Pakistan has assured the International Monetary Fund that it will strengthen oversight of trade-based transactions and improve interagency data sharing after an inquiry revealed that nearly Rs. 70 billion may have been laundered through over-invoiced solar panel imports.
Prime Minister Shehbaz Sharif has constituted a supervisory committee to monitor disciplinary proceedings against officials accused of failing to detect and prevent the alleged scheme, according to an official notification.
The committee was formed following a government review of findings related to suspected trade-based money laundering linked to solar panel imports between 2017 and 2022.
The case surfaced as Pakistan works to fulfill IMF commitments under its latest staff-level agreement, particularly in the areas of anti-money laundering and counter-terror financing reforms.
Pakistani authorities informed the IMF that they would enhance coordination among agencies handling foreign exchange reporting, customs records, and import monitoring to better identify suspicious trade-based financial activities.
According to the inquiry report, around 6,232 import documents were allegedly over-invoiced during the five-year period, enabling an estimated Rs. 69.5 billion to be transferred abroad.
Investigators described the case as a major institutional failure caused by weak oversight, poor interagency coordination, and official inaction.
The report criticized multiple institutions, including the Financial Monitoring Unit for weak suspicious transaction analysis and ineffective currency monitoring. The Securities and Exchange Commission of Pakistan was also criticized for registering shell companies with limited scrutiny of audit reports and annual returns.
The State Bank of Pakistan faced criticism for weak banking inspections despite existing anti-money laundering regulations. Investigators stated that enforcement actions were delayed until intervention by the Senate Standing Committee on Finance.
Commercial banks were also accused of processing inflated import payments for years without conducting effective post-audit checks.
The inquiry committee recommended disciplinary action against officials from the Financial Monitoring Unit, Customs, Inland Revenue, anti-money laundering departments, and the securities regulator. It also called for criminal proceedings against bank officials allegedly involved in facilitating the transactions.
The supervisory committee, headed by Establishment Division Secretary Barrister Nabeel Awan, will oversee disciplinary proceedings, identify additional officials who may have escaped scrutiny, and submit fortnightly reports to the Prime Minister’s Office.
The report further recommended that the central bank strengthen compliance monitoring through automated real-time systems, conduct internal audits of enforcement units, and establish a stricter accountability framework for banks repeatedly violating compliance standards.
