Financial Crime World

Pakistan’s Financial Compliance Landscape: An Overview of Key Laws and Regulations

In the ever-evolving world of finance, staying compliant with regulations is crucial. Pakistan, with its rich financial sector, is no exception. In this article, we provide an overview of the primary laws and regulations that shape Pakistan’s financial compliance landscape.

Central Legislation

  • State Bank of Pakistan Act, 1956: This act is the central piece of legislation governing the country’s monetary policy and overseeing the operations of the State Bank of Pakistan.

Subsequent Laws

  • Protection of Economic Reforms Act 1992: Significantly contributed to shaping regulations in the country.
  • State Bank of Pakistan (Banking Services Corporation) Ordinance, 2001
  • The Financial Institutions (Recovery of Finances) Ordinance, 2001

Influential Pieces of Legislation

  • Banking Companies Ordinance 1962 (as modified up to 02 April 2011)
  • National Accountability Ordinance, 1999
  • Microfinance Institutions Ordinance, 2001
  • Payment Systems and Electronic Fund Transfer Act, 2007

Pivotal Financial Acts

  • Foreign Exchange Regulation Act, 1947
  • Financial Institutions (Secured Transactions) Act, 2016
  • Deposit Protection Corporation Act 2016

Regulations and Policy Guidelines

  • Lender of Last Resort (LOLR) Facility under Section 17G of the State Bank of Pakistan Act, 1956
  • Foreign Exchange Manual
  • Prudential Regulations
  • Anti-Money Laundering, Combating the Financing of Terrorism & Countering Proliferation Financing (AML/CFT/CPF) Regulations
  • Credit Bureau Licensing Criteria
  • Credit Bureau Regulations, 2016
  • Credit Bureau Rules, 2016
  • Minimum Paid-up Capital for Credit Bureaus order

Keeping Up-to-Date

To understand Pakistan’s financial compliance regulations fully, it is essential to stay updated on the latest developments, including notifications, policy rate adjustments, and rates. Recently, there have been notifications under section 20(7) of the Financial Institutions (Recovery of Finances) Ordinance and changes to the SBP’s Policy Rate, Overnight Reverse Repo (Ceiling) Rate, and Overnight Repo (Floor) Rate. Additionally, staying informed about the latest rates, such as the M2M Revaluation Rate, is crucial for maintaining financial compliance.

In conclusion, Pakistan’s financial compliance landscape is diverse and complex, with a rich array of laws and regulations shaping the sector. By staying informed of these changes and staying up to date with the latest notifications and rates, financial institutions can ensure their practices remain aligned with the evolving regulatory framework.