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A brief on Anti Money Laundering and Countering Financing of Terrorism Regulations, 2018 and Guidelines

A brief on Anti Money Laundering

The Securities and Exchange Commission of Pakistan (SECP), in order to maintain integrity of its regulated financial sector, notified Anti Money Laundering Regulations, 2018 vide S.R.O. 770 (1)/2018 dated 13 June 2018 [“Regulations”] and subsequently amended vide S.R.O. 1170(1)/2018 dated 1st October 2018.

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Amyn Malik

Partner, Audit

KPMG in Pakistan

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A brief on Anti Money Laundering Regulations

These regulations would repeal Circular No. 28 of 2017 dated 16 November 2017, Circular No 12 dated 28 April 2009, Circular No 29 of 2009 dated 9 September 2009 respectively; and (3) SRO 20(1)/2012 dated 11 January 2012.

The OBJECTIVE

The Objective of these Regulations is to identify, prevent, report and investigate money laundering (ML) and Terrorism Financing (TF) activities and take precautions to alleviate the risk of ML and TF. This brief explains the scope and requirements of Anti Money Laundering and Countering Financing of Terrorism Regulations [“AML/CFT”] laws and Financial Action Task Force [“FATF”] recommendations and providing a high-level approach to fulfill these AML and CFT requirements effectively.

APPLICABILITY

These Regulations shall apply to all Securities brokers, Futures brokers, Insurers, Takaful Operators, NBFCs and Modarabas (hereinafter referred to as [“Regulated Persons”] or [“RPs”]).

These Regulations shall come into force at once that is to say from the date of its promulgation viz. 13 June 2018.

THE IMPLICATIONS

The implications of money laundering are significant as the AML regulations and guidelines criminalize the offence of money laundering and terrorism financing. Over the last decade it has been apparent that developing countries have been vulnerable target of money laundering activities which destabilizes the economic and political stability of the country as a whole.

Additionally, in September 2018, the SECP issued Guidelines on Implementation of AML/CFT Framework under the Securities and Exchange Commission of Pakistan (Anti Money Laundering and Countering Financing of Terrorism) Regulations, 2018 [“Guidelines”] designed to assist RPs in complying with the Regulations. It clarifies and explains the general requirements of the legislation to help RPs in applying AML/CFT measures, developing an effective AML/CFT risk assessment and compliance framework suitable to their business, and in detecting and reporting suspicious activities.

The Regulations and Guidelines lay emphasis on evaluation, identification, assessment and mitigation of risk vis-à-vis money laundering and terrorism financing.

This publication contains a synopsis of these regulations and the related guidelines

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