Social media is now working as a high-speed pipeline to move money comfortably outside the perimeter of financial regulations. On TikTok and other apps, likes, gifts and livestream donations are converted into platform-specific digital credits. A follower buys virtual currency with their debit card, mobile wallet, or bank account, then sends gifts to the TikToker or creator during live streams or content interactions. The app takes a commission and sends the remaining ‘amount’ to the TikToker’s internal wallet. Once you earn a minimum amount, or cross a threshold, you can withdraw or transfer earnings through payment processors, digital wallets, or linked bank accounts into your local currency.
In practice, a transaction that begins as a seemingly harmless “gift” or online appreciation can pass through multiple layers — virtual tokens, platform wallets, payment intermediaries, and cross-border processors — before emerging as legitimate funds in a bank account. What appears on the surface as digital admiration may, in reality, become part of a complex financial pathway operating beyond the visibility of conventional oversight mechanisms.
A shadow financial channel has emerged, embedded within entertainment infrastructure, and it was only a matter of time before the wrong people started to pay attention.
Live hearts and roses
In 2025, unsealed state court documents, which were part of a consumer protection lawsuit by Utah’s Division of Consumer Protection, pulled back the curtain on Project Jupiter, a 2021 internal investigation by TikTok. The tech giant had harboured suspicions that organised crime was treating its live gifting feature for money laundering.
The internal investigation revealed a high risk of money laundering, but TikTok allegedly failed to do anything about it.
Financial authorities in Turkiye launched a probe when $82 million flowing through TikTok accounts reeked of terrorism financing. Regulators in Australia and the United Kingdom have begun questioning whether TikTok’s token system is actually a shadow banking service operating without a license. Even the Financial Action Task Force (FATF) has expressed concern, saying that digitally enabled crowdfunding has become a playground for those looking to fund terror.
All over the world, investigations have identified coordinated fraudulent donation networks operating through social media accounts, with academic research documenting hundreds of such schemes. The Financial Action Task Force has repeatedly warned that new payment technologies are being exploited for money laundering and terrorism financing. The United Nations Counter-Terrorism Committee Executive Directorate has highlighted how platforms enable cross-border fundraising with limited traceability. It has been documented that extremist networks have leveraged micro-donations at scale precisely because the pattern evades conventional detection.
The focus has thus inevitably shifted to markets where digital adoption has outpaced regulatory oversight, and few places illustrate this friction as vividly as Pakistan.
Here, the creator economy has created a unique brand of digital exploitation. A 2025 investigation by The Observer exposed the trend of child-begging livestreams. Vulnerable children in Pakistan, Indonesia, Afghanistan, Syria, Egypt and Kenya were put before cameras to solicit virtual gifts from people all over the world. Behind the scenes, organised handlers pulled the strings so they could capture the monetised proceeds. By using TikTok’s token-to-cash conversion pipeline, these intermediaries moved money through a system that remains largely invisible to any financial regulator.
The difficulty in policing cyberspace was best exemplified in the social media personality Hareem Shah’s case. In 2022, she posted a video flaunting stacks of British pounds, claiming she had transported the cash from Pakistan to the UK. While the Sindh High Court restrained the FIA from taking action, the case shed light on a structural black hole. When a celebrity generates unverifiable income through a mix of platform gifts and brand deals, there is no paper trail to audit the full scope of their earnings.
The authorities could barely keep up. By the end of 2025, Pakistan had nearly 80 million social media users. The State Bank of Pakistan reported that digital channels accounted for 88 per cent of the country’s 9.1 billion retail transactions, totalling some Rs612 trillion. In an ecosystem of this magnitude, even a microscopic leak into unregulated platform-based schemes represents a massive threat to financial integrity.
As we move further into a decade defined by digital assets, the lesson is clear. While we’re watching the influencers, the criminals are watching the infrastructure. Pakistan, with its burgeoning digital population and history of FATF scrutiny, cannot afford to stay tuned out for much longer.
Micro-laundering at scale
For a better understanding of the way it works, consider a hypothetical, though entirely plausible, scenario. A mid-tier influencer conducts regular live streams. Over a month, they receive multiple small gifts from dozens of accounts, Rs500 here, Rs1,000 there, Rs 2,000 from elsewhere. Individually, each transaction is trivial, but collectively, they amount to Rs2 million. The funds are converted and withdrawn through platform payment channels. None of this raised any eyebrows or triggered any red flag alerts.
Pakistan’s existing anti-money laundering frameworks, anchored by acts such as the Anti-Money Laundering Act 2010 (AMLA), were built for a different era of financial crime. These regulations were optimised for large, structured financial movements, transactions breaching fixed reporting thresholds, and established banking corridors. They were designed to hunt whales, not schools of digital minnows. And so these regulations are ill-equipped to intercept the death by a thousand cuts strategy, where thousands of Rs500 digital gifts flow from coordinated, anonymous accounts into a single user’s wallet.
The loophole
The root problem is a category error. Social media platforms are not classified as financial institutions, yet they perform financial functions. They move money. They convert value. They facilitate cross-border transfers. But because they are classified as technology companies or communication services, they operate outside the frameworks that govern banks and payment systems.
This creates three critical blind spots. There is a lack of mandatory customer due diligence for monetised accounts, an absence of structured suspicious transaction reporting requirements, and a failure to integrate with financial intelligence units.
Over a decade, Pakistan has developed an Anti-Money Laundering infrastructure through the State Bank and the Financial Monitoring Unit, largely under pressure from the FATF. However, this framework was designed specifically for the conventional financial system, leaving the emerging digital gifting economy to operate entirely outside its purview.
China realised this years ago and acted fast. Live-streaming platforms are now mandated to implement strict real-name verification and transaction monitoring, shifting the burden of accountability onto the platforms themselves rather than solely on individual users.
Other global jurisdictions are also following suit, but in Pakistan, the regulatory conversation has barely begun.
A law enforcement perspective
There is almost no point in detecting individual suspicious transactions. If we look at it from an operational standpoint, the challenge is identifying patterns across millions of micro transactions happening every day that, taken alone, are invisible.
This demands a different kind of enforcement architecture. Digital crime monitoring must move beyond case-by-case reactive investigation toward real-time pattern analysis. We have all the tools in the world. AI-driven anomaly detection can identify coordinated gifting spikes, unusual account clustering, and correlation between platform transaction data and known financial intelligence flags.
Integration between social media monetisation data, telecom metadata, and financial intelligence reporting would create a threat picture that no single agency can currently assemble.
A centralised digital financial crime dashboard, connecting FIA’s cybercrime wing, the FMU, PTA, and relevant provincial law enforcement, would be a meaningful first step.
Protecting creators
Don’t forget, most digital gifting activity is legitimate. Creators across Pakistan use TikTok and YouTube to build lawful livelihoods, and overregulation risks discouraging digital entrepreneurship and criminalising small earners. It may actually push income back into informal cash channels that are far more difficult to monitor.
And of course, there is a genuine concern that aggressive surveillance of social media monetisation could be weaponised for political control rather than financial integrity, which is a risk that remains far from theoretical in Pakistan.
Although these worries are well-founded, they do not argue against regulation entirely, but advocate for a proportionate and risk-based approach. Under such a model, small creators earning modest amounts would face no additional compliance burdens, ensuring that the barrier to entry for digital work remains low. Instead, reporting obligations would be triggered only by specific high-risk indicators, such as high-volume monetised accounts, unusual gifting clusters from foreign-linked sources, repeated cash-outs above defined thresholds, and account patterns that are clearly inconsistent with organic audience behaviour.
These parameters mirror the exact logic banking regulators currently use to distinguish routine transactions from suspicious activity, and there is no principled reason why the same logic should not apply when a social media platform acts as the payment infrastructure. Ultimately, the goal is not to criminalise digital livelihoods, but to ensure that entertainment infrastructure does not serve as a shadow remittance channel or a conduit for illicit financing.
Here’s what needs to change
The regulatory response must be layered and sequenced. In the short term, Pakistan should require identity verification for monetised accounts on platforms operating in the country and bring high-volume digital gifting transactions within suspicious transaction reporting obligations. Platform operators should be formally designated as reporting entities under AML/CFT frameworks, as several jurisdictions have already done.
Soon enough, the FMU should develop a digital monetisation monitoring protocol and establish data-sharing arrangements with major platforms. AI-based tools for detecting suspicious gifting patterns should be piloted within existing law enforcement structures.
The ultimate goal should be for Pakistan to actively engage in international efforts to develop global regulatory standards for digital financial ecosystems, which is a conversation FATF is already beginning to lead.
The comfortable illusion
We have an instinct to perceive live streaming as harmless entertainment. Creators earning through fan appreciation is not a story that triggers regulatory concern. And in the overwhelming majority of cases, it is exactly that, harmless, legitimate, and economically valuable for a generation of young Pakistanis building digital livelihoods.
But the same architecture that enables a creator in Lahore to earn a living at 2am can enable a financier in another time zone to move money with no paper trail. The challenge is not what the platforms were designed to do. It is what they can be made to do, and whether the state is equipped to tell the difference. In a world where money moves disguised as applause, the question is no longer whether this risk exists. It is whether we are willing to look at it directly.
Header image created with Generative AI
