Pakistan’s Finance Minister Muhammad Aurangzeb has warned that if illegal digital transactions continue, the country risks being placed back on the Financial Action Task Force (FATF) grey list. It is worth recalling that Pakistan was removed from the FATF grey list in October 2022 after implementing key measures against money laundering and terror financing. However, this fresh warning from the Finance Minister has raised concerns about Pakistan’s financial compliance, particularly as the country establishes new regulatory bodies for the digital assets sector. Recently, a Crypto Council and a Virtual Assets Authority have been set up in Pakistan. According to Bilal Bin Saqib, head of the Pakistan Crypto Council, nearly 20 million people in the country are engaged in cryptocurrency transactions. Although a presidential ordinance has introduced the new Virtual Assets Authority, permanent legal protection still requires parliamentary approval. Experts argue that without a proper regulatory framework for digital currencies, the risks flagged by the Finance Minister are valid, and Pakistan’s digital asset sector cannot grow sustainably without strong regulation.
Speaking at the Leadership Summit on Technology and Innovation, Pakistan’s Finance Minister said that the country’s economy is moving in the right direction. He highlighted Pakistan’s successful removal from the FATF grey list and emphasized the need for greater transparency in digital transactions. The Minister warned that given the scale of activity in digital currencies, ignoring the regulation of digital assets could expose Pakistan to risks related to Know Your Customer (KYC) compliance, anti-money laundering (AML) measures, and sanctions. This, he cautioned, might put Pakistan back on the FATF grey list. He added that starting next week, parliamentary standing committees will begin reviewing the Virtual Assets Ordinance, which was introduced a few weeks ago by the government to establish an independent regulator for virtual assets and cryptocurrencies.
Finance Minister calls for greater transparency in digital transactions
Speaking about the Finance Minister’s concerns over the lack of regulation of cryptocurrency in Pakistan and the risks it poses, economic expert Dr. Ikramul Haq called the minister’s warning “understandable.” According to him, it is essential for Pakistan to cooperate with global monitoring bodies and adopt blockchain analytics tools. He stressed that legislation should not be based solely on local compliance requirements but must also establish effective channels of cooperation with foreign regulators to trace and freeze illegal capital flows in and out of Pakistan. Meanwhile, Abdul Rauf Shakoori, a U.S.-based expert on financial laws, the Finance Minister’s statement reflects a lack of understanding of the FATF mechanism, questioning whether the government and its team even have the capacity to design effective cryptocurrency regulations. He pointed out that according to FATF’s latest data (as of April 2025), 138 countries were reviewed, but only 40 were found to be “largely compliant” with standards on cryptocurrency regulation (Recommendation 15). Only one country, The Bahamas, was deemed fully compliant. This means that just 29% of countries meet the minimum requirements.
The data also shows that in 67 countries with large virtual asset sectors, more than 90% have conducted risk assessments, implemented licensing systems, and carried out supervisory inspections. Similarly, the “Travel Rule”—which requires identity information to accompany crypto transactions—has been adopted into law in 73% of countries, but nearly 60% of them have yet to implement it effectively. This indicates that global compliance with virtual asset regulations is still incomplete, with most countries gradually improving their regulatory frameworks. In contrast, Abdul Rauf Shakoori described Pakistan’s strategy as “unclear” and “indecisive.” On one hand, the government claims Pakistan will become a global leader in crypto, while on the other, it admits that it lacks the ability to effectively enforce Recommendation 15’s basic requirements, such as a risk-based framework, licensing, and enforcement. According to Shakoori, such irresponsible statements about FATF grey listing not only undermine investor confidence but also expose a lack of seriousness in decision-making at the government level. Senior financial journalist Shahbaz Rana noted that one reason behind the Finance Minister’s remarks may be an IMF report, which highlighted certain shortcomings in Pakistan’s anti-money laundering efforts.
In 2020, Pakistan also amended the law against money laundering to take further action.
Regarding the legal status of cryptocurrency in Pakistan, Abdul Rauf Shakoori explained that after the enforcement of the Virtual Assets Ordinance 2025, formal regulations for cryptocurrency have been introduced in the country, and licensing requirements have also been clarified. However, he acknowledged that important amendments to existing laws are still required to comprehensively address all aspects of crypto regulation. He further stated that the ordinance also makes it clear that cryptocurrency has not been officially recognized as legal tender in Pakistan.
On the concerns of Pakistan potentially being placed back on the FATF grey list due to the absence of a complete regulatory framework for cryptocurrency, Shakoori said that it is still too early to answer this question, as it will depend on how effective Pakistan’s final legal framework proves to be. He explained, “The reality is that Pakistan has not yet introduced comprehensive legislation nor amended the major laws referenced in the Pakistan Virtual Assets Ordinance 2025. That is why, at this stage, it is difficult to assess whether Pakistan’s regulatory structure will meet FATF standards or not.” According to him, “This evaluation will depend on whether the upcoming framework includes strict regulations for licensing service providers, ensures consumer protection, implements an effective anti–money laundering system and counter-terrorism financing measures, addresses the risks of anonymity in transactions, and provides meaningful mechanisms for international cooperation.” Shakoori added that in the absence of these elements, Pakistan will face difficulties. However, until a complete regulatory system is finalized and implemented, it cannot be evaluated. Therefore, claims that the country is going back on the FATF grey list are merely speculative.
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