SECP Introduces Vital Amendments to Anti-Money Laundering Regulations

SECP Introduces Vital Amendments to Anti-Money Laundering Regulations

Islamabad, September 26, 2023 – The Securities and Exchange Commission of Pakistan (SECP) has taken significant steps to bolster its Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Regulations for 2020.

The amendments, announced in a recent press release, are designed to broaden the scope of regulations to effectively combat financial crimes, control money laundering, and counter the financing of terrorism while maintaining the integrity of Pakistan’s financial system.

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These crucial changes have been introduced following a thorough review, taking into account the National Risk Assessment conducted in 2023. The SECP conducted a self-assessment of its AML/CFT regulatory framework, aligning it with the criteria utilized in the Financial Action Task Force (FATF) Assessment Methodology for assessing technical compliance. The amendments, developed through post-stakeholder consultation, underscore SECP’s commitment to fortifying the country’s regulatory framework and ensuring alignment with international best practices.

Key highlights of the amendments to the SECP AML/CFT Regulations 2020 include:

Enhanced Customer Due Diligence (CDD): The amendments introduce tailored measures for CDD requirements related to mentally ill persons when opening accounts. This ensures that vulnerable individuals receive the necessary safeguards to prevent financial exploitation.

Dormant Account Classification: Under the revised regulations, an account will now be classified as dormant after three years of inactivity, down from the previous threshold of five years. This change aims to improve the monitoring of inactive accounts and prevent potential misuse.

Third-Party Reliance: The updated provisions provide guidelines for regulated entities to rely on third parties for conducting CDD, enhancing efficiency and accuracy in due diligence processes.

International Applicability: The amendments also specify requirements applicable to the foreign branches of regulated entities and their subsidiaries, ensuring that AML/CFT measures are consistent across borders.

These amendments signify a significant step forward in Pakistan’s efforts to combat money laundering and terrorist financing effectively. They demonstrate SECP’s commitment to adapt and strengthen its regulatory framework in line with evolving global standards. By broadening the scope of the AML/CFT regulations and addressing specific areas of concern, SECP aims to bolster the country’s financial integrity and contribute to international efforts in combating financial crimes.