💱 Anti-Money Laundering Regime (FATF, AMLA, Regulators)

💱 Global Anti-Money Laundering Regime and Pakistan

📜 Introduction

• Money laundering — disguising the illegal origin of criminal proceeds — is addressed through an interlocking global regulatory regime that Pakistan is required to comply with as a member of relevant international bodies

⚖️ Anti-Money Laundering Regulation

• Encompasses international conventions (e.g. the Palermo and Vienna Conventions), FATF standards, and domestic legislation requiring financial institutions to monitor, report, and prevent suspicious transactions

🏴 Financial Action Task Force (FATF)

• The global standard-setting body for anti-money-laundering (AML) and counter-terrorism-financing (CFT) measures; Pakistan was placed on FATF's "grey list" (2018–2022) for AML/CFT deficiencies, driving significant legal and institutional reform, and exited the grey list in October 2022 after demonstrating sustained compliance

🌐 Other International Sources of Ensuring Compliance of AML/CFT Standards

• Includes the Egmont Group (network of Financial Intelligence Units), Asia/Pacific Group on Money Laundering (APG, FATF's regional body for Pakistan), and bilateral/multilateral mutual evaluation mechanisms

🇵🇰 Pakistan and Anti-Money Laundering Regime

🏦 Primary Financial Regulators in Pakistan — 3 Bodies

1. State Bank of Pakistan (SBP) — regulates banks and payment systems.
2. Securities and Exchange Commission of Pakistan (SECP) — regulates non-bank financial companies, insurance, and capital markets.
3. Financial Monitoring Unit (FMU) — Pakistan's central Financial Intelligence Unit, receiving suspicious-transaction reports.

🏦 Regulatory Measures by SBP

• Know-Your-Customer (KYC) and Customer Due Diligence (CDD) requirements for banks, mandatory suspicious-transaction reporting, and periodic AML/CFT compliance audits of regulated financial institutions

📈 Regulatory Measures by SECP

• AML/CFT regulations applicable to non-bank financial companies, insurance companies, and capital-market intermediaries, mirroring SBP's banking-sector requirements

🏢 Non-Banking Finance Companies and Notified Entities Regulations

• Extends AML/CFT compliance obligations to designated non-financial businesses and professions (real estate agents, jewelers, lawyers/accountants in defined transactions) recognized internationally as vulnerable money-laundering channels

📜 National Legislation Regarding Anti-Money Laundering

• Anti-Money Laundering Act (AMLA), 2010 — Pakistan's principal AML law, criminalizing money laundering and establishing the FMU
• Subsequent amendments (including the 2020 Second Amendment) progressively strengthened the framework to meet FATF requirements

🎥 From the Lecture (added detail) — Money-Laundering Techniques

• Smurfing / structuring — breaking large sums into many smaller transactions to stay under reporting thresholds.
• Bulk cash smuggling across borders.
• Cash-intensive businesses used as fronts.
• Shell companies and fake/dummy firms.
• Real-estate and casino-based laundering.
• Bank layering, and delayed or manipulated payroll/salary payments used as cover.
• Trade-based laundering via over/under-invoicing (see also the Past Papers & Model Answers subpage, FPSC 2021 Q9).

✅ Conclusion and Recommendations

• Pakistan's AML/CFT framework has strengthened substantially since the FATF grey-listing episode; continued priorities include sustained inter-agency coordination (SBP, SECP, FMU, NAB, FIA), effective prosecution of money-laundering cases (not just legislative compliance), and extending oversight to emerging risks such as cryptocurrency-based laundering