Unreal Estate: The Black Money Blocking Sustainable Growth in Pakistan

Abstract

Money laundering (ML) stifles and demeans all of an economic system's progressive efforts by siphoning off productivity and undermining the consequences of socioeconomic and regulatory efforts to achieve economic justice and social welfare. It not only usurps the economy's positive yield, but it also feeds and mutates with the socioeconomic structure and the practices that enable it to function. Money laundering is a 'systemic assault' on economic justice since it encourages illegitimate wealth accumulation, distorts markets, and perpetuates structural inequalities. Because of its high-value transactions, subjective valuation methods, and opacity in ownership structures, the real estate sector attracts criminal asset investments worldwide. It is regarded as a safe haven due to its potential to absorb not only the proceeds of corruption, drug trafficking, tax evasion, and market malpractice, but also to yield 'white' and laundered funds. In Pakistan, the real estate sector is among the major contributor to the economy and is regarded as a high-risk sector for money laundering due to its large non-conventional transactional pattern and lack of transparency. The sector's vulnerability to money laundering activities has far-reaching implications for Pakistan's economic justice and stability. Despite being a significant driver of economic expansion, Pakistan's real estate sector faces challenges related to transparency, accountability, and regulatory oversight. Money laundering chances exist due to the industry's lack of transparency and regulation, which can manipulate property values, cause loss to state revenue, inflate prices against the market trends, and jeopardize the sector's integrity and fair competition. Pakistan's real estate sector exemplifies how AML regulatory loopholes directly impair economic justice principles like distributive justice (equitable resource allocation), procedural justice (transparent institutions), and corrective justice (accountability for unlawful wealth). Real estate prices are artificially inflated by this capital distortion, which excludes qualified buyers and makes it possible for the wealthy to hide their money. The ensuing wealth disparity serves as an example of why targeted AML enforcement in the real estate industry is essential to achieving economic justice and goes beyond simple regulatory compliance.