The Impact of Money Laundering on Pakistan’s Economic Growth: A Critical Analysis

Abstract

This paper examins the impact of Money laundering on economic growth of Pakistan and the role of the Financial Action Task Force (FATF) on financial expansion of Pakistan. The processes of money laundering are endangering the economic stability of an economic system by ruining the trust of the potential investor and facilitating a way of transferring money illegally by using non-banking fiscal institutions and transfer of properties and goods. Consequently, the qualitative approach was employed in this research, and the findings were made up of the information gathered with the help of various resources such as journals, internet resources, books, and research papers, all of which also served as secondary sources. The effects that money laundering has had on the economy of Pakistan are not limited to foreign capital, reduced tax revenue, increased degree of corruption as well as the decline of trust and confidence of people on the financial base but the research underlines the significance of fiscal transparency as a motivating factor to legitimate investments in appropriate trade. Some of the recommendations that were formulated during this study were to strengthen anti-money laundering (AML) legislation that runs artificial intelligence, create a due diligence system on client, establish special courts that run anti-money laundering, and sensitization that complies with the requirements of FATF to effected implementation.