ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has enhanced the scope of Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Regulations to effectively combat proliferation financing and strengthen the country’s financial integrity framework.
The SECP on Wednesday issued SRO 739 (I)/2023 to notify draft amendments to the Securities and Exchange Commission of Pakistan (Anti Money Laundering and Countering Financing of Terrorism) Regulations, 2020.
The SECP has proposed significant amendments to the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Regulations, 2020.
These amendments aim to enhance the scope of regulations to effectively combat proliferation financing and strengthen the country’s financial integrity framework. The SECP has invited the stakeholders to provide their comments and/ suggestions on proposed amendments within the next 14 days.
The proliferation financing, which refers to the financial support provided for the proliferation of weapons of mass destruction (WMD) or their delivery systems, has emerged as a significant global concern. Recognizing the need for a comprehensive approach to address this issue, the SECP has taken proactive steps to strengthen the existing AML/CFT Regulations.
The proposed amendments to the AML/CFT Regulations 2020 primarily focus on expanding the regulatory framework to encompass measures specifically tailored for combating proliferation financing & diminishing the frequency from existing five years to three years to treat an account as dormant.
The SECP further aims to enhance the effectiveness of the regulations by adding provisions, among others relating to reliance on third parties for CDD and requirements applicable on foreign branches and subsidiaries of Regulated Persons.
The public consultation process is an essential component of SECP’s commitment to transparency and inclusiveness. The involvement of stakeholders is crucial for development of robust regulations that align with the evolving needs of the financial ecosystem.
Under the new regulations, the regulated person shall ensure that their foreign branches and majority-owned subsidiaries in countries which do not sufficiently apply the FATF Recommendations, apply AML & CFT measures consistent with Pakistan’s AML/CFT requirements, to the extent that host country laws and regulations permit.
If the foreign country does not permit the proper implementation of AML/CFT measures consistent with that of Pakistan requirements, financial groups should apply appropriate additional measures to manage the risks, and inform the Commission when a foreign branch or subsidiary is unable to observe appropriate AML/CFT measures.
The regulations added that a regulated person may rely on third party to conduct the CDD measures on its behalf, in line with the requirements specified in these regulations.
Copyright Business Recorder, 2023