IMF asks Pakistan to tighten checks on real estate money laundering risks

The International Monetary Fund (IMF) has asked Pakistan to strengthen monitoring of suspicious financial activity in the real estate sector, improve reporting of beneficial ownership information and intensify efforts against trade-based money laundering, The News reported. 

According to official sources, the IMF raised concerns during discussions linked to Pakistan’s Extended Fund Facility programme. The lender observed that suspicious transaction reports (STRs) generated by designated non-financial businesses and professions (DNFBPs), particularly in the real estate sector, remained low despite concerns that untaxed and illicit funds were being parked in property markets.

The Federal Board of Revenue (FBR) had tasked DNFBPs with monitoring the real estate sector and generating suspicious transaction reports in coordination with the Financial Monitoring Unit (FMU), similar to reporting mechanisms used by banks.

Sources said the IMF was informed that Pakistan had updated its National Risk Assessment and strengthened coordination with National AML/CFT Authority on anti-money laundering and counter-terror financing measures.

The government also assured the lender that it was working to improve the effectiveness of AML/CFT controls, particularly through designated non-financial businesses and professions and enhancement of beneficial ownership information maintained in the Securities and Exchange Commission of Pakistan’s central registry.

According to officials, real estate agents, the Directorate General of DNFBPs under FBR and Financial Monitoring Unit would work to improve suspicious transaction reporting through reforms, mandatory registration requirements and enhanced reporting frameworks.

The IMF also raised concerns over trade-based money laundering risks during the recent third review discussions with Pakistani authorities.

Officials informed the lender that State Bank of Pakistan had issued a framework in August 2025 to help authorised dealers assess and monitor trade-based money laundering risks associated with customers, transactions and services.

The Financial Monitoring Unit currently shares financial intelligence with relevant agencies, particularly customs authorities, while Pakistan and IMF agreed to further strengthen inter-agency data sharing related to foreign exchange reporting, import payments and customs data.

Separately, the IMF reviewed developments in Pakistan’s banking sector and discussed the level of non-performing loans.

According to officials, commercial banks informed the IMF that the non-performing loan ratio had declined to 6.1% by the end of 2025 and shared plans to further reduce bad loan stocks.

The SBP assured the IMF that it would continue monitoring banks and supervise the implementation of recapitalisation and recovery plans to maintain stability in the banking sector.

Officials also informed the IMF that one private bank identified as undercapitalised in March 2025 had undergone a multi-step recapitalisation process and was now fully compliant with regulatory capital requirements.

The State Bank further assured the lender that prompt supervisory measures would continue to be taken against any banks facing capital shortfalls in future.