PREVALENCE OF ANTI MONEY LAUNDERING IN FINANCIAL INSTITUTIONS OF PAKISTAN

Abstract

The basic objective of this research is to identify and discuss the methods of money laundering used in Pakistan. Money laundering by using banking channels is not a new thing in Pakistan, after 9/11, the consequences of money laundering have seen internationally, especially with perspective of Pakistan, being a Muslim country. In all over the world, the importance of money laundering have seen in last decade, therefore all banks from all over the work must have develop a confidential unit name is compliance, who continuously looking and working on the customer suspicious activities through banking channels. Pakistan also in the category of high risk jurisdiction, due to fail to implement FTAF recommendations and tighten the AML/CFT policies through parliament. Pakistan needs to enact AML/CFT act through parliament. There are diverse ways that are in practice for money laundering in commercial bankssimilar to placement, layering, and integration. The money laundering on one handcreates the social problem like concentration of wealth in few hands and on the otherhand, from commercial banks point of view it results in the unbalanced increase indeposit of the banks. The phenomenon of money laundering was not so much famousbefore the 9/11. The incidence of 9/11 opened the eyes of financial institutions and theregulatory bodies specially in the USA because before 9/11 there were many shellbanks (fugue banks) which used to transact with huge funds without any source oforigin of these funds, which resulted in the disaster like 9/11.Money laundering exists in Pakistan, and money launders normally using banking channels and hundi, hawala system to launder money from one place to other place, detail analysis havedone in this research. All banks must be focus on KYC process at the time of account opening and ongoing basis; Know your customer is very crucial part to prevent banks from money laundering. In this study, researcher define the process of money laundering, and how it works and how Pakistani banking channels is being used for money laundering, researcher also describe the facts and figures of money laundering and its impact on country, as a social and as a political. Researcher conducted interviews, fills up questionnaires from different bankers, reviewed prior history and then researched to conclude this research with recommendations.