According to reports, Pakistan’s Minister of State for Finance and Revenue commented that due to the conditions set by the global money-laundering watchdog, legalizing crypto is not possible for the country. Meeting the terms and conditions is a must to avoid being placed on the watchdog’s enhanced monitoring list.
Antithetical to the statement by Pakistan’s finance minister, the Financial Action Task Force (FATF) shed light on the fact that it does not mandate countries to impose a blanket ban on virtual assets and virtual asset service providers. In a statement, the FATF highlighted that such a condition had not been set for the South Asian nation.
On May 17, Pakistan’s Minister of State for Finance and Revenue, Aisha Ghaus Pasha claimed that the FATF had enforced a condition that prohibits the legalization of cryptocurrency in the country to maintain avoidance of being placed on the “grey list” of nations that are subjected to heightened scrutiny. According to another report, Pakistan’s opposition to cryptocurrencies was due to non-compliance with FATF norms and conditions. As per the local media, in the course of the session with Pakistan’s Senate Standing Committee on Finance, Pasha proclaimed that cryptocurrencies would never be legalized in Pakistan.
The FATF’s “grey list” acts as a warning to address the weaknesses in anti-money laundering and counter-terrorist financing schemes. Pasha’s statement was regarded as newly imposed restrictions on cryptocurrency by the government. Amidst the prevailing economic challenges aggravated by a volatile political climate in the nation, Pasha urged the authorities to commence efforts to ban cryptocurrencies.
The country’s central bank took its first concrete decision on the matter, announcing plans to ban crypto in January 2022. The FATF highlighted the need for countries to get their heads around the money laundering and terrorist financing risks correlated with the crypto sector. Moreover, it advocated for the issuance of licenses or registration of exchanges to regulate the sector, similar to its oversight of other financial institutions.
The FATF directs virtual asset service providers to adopt equivalent preventive measures to those of financial institutions. These measures include customer due diligence, record keeping, reporting of suspicious transactions and compliance with the travel rule which requires the collection and sharing of transaction information above a specified threshold by crypto service providers.
The FATF did not directly respond to the comments Pasha made. It clarified that the countries have the option, but not the obligation to ban virtual assets and virtual asset service providers.