrister Nabeel Awan—has been tasked with tracking disciplinary cases, identifying any officials not included in the original inquiry, and submitting regular progress reports to the Prime Minister’s Office.
The committee has also recommended that the central bank adopt real-time monitoring systems, strengthen internal audits, and establish stricter accountability mechanisms for banks that repeatedly fail to comply with anti-money laundering requirements.
