Pakistan has assured the International Monetary Fund that it will strengthen interagency data sharing and tighten oversight of trade-based transactions after an inquiry found that nearly Rs. 70 billion may have been laundered through over-invoiced solar panel imports.
Prime Minister Shehbaz Sharif has formed a supervisory committee to monitor disciplinary proceedings against officials accused of failing to detect and stop the alleged scheme, according to a government notification issued after the inquiry findings were reviewed.
The committee was constituted following an investigation into suspected trade-based money laundering linked to solar panel imports between 2017 and 2022.
The case has gained significance as Pakistan seeks to meet commitments made under its latest staff-level agreement with the IMF, including stronger anti-money laundering and counter-terror financing safeguards.
As part of those commitments, Pakistan told the IMF it would improve coordination among relevant agencies, including better sharing of foreign exchange reporting, import payment records, and customs data. The government also pledged to enhance monitoring of trade-based money laundering at both the broader trend level and individual transaction level.
The inquiry report described the solar panel case as a major failure of state institutions, saying the alleged fraud was enabled by weak systems, poor coordination, and official inaction. Investigators found that around 6,232 import documents were allegedly over-invoiced during the five-year period, allowing an estimated Rs. 69.5 billion to be moved out of the country.
Trade-based money laundering generally involves overstating import values or understating export proceeds to transfer funds abroad through commercial transactions.
According to the findings, the Financial Monitoring Unit failed to exercise effective oversight and carried out weak analysis of currency movements and suspicious transactions. The Securities and Exchange Commission of Pakistan was also criticized for registering shell companies with minimal capital and failing to properly examine annual returns and audit reports that could have signaled laundering risks.
The State Bank of Pakistan also came under scrutiny for weak bank inspections despite an existing anti-money laundering framework. The report said the central bank delayed penalties and only moved after intervention by the Senate Standing Committee on Finance.
Investigators further found that commercial banks cleared inflated import values for years without effective post-audit checks, allowing billions of rupees to pass through the financial system.
The inquiry committee recommended disciplinary action against officials from the Financial Monitoring Unit, the securities regulator, Inland Revenue, Customs, and other anti-money laundering bodies. It also recommended criminal proceedings against bank officials accused of facilitating the transactions.
In addition, the committee called on the central bank to strengthen compliance monitoring through real-time automated tools, conduct internal audits of its inspection and enforcement units, and establish an accountability framework for repeated non-compliance by banks.
