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Financial Institution Compliance Officers in Pakistan: A Comprehensive Guide

Pakistan’s financial sector has seen significant growth in recent years, with the country’s central bank, State Bank of Pakistan (SBP), and other regulatory bodies playing a crucial role in ensuring compliance with anti-money laundering and counter-terrorism financing (AML/CTF) regulations.

Regulatory Bodies


The SBP is the primary regulator for AML controls in Pakistan, responsible for overseeing the country’s monetary and credit systems. The Securities and Exchange Commission of Pakistan (SECP), established in 1999, regulates stockbrokers, commodity brokers, non-bank financial companies, insurance firms, corporations, and non-profit organizations to ensure compliance with AML/CTF regulations.

  • FIU-Pakistan is responsible for receiving, analyzing, and disseminating financial information related to suspected proceeds of crime, money laundering, and terrorist financing activities.

Compliance Requirements


Designated service providers in Pakistan must ensure they have a robust anti-money laundering/counter-terrorism financing policy in place, which includes:

  • Conducting customer due diligence
  • Identifying beneficial owners
  • Monitoring customer business relationships
  • Implementing internal policies and procedures for politically exposed persons
  • Reporting suspicious transactions to FIU-Pakistan

Internal Risk Assessment Reports (IRAR)


Internal Risk Assessment Reports are essential for assessing the effectiveness of AML/CTF policies and controls. Each registered entity must consider its unique market, corporate structure, clients, and transaction types when adopting initiatives and procedures to ensure their effectiveness.

Reporting Obligations


As a designated service provider in Pakistan, you are required to notify FIU-Pakistan regarding suspicious activity. Notable ongoing reporting responsibilities include:

  • Submitting Suspicious Transaction Reports (STRs) for any suspicious transactions, regardless of the threshold
  • Currency Transaction Reports (CTRs) for cash transactions exceeding PKR 2 million or equivalent

Conclusion


Compliance with AML/CTF regulations is crucial for financial institutions in Pakistan. By understanding the regulatory requirements and reporting obligations, designated service providers can ensure they are fully compliant with Pakistani laws and regulations, protecting themselves from legal consequences and maintaining a reputation of integrity in the global financial market.