Financial Crime World

Strengthened Anti-Money Laundering (AML), Combating the Financing of Terrorism (CFT), and Countering Proliferation Financing (CPF) Policies Required by SBP

The State Bank of Pakistan (SBP) has emphasized the need for strengthened AML/CFT/CPF policies to mitigate Money Laundering (ML) and Terrorist Financing risks. This move aims to ensure a safe and sound financial system in Pakistan.

Key Requirements

To comply with AML/CFT/CPF regulations, banks and other financial institutions must meet the following key requirements:

  • Conduct an Independent Risk Assessment and Categorization (IRAC) of customers, financial services offered, and geographical locations operated in.
  • Implement Customer Due Diligence (CDD) measures, including verifying the identity of beneficial owners for legal persons and arrangements.
  • Apply Enhanced Due Diligence (EDD) measures for high-risk customers, financial services, and geographical locations.
  • Maintain accurate and up-to-date records of customer information and transactions.
  • Not open or maintain numbered accounts and conduct transactions on fake identity documents.

Enhanced Due Diligence

The SBP has also emphasized the need for Enhanced Due Diligence (EDD) measures for high-risk customers, financial services, and geographical locations. This includes applying EDD measures in business relationships and transactions with:

  • Natural and legal persons from countries mentioned in Counter Measures for High Risk Jurisdictions Rules, 2020.
  • Politically Exposed Persons (PEPs) and their close associates and family members.

Strengthening AML/CFT/CPF Policies

The SBP has emphasized the need for strengthened AML/CFT/CPF policies to mitigate ML/Terrorist Financing risks. The move aims to ensure a safe and sound financial system in Pakistan, protect the integrity of the financial sector, and prevent the misuse of financial institutions for illegal activities.

Consequences of Non-Compliance

Non-compliance with AML/CFT/CPF regulations will result in severe consequences, including:

  • Fines
  • Penalties
  • Revocation of licenses

The SBP has warned that banks and other financial institutions must take immediate action to comply with AML/CFT/CPF regulations and implement measures to mitigate ML/Terrorist Financing risks.

Conclusion

The SBP’s emphasis on strengthened AML/CFT/CPF policies is a critical step towards mitigating ML/Terrorist Financing risks in Pakistan. This move will help ensure a safe and sound financial system, protect the integrity of the financial sector, and prevent the misuse of financial institutions for illegal activities.