Charities Or Donations as a Source of Terrorism Financing: Why does Regulation Fail in Pakistan?

Abstract

Abstract

This comprehensive research analyses Pakistan's regulatory system for preventing terrorist funding and money laundering through charities/donations. The report discusses the regulatory environment, problems, empirical analysis, policy implications, innovative ideas, and a National Counter Terrorism Authority’s action plan. The report reveals an evolving regulatory framework that strives to satisfy global standards despite ongoing challenges. The integrity of Pakistan's economy and its national security are safeguarded by its regulatory framework, which consists of laws, agencies, and international cooperation. The nation's commitment to combating financial offenses has resulted in a sophisticated regulatory structure. However, the regulatory structure of Pakistan presents challenges and criticisms. Institutions that do not comply with AML and CTF regulations avoid prompt and severe punishment. The large informal sector makes monitoring the flow of funds and promoting illicit active it's difficult. Maintaining transparency in charitable organizations while permitting their authorized activity takes time and effort. The complex multi-agency regulatory environment requires improved coordination and simplification to ensure coordinated efforts. Our empirical investigation yielded qualitative data that reveal successes and areas for refinement. The increase in Suspicious Transaction Reports (STRs) related to charity and donations indicate a greater awareness of financial risk. Significant penalties and imprisonment terms demonstrate that regulatory enforcement holds offenders accountable. Audits of charitable organizations indicate an increase in financial transparency. Consistency in enforcement, the informal economy, and regulatory cooperation remain issues. The study has far-reaching policy implications, highlighting the need to close gaps in enforcement, embrace innovation, and collaborate. Technology, public participation, and international cooperation are required to combat the evolving landscape of financial crimes. In response to these issues, proposals are made for innovative technology adoption, public participation, regulatory changes, and international collaboration. These concepts necessitate transitioning from AI-driven threat prediction to block chain-based secure reporting systems, allowing various strategic options. Financial crime prevention requires unwavering commitment, ongoing education, and the willingness to experiment. Pakistan's commitment to the security of its financial system reflects its commitment to a safer, more secure global financial environment.

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