Financial Crime World

Pakistan’s Financial Watchdogs: State Bank, SECP, and FIU-Pakistan Enforce AML/CFT Compliance

In the complex world of finance, combating money laundering, terrorism financing, and proliferation financing remains a top priority for regulatory authorities in Pakistan. Three key players – the State Bank of Pakistan (SBP), the Securities and Exchange Commission of Pakistan (SECP), and the Financial Information Unit (FIU-Pakistan) – lead the charge in enforcing strict Anti-Money Laundering/Counter-Terrorism Financing (AML/CFT) regulations.

Roles and Responsibilities of Pakistan’s Financial Regulators

1. State Bank of Pakistan (SBP)

  • Role: Established under the State Bank of Pakistan Act, 1956, SBP is Pakistan’s central bank and money regulator, overseeing monetary and credit systems.
  • Responsibility: Supervises banks and related services regarding AML controls and issued AML/CFT/CPF Regulations for its regulated entities.

2. Securities and Exchange Commission of Pakistan (SECP)

  • Role: Established on January 1, 1999, SECP is responsible for developing a modern and efficient corporate sector.
  • Responsibility: Ensures stockbrokers, commodity brokers, NBFCs, insurers, corporations, and non-profit organizations adhere to AML/CFT regulations.

3. Financial Information Unit (FIU-Pakistan)

  • Role: Inaugurated in October 2007, FIU-Pakistan is the central agency for receiving, analyzing, and disseminating financial information related to suspected proceeds of crime, money laundering offenses, and terrorism financing.

Ensuring Compliance with AML/CFT Regulations

To ensure compliance with AML/CFT regulations, entities in Pakistan must:

  • Implement a comprehensive anti-money laundering/counter-terrorism financing policy
  • Conduct thorough customer due diligence
  • Identify, verify, and document beneficial owners
  • Regularly monitor customer business relationships
  • Implement procedures for politically exposed persons and adhere to record-keeping requirements

Reporting Obligations for Registered Entities

Suspicious Transaction Report (STR)

  • Report any suspicious activity to FIU-Pakistan with no threshold limit.
  • Regulatory agencies must maintain all related STR records for at least ten years.

Currency Transaction Report (CTR)

  • If a cash transaction exceeds PKR 2 million (or its equivalent), report it to the concerned authority.

By following these regulations and guidelines, financial entities in Pakistan can contribute to maintaining a clean and transparent financial system, which, in turn, supports the country’s economy and global reputation.