Unregulated Digital Transactions Could Push Pakistan Back to FATF Grey List, Says Finance Minister

Finance Minister Muhammad Aurangzeb has warned that Pakistan could slip back into the Financial Action Task Force (FATF) grey list if unregulated digital transactions are not addressed. He shared his concerns while speaking at the Leadership Summit on Blockchain and Digital Assets: Technology and Innovation on Saturday.

The minister pointed out that nearly 15% of Pakistan’s population, around 25 million people, are engaged in digital transactions and businesses. Most of them are young people. While this shows progress in digital adoption, he cautioned that the scale of unregulated activity poses risks of international sanctions.

Unregulated Digital Transactions Could Push Pakistan Back to FATF Grey List, Says Finance Minister

Aurangzeb said Pakistan worked very hard to exit the FATF grey list after six years and must not allow weak regulation to push the country back. “If this activity is happening at this scale, it’s only a matter of when, not if, we get into trouble again as a country,” he warned.

Pakistan Virtual Assets Regulatory Authority

His remarks came just two days before the government’s first meeting of the Pakistan Virtual Assets Regulatory Authority (PVARA), scheduled for Monday. The newly formed authority will review key policy matters and discuss a framework to regulate digital assets.

The government recently promulgated the Virtual Assets Ordinance to set up PVARA as an independent federal regulator for digital currencies and related services. However, the ordinance is temporary and will expire in four months unless Parliament passes it into permanent law.

Under the new rules, anyone offering virtual asset services in Pakistan must obtain a license from PVARA. The authority has been given broad powers to ensure compliance, financial integrity, and transparency. Its mandate aligns with FATF standards to prevent money laundering and illicit financial activities.

A regulatory sandbox will also be introduced. This will allow businesses and startups to test blockchain, cryptocurrency, AI, and Web 3.0 solutions under government oversight.

Pending Amendments and Policy Decisions

Currently, digital currencies remain illegal in Pakistan. Amendments that could change this status are still awaiting federal cabinet approval. A committee formed by Prime Minister Shehbaz Sharif is reviewing these proposals, including whether dual nationals can serve as deputy governors of the central bank.

Aurangzeb stressed that Pakistan cannot ignore global technological trends. He highlighted the importance of adopting blockchain, artificial intelligence, cryptocurrency, and Web 3.0. According to him, these technologies can boost efficiency and competitiveness in Pakistan’s economy.

“We do not need to start from zero,” he said, adding that Pakistan has already benefited from international collaborations and knowledge transfers. “We have to accelerate our journey in terms of the new economy, and the ministry is ready to assist.”

See Also; Pakistan, Malaysia to Collaborate on FATF-Compliant, Shariah-Aligned Crypto Framework

Balancing Growth with Regulation

The finance minister underlined three key aspects of regulating digital assets: offensive, economic, and defensive. Offensively, Pakistan must adopt new technologies to compete globally. Economically, it must harness digital innovation to strengthen growth. Defensively, it must enforce strict regulations to avoid international penalties.

He also noted that parliamentary committees will soon start reviewing the Virtual Assets Ordinance to move towards permanent legislation.

Our Thoughts

Pakistan’s digital economy is growing fast, but without proper checks, it could become a liability. The creation of PVARA is an important step toward ensuring transparency and compliance. As the world advances with blockchain, AI, and crypto, Pakistan faces a critical choice: regulate and grow or risk sliding back into international isolation.

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