Financial Crime World

Regulatory Bodies for Financial Crimes in Pakistan: Ensuring Integrity of Financial Systems

Pakistan’s Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) regime is designed to combat financial crimes, protect the integrity of domestic and international financial systems, and prevent crime from paying. In this article, we will explore the regulatory bodies responsible for ensuring compliance with AML/CFT obligations in Pakistan.

The Role of Regulatory Bodies

The Federal Board of Revenue (FBR) is responsible for ensuring compliance with AML/CFT obligations by designated non-financial businesses and professions (DNFBPs), including:

  • Real estate agents
  • Dealers in precious metals and stones
  • FBR-supervised accountants

AML/CFT Obligations

Under the Anti-Money Laundering Act, DNFBPs are required to:

  • Assess and document their risk
  • Implement preventive measures and internal controls
  • Maintain accurate records of transactions

The accounting and legal sectors are also subject to AML/CFT rules when providing trust and company services for clients.

Terrorist Financing Regime

Pakistan’s CFT regime works in concert with the regimes for United Nations and Pakistani targeted financial sanctions to prevent terrorist financing. Terrorist financing involves using funds, licit or illicit in origin, to support terrorist activity.

Key Features of Pakistan’s AML/CFT System

  • Regulatory bodies responsible for supervising DNFBPs include:
    • Federal Board of Revenue
    • Other competent authorities
  • Supervisors conduct compliance inspections to assess how well DNFBPs are meeting their AML/CFT obligations
  • The accounting and legal sectors are also subject to AML/CFT rules when providing trust and company services for clients

Understanding Risk

The key to an effective AML/CFT system is a good understanding of risk. Each DNFBP must assess and document its risks by looking at:

  • Customers
  • Business types
  • Delivery channels
  • Geographic exposure

This allows resources to be targeted towards those areas that present the greatest risk for money laundering and terrorist financing abuse.

Pakistan’s New AML/CFT Supervisory Regime

The new regime is designed to monitor and encourage compliance with AML/CFT obligations by each DNFBP sector. It includes:

  • Dedicated supervisors
  • Compliance inspections
  • System of penalties and sanctions for non-compliance

By implementing this regime, Pakistan aims to ensure the integrity of its financial systems and prevent financial crimes from occurring.

Conclusion

Pakistan’s AML/CFT regime is designed to combat financial crimes, protect the integrity of domestic and international financial systems, and prevent crime from paying. The regulatory bodies responsible for ensuring compliance with AML/CFT obligations play a crucial role in achieving this goal. By understanding risk and implementing effective measures, DNFBPs can help ensure the integrity of Pakistan’s financial systems.