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AML/CFT Regulations by Pakistan Led to Penalties of Rs. 32.280 Million in FY 2019-20

The Securities and Exchange commission of Pakistan’s (SECP) data revealed that the drive to ensure effective compliance with anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regime led to unprecedented enforcement actions against non-compliant institutions and imposition of dissuasive penalties amounting to Rs. 32.280 million in 76 orders during 2019-20.

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According to the annual report issued by the SECP for financial year 2019-20, the SECP has intensified efforts to develop and maintain an AML/CFT regime that is robust, and can effectively respond to the constantly evolving threats and vulnerabilities.

These efforts are aimed atprotecting the integrity of the financial system and preventing its abuse for criminal and terrorism purposes.

During the fiscal year, inspections focusing on TFS and Transnational TF Risk, Beneficial Ownership and Compliance Function of 125 Securities Brokers, 18 NBFCs and 21 Insurance Companies were conducted.

These resulted in dissuasive penalties amounting to Rs. 42.33 million being imposed through 154 enforcement orders for AML/CFT breaches of SECP AML/CFT Regulations 2018.

The drive to ensure effective compliance with AML/CFT regime led to unprecedented enforcement actions against non-compliant institutions and imposition of dissuasive penalties amounting to Rs. 32.280 million regarding 76 orders.

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These efforts were made to bring market discipline and discourage market malpractices and non-compliance with the regulatory regime.

The SECP has also implemented Targeted Financial Sanctions within its regulated sectors under UNSC Resolution that require identification, freezing, and confiscation of terrorist assets.

During 2019-20, the SECP has launched a digital Secured Transaction Registry to facilitate small businesses / farmers to access bank finance without having to mortgage their homes or land; over 85,000 charges have been registered since April 2020, as a result, placing Pakistan in one of only 60 countries in the world that have such a registry, backed by necessary legal framework.

The effectiveness of the sanctioning regime of SECP has encouraged the adoption of remedial measures among its regulated universe.

The Regulated Persons (RPs) have enhanced their focus through upgradation of risk-based controls, including strengthening of transaction monitoring systems and name screening solutions, data cleansing, increasing the number of ML/TF analysts and provision of additional training to improve understanding of ML/TF risks.

These measures have enabled RPs to minimize chances of repetition/ recurrence of regulatory violations with respect to AML/CFT.

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