The State Bank of Pakistan (SBP) has amended some provisions of the Anti-Money Laundering, Combating the Financing of Terrorism, and Countering Proliferation Financing (AML/CFT/CPF) regulations to align with the Financial Action Task Force (FATF) recommendations.
The central bank issued details of the previous and amended regulations saying that these amendments will provide further clarity on the implementation of AML/CFT/CPF regulations.
The latest amendments in the regulations entail that new policies, controls, procedures, and preventive measures will be developed and implemented proportionately to the level of money laundering, terrorist financing, and proliferation financing risks.
The central bank has asked the banks to obtain additional information on the customer, including occupation, the volume of assets, information available through public databases, the internet, etc., and update the identification data of the customers and beneficial ownership more regularly.
Additional information on the intended nature of the business relationship and transactions, information on the source of funds or source of wealth of the customer, additional information on the reasons for intended or performed transactions, and purpose of the transaction are all types of information that banks will have to collect now as per the amended regulations.
Banks in Pakistan are already sensitive to these requirements and are cautious while dealing with their customers. For example, banks now ask to attach computerized national identity card (CNIC) copy while paying utility bills.
Such measures have been causing inconvenience for the general public, but the amended regulations further strengthen the information requirements.
“All business relations with customers shall be monitored on an ongoing basis to ensure that the transactions are consistent with the SBP’s regulated entities (REs) knowledge of the customer, its business and risk profile and where appropriate, the sources of funds,” the amended regulations noted.
FATF – the global anti-money laundering watchdog, has kept Pakistan on its monitoring list since October 2020, asking the country to improve controls on terrorist financing. Over time, and as Pakistan continues to make progress on the recommendations, FATF has also lauded the authorities for the progress.
FATF said that Pakistan has largely completed 21 out of 27 tasks and made varying levels of progress on the rest of the plan as well.
Pakistan has been struggling hard to avoid being put back on the blacklist as it tries to come out from the grey list. In case Pakistan continues to remain in the grey list, or if included in the blacklist, the consequences would mean sanctions on Pakistan while jeopardizing funding projects with the International Monetary Fund (IMF).