Money Laundering: Pakistan Creates Crypto Investigation Unit Within Its Federal Police

The stick after the carrot. Eighteen months after initiating its major pro-crypto shift, Islamabad is gearing up to hunt down dirty money. The Federal Investigation Agency (FIA), Pakistan's federal police, has just established a dedicated investigation unit for cryptocurrencies, focusing on money laundering and terrorism financing. This is the enforcement aspect of a national strategy that, until now, had mainly involved gestures of openness towards digital assets.

Key Points

• The FIA, Pakistan's federal police, has created a crypto investigation unit within its new NC3 command center, targeting money laundering and terrorism financing.
• Regulation remains in the hands of the PVARA, the permanent regulator since the Virtual Assets Act 2026, which is issuing the first licenses for exchanges.
• Ranked third in the Chainalysis 2025 adoption index, Pakistan has lifted its banking ban and signed an agreement regarding the USD1 stablecoin from World Liberty Financial.
• A fatwa from the Jamia Darul Uloom Karachi seminar contests the status of cryptocurrencies as "wealth" under Islamic law, complicating the government's plans.

The initiative was unveiled by Muhammad Athar Waheed, the director of the FIA's anti-terrorism branch, in an interview with the Dawn newspaper. The new unit is housed within the National Command and Control Centre (NC3), a newly operational command center that consolidates the agency's financial crime-fighting arsenal on a single platform: anti-money laundering cell, virtual currency investigation bureau, coordination point with Interpol, open-source intelligence, cyber patrols, and investigations on the dark web.

The division of roles is clear: the FIA unit will investigate the criminal use of cryptocurrencies, while the regulation of digital assets remains the domain of the Pakistan Virtual Assets Regulatory Authority (PVARA), the market watchdog created in 2025. Athar Waheed has also invited two other agencies, the National Cyber Crime Investigation Agency and the Anti-Narcotics Force, to set up similar units to counter the use of crypto in cybercrime and drug trafficking. New rules are also being prepared to complete investigations within fixed timelines.

Ranked third in the 2025 Chainalysis global adoption index, Pakistan is among the nations where cryptocurrencies have become widely adopted by the population. The government has chosen to embrace the movement rather than combat it: lifting an eight-year banking ban, creating the PVARA, planning a strategic reserve in Bitcoin, and reserving 2,000 megawatts of electricity for mining and data centers dedicated to artificial intelligence.

The framework was clarified in March with the Virtual Assets Act 2026: the PVARA becomes a permanent regulator, authorized to issue licenses to exchanges and custodians, while unlicensed operators now face fines of up to 50 million rupees (approximately $179,000) and five years in prison. Since April, the central bank has even allowed commercial banks to open accounts for licensed platforms. On the diplomatic front, Islamabad signed a memorandum of understanding in January with a subsidiary of World Liberty Financial, the crypto company of the Trump family, to explore the use of its USD1 stablecoin in cross-border payments.

However, this dynamic took a hit in June. The Jamia Darul Uloom Karachi seminar, one of the country's most influential religious institutions, declared that cryptocurrencies do not constitute "wealth" (maal) under Islamic law and therefore cannot serve as a valid means of payment. A fatwa signed by the highly respected mufti Taqi Usmani casts a shadow over all government plans in a country where the opinions of religious scholars carry significant weight.

The president of the PVARA, Bilal bin Saqib, was quick to respond. He urged the seminar to distinguish purely speculative tokens from instruments backed by real assets, such as fully collateralized stablecoins or sukuk (Islamic finance-compliant bonds) recorded on the blockchain. He claims to have had a "constructive discussion" with mufti Taqi Usmani since then and expresses his ambition to Reuters:

"Pakistan can lead the world in Sharia-compliant digital finance."

Bilal bin Saqib, president of the PVARA

While awaiting a potential theological update, the administrative machine does not slow down: the PVARA is processing the first licensing requests from exchanges, banks are opening their doors to licensed players, and the FIA now has the enforcement arm it was missing in its anti-money laundering framework.

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