Social media-driven money laundering

EDITORIAL: The government’s decision to launch a far-reaching crackdown on money laundering and Hawala-Hundi networks at a meeting jointly chaired by federal finance and interior ministers is both timely and essential. For years, billions have quietly drained out of the economy through informal channels, eroding the tax base, distorting markets and unfairly burdening compliant businesses and citizens. Alarmingly, these activities are no longer confined to the shadow economy and operators therein; they now permeate mainstream commerce, enabling individuals, small traders and large enterprises alike to bypass formal financial systems, weakening fiscal stability and undermining the credibility of regulatory institutions. Yet, even as authorities prepare to tackle traditional conduits of illicit finance, a critical dimension of this problem remains conspicuously neglected: the rise of widespread money laundering activities linked to digital advertising and monetisation on global platforms such as Meta and Google. A combination of stringent foreign exchange controls by the State Bank of Pakistan (SBP), high taxes on foreign transactions, surging demand for international advertising payments on global digital platforms, and restrictive monetisation rules these platforms have for content creators and businesses from Pakistan has created a grey market for payments and receipts, enabling illicit actors to systematically exploit regulatory gaps, and giving rise to a flourishing money-laundering ecosystem. Over time, this ecosystem has grown increasingly sophisticated. At its most basic, it sees local businesses route advertising payments on platforms like Meta and Google through friends or intermediaries abroad, while settling these dues domestically in rupees via informal Hundi transfers, bypassing SBP oversight. More complex schemes involve illicit operators offering ‘discounted ad payment’ services to legitimate Pakistani businesses at a lower rate than the standard USD transaction fees, tempting them to avoid the taxes and charges imposed by local banks on international payments. These operators use foreign bank accounts or financial ‘mules’ to route payments to digital platforms. On the revenue side, the lack of native monetisation pathways in Pakistan – compounded by SBP restrictions barring residents and businesses from opening foreign accounts – has fostered a structured pattern of money laundering and tax evasion. Unable to link local bank accounts to receive content revenue, Pakistani content creators, media houses and digital entrepreneurs routinely register accounts in foreign jurisdictions under the names of associates abroad, which then receive payments from services such as Google AdSense or Meta Platforms Creator Studio, circumventing SBP oversight and avoiding domestic taxation. Funds are then repatriated to Pakistan through Hawala channels or even through converting them into cryptocurrency. As is evident, this systematised model of cross-border digital money laundering exposes a glaring regulatory blind spot. The fact that authorities are only now waking up to the scale and sophistication of such practices reflects both criminal negligence and institutional inertia, particularly as this ecosystem has expanded unchecked for years, in full view and reach of law enforcement. It is imperative, then, that this flagrant gap is finally addressed, and not just through punitive action against those involved in money laundering, but also by reforming the conditions that enable these activities. The government must create a framework that allows businesses to route payments to and from Pakistan through legal, seamless and cost-effective channels. What we are seeing right now is as much a consequence of regulatory distortions as it is of deliberate malpractice. A pragmatic step, for instance, could be for the SBP to permit Pakistani businesses to maintain fully disclosed mirror accounts with domestic banks’ foreign branches, ensuring that transactions remain transparent, traceable and within the ambit of regulatory oversight. Aligning regulatory action with reform will be essential to ensure that illicit flows are curtailed through both effective law enforcement, and by making compliance the more viable and rational choice. Copyright Business Recorder, 2026

Read full story on Business Recorder