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Pakistan’s Banking Sector Cracks Down on Money Laundering and Terror Financing with New Regulations
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Pakistan’s banking regulator has introduced new regulations to curb money laundering, combat the financing of terrorism, and counter proliferation financing. The Anti-Money Launderling, Combating the Financing of Terrorism, and Countering Proliferation Financing (AML/CFT/CPF) Regulations aim to strengthen the country’s efforts in preventing illicit financial activities.
Implementing Risk-Based Approach
To implement these regulations, banks, development finance institutions, and microfinance banks have been issued guidelines on a risk-based approach. The guidelines outline measures to identify and mitigate potential risks associated with:
- Money laundering
- Terrorist financing
- Proliferation financing
These guidelines aim to help financial institutions prevent illicit activities by identifying and mitigating potential risks.
Targeted Financial Sanctions (TFS)
The regulator has also released guidelines on TFS under United Nations Security Council Resolutions. TFS are aimed at:
- Freezing assets
- Imposing travel bans on individuals and entities linked to terrorism and other illicit activities
Frequently Asked Questions (FAQs)
To provide clarity on the requirements for financial institutions, FAQs have been published on:
- TFS obligations
- Use of biometric technology in banking
The FAQs highlight the potential benefits of biometric technology in enhancing customer identification and verification processes.
Enhanced Detection and Prevention
These new regulations are expected to enhance Pakistan’s ability to detect and prevent money laundering, terrorist financing, and proliferation financing activities. By implementing these measures, the country is taking a significant step towards:
- Maintaining the integrity of its financial system
- Meeting international standards on anti-money laundering and combating the financing of terrorism
Overall, these new regulations demonstrate Pakistan’s commitment to preventing illicit financial activities and maintaining a robust financial system.