SECP Imposes Monetary Penalties of Rs 5.3 Billion in 2023

SECP Imposes Monetary Penalties of Rs 5.3 Billion in 2023

Islamabad, December 6, 2023 – The Securities and Exchange Commission of Pakistan (SECP) has taken an assertive stance in 2023, imposing a substantial monetary penalty of Rs 5.3 billion, according to the recently unveiled annual report.

The SECP’s rigorous oversight unearthed significant non-compliance issues within the corporate landscape, particularly among unlisted companies, which bore the brunt of a hefty Rs 5.2 billion penalty. In contrast, listed companies and licensed entities faced a comparatively modest penalty of Rs 55 million.

Over the course of the year, the SECP issued a total of 1383 orders, with 742 targeting unlisted companies and the remaining 641 directed at listed companies and licensed entities. The Commission’s commitment to proportionate, dissuasive, and effective enforcement actions played a pivotal role in bolstering overall compliance within the corporate sector.

One noteworthy facet of the SECP’s enforcement efforts focused on Anti-Money Laundering (AML) violations. A total of 83 orders were issued, resulting in penalties amounting to Rs 10.609 million for the year. Regulated entities responded with significant improvements to their systems and controls, leading to a reduction in AML/CFT (Counter Financing of Terrorism) violations.

Unlisted companies engaged in illegal deposit-taking activities faced severe consequences. The SECP took stringent actions against twenty-four such entities, imposing substantial penalties of Rs 5.222 billion. Additionally, 41 directors were debarred from holding positions in other companies, and 21 sanctions were granted to initiate the winding-up process for these non-compliant entities.

The SECP’s enforcement actions extended to capital markets, with penalties totaling Rs 8.595 million imposed for various non-compliances. A separate focus on AML-related non-compliances resulted in penalties of Rs 4.95 million.

Listed companies found themselves under regulatory scrutiny, with 264 orders and penalties amounting to Rs 22.222 million, underscoring the SECP’s commitment to maintaining the integrity of the capital market.

Adjudication proceedings related to Non-Banking Financial Companies (NBFCs), Modarabas, and AML regulatory compliance resulted in penalties of Rs 1.99 million for legal and regulatory non-compliances and Rs 2.37 million for AML-related violations.

The insurance sector also faced regulatory scrutiny, with enforcement actions and penalties totaling Rs 11.395 million for non-compliances and Rs 3.2891 million for AML-related issues.

The SECP’s robust enforcement actions in 2023 underscore its commitment to upholding regulatory standards and ensuring the integrity of Pakistan’s financial markets. The imposition of record-breaking monetary penalties sends a clear message to companies and entities about the paramount importance of strict adherence to legal and regulatory frameworks.