Pakistan’s Banking Regulators Crack Down on Money Laundering and Terrorist Financing
A New Era in Combating Financial Crimes
In a bid to curb the menace of money laundering and terrorist financing, Pakistan’s banking regulators have introduced new regulations for designated non-financial businesses and professions (DNFBPs). These regulations aim to prevent criminals from using the country’s financial system to hide illegal funds and protect the integrity of the domestic and international financial systems.
Who is Affected?
The Anti-Money Laundering Act requires DNFBPs, including:
- Real estate agents
- Dealers in precious metals and stones
- FBR-supervised accountants
to comply with anti-money laundering and counter-terrorism financing obligations. Other entities such as:
- Financial institutions
- Lawyers
- Law firms
- Notaries
- Non-FBR-supervised accountants are supervised by other competent authorities and self-regulatory bodies.
The Purpose of the Regulations
Pakistan’s Anti-Money Laundering regime aims to prevent criminals from using the country’s financial system to hide illegal funds. “Money laundering is a serious threat to the integrity of our financial systems,” said an official. “We need to ensure that crime does not pay and that our financial systems are not used to support criminal activities.”
Similarly, Pakistan’s counter-terrorism financing system aims to prevent the use of funds to support terrorist activities. Terrorist financing involves the use of licit or illicit funds to support terrorist activity, which can result in tragic losses of life.
What do DNFBPs Need to Do?
DNFBPs, including lawyers and law firms, notaries, accountants, real estate agents, and dealers in precious metals and stones, are now required to implement anti-money laundering and counter-terrorism financing measures. These measures include:
- Assessing and documenting risks
- Implementing preventive measures and internal controls
- Reporting suspicious transactions
Supervision and Monitoring
Each DNFBP sector has a dedicated supervisor or set of supervisors that monitor and encourage compliance with AML/CFT obligations. This includes compliance inspections to assess how well DNFBPs are meeting their AML/CFT obligations.
Conclusion
Pakistan’s banking regulators have taken a significant step towards combating money laundering and terrorist financing by introducing new regulations for DNFBPs. These regulations aim to prevent criminals from using the country’s financial system to hide illegal funds and protect the integrity of the domestic and international financial systems.