ISLAMABAD:
The International Monetary Fund (IMF) has flagged serious shortcomings in Pakistan’s use of beneficial ownership data, warning that weak implementation is hampering efforts to curb corruption-linked money laundering and allowing front companies to secure government contracts.
In its draft Governance and Corruption Diagnostic Assessment, the IMF highlighted major gaps in enforcing Pakistan’s beneficial ownership regime. It noted there was “little evidence of routine coordination” between the Securities and Exchange Commission of Pakistan (SECP) and investigative agencies in leveraging ownership data for financial probes.
Pakistani authorities, however, rejected this view, insisting that law enforcement and regulatory bodies already make use of beneficial ownership data, except in cases involving Designated Non-Financial Businesses and Professions (DNFBPs).
Pakistan strengthened its beneficial ownership framework nearly eight years ago to meet Financial Action Task Force (FATF) requirements, but the IMF stressed that enforcement remains well below required standards. Effective use, it said, requires continuous information-sharing between the SECP, the State Bank of Pakistan (SBP), the Federal Board of Revenue (FBR), banks, money service providers, and law enforcement bodies.
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The IMF mission recommended the creation of a permanent multi-agency working group to regularly review beneficial ownership data for use in corruption investigations. It observed that weaknesses in the registry, verification process, enforcement mechanisms, and inter-agency access reduce the framework’s effectiveness.
“Strengthening these areas is critical if beneficial ownership transparency is to play a meaningful role in identifying and disrupting corruption-related laundering schemes,” the IMF stated. It added that timely access to accurate ownership data is vital not only to track illicit financial flows but also to expose conflicts of interest in public procurement, particularly when public officials or their associates hold undisclosed stakes in bidding companies.
Pakistani officials maintained that the SECP has already granted investigation agencies direct access to its beneficial ownership database, while the Financial Monitoring Unit (FMU) is actively using the data to track suspicious transactions. In 2018, the SECP also mandated companies to disclose their ultimate beneficial owners in order to remove secrecy in ownership structures and address FATF concerns.