Financial Crime World

Pakistan’s Financial Compliance Laws: AMLA 2010, ATA, and National Savings Regulations

Pakistan’s financial sector is subject to stringent compliance regulations aimed at preventing money laundering, terrorism financing, and other financial crimes. Three key pieces of legislation in Pakistan shape the regulatory landscape: the Anti-Money Laundering Act 2010 (AMLA 2010), the Anti-Terrorism Act 1997 (ATA), and the National Savings AML & CFT Regulations 2020.

Money Laundering and Definitions (AMLA 2010)

  • Definition of Money Laundering (AMLA 2010, Section 2): Money laundering is the processing of criminal proceeds derived from illegal activities. Examples include drug trafficking, fraud, corruption, tax evasion, and other criminal offenses.

Penalties and Simplified Customer Due Diligence (AMLA 2010)

  • Money Laundering Penalties: An individual found guilty of money laundering can be imprisoned for a term of up to 10 years and fined an amount equal to twice the value of the involved property (AMLA 2010, Sections 3 and 5).

  • Simplified Customer Due Diligence: Section 5(4) allows for reduced customer due diligence measures for lower-risk customers or transactions but requires identity verification.

Enhanced Customer Due Diligence, Politically Exposed Persons, and Ongoing Monitoring (AMLA 2010)

  • Enhanced Customer Due Diligence: Reporting entities are required to apply enhanced customer due diligence measures when dealing with higher-risk customers, politically exposed persons (PEPs), and suspicious transactions. PEPs have increased risks of corruption and money laundering (AMLA 2010, Section 5).

  • Reporting and Ongoing Monitoring: Ongoing monitoring of business relationships is necessary to detect and report suspicious activity.

Suspicious Transactions and Reporting (AMLA 2010)

  • Suspicious Transactions Reporting: Reporting entities are obligated to report any suspicious transactions to the Financial Monitoring Unit (FMU).

The Anti-Terrorism Act, 1997 (ATA)

  • Combating Terrorism Financing: The ATA was amended in 2013 to incorporate measures related to combating the financing of terrorism and criminalizing terrorist financing activities. The act outlines penalties and includes provisions for asset freezing and confiscation for terrorists or those involved in terrorism-related activities.

National Savings AML & CFT Regulations 2020

  • Guidelines for Combating Money Laundering and Terrorist Financing: These regulations outline measures for combating money laundering and terrorist financing within the National Savings Organization. They specify procedures for customer identification, dealing with authorized agents, beneficial owner identification, record keeping, and sanctions for violations.

Banking Companies Ordinance, 1962

  • Regulation of Banking Companies: The Banking Companies Ordinance establishes rules for the governance of banking companies and provides regulatory authorities power to inspect and ensure compliance with regulatory standards. It also outlines penalties for non-compliance.

In conclusion, Pakistan’s financial sector is governed by a complex web of regulations, including the AMLA 2010, ATA, National Savings AML & CFT Regulations 2020, and Banking Companies Ordinance, 1962. These regulations aim to prevent financial crimes, ensuring the stability and integrity of Pakistan’s financial system.