Pakistan AML & Sanctions Compliance - ANQA

Pakistan AML & Sanctions Compliance

Navigate the complex AML and sanctions compliance landscape in Pakistan with Anqa's comprehensive knowledge and solutions tailored for the Pakistani regulatory environment.

Regulatory Framework

Pakistan's AML/CFT framework has undergone significant evolution, particularly since its placement on the FATF grey list in 2018. Key legislation includes:

  • Anti-Money Laundering Act (AMLA) 2010 (amended in 2020)
  • Anti-Terrorism Act (ATA) 1997 (amended in 2020)
  • Financial Institutions (Secured Transactions) Act 2016

Primary regulatory authorities include:

  • State Bank of Pakistan (SBP) - Banking sector
  • Securities and Exchange Commission of Pakistan (SECP) - Non-banking sector
  • Financial Monitoring Unit (FMU) - Financial intelligence unit

FATF Status

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Removed from Grey List (2023)

After a five-year period on the FATF grey list (2018-2023), Pakistan was removed in October 2023 after completing an extensive action plan. The country is now compliant with 31 of 40 FATF Recommendations and partially compliant with 9 Recommendations. Significant improvements have been made in terror financing prosecution and asset seizure, while beneficial ownership implementation and NPO risk assessment remain areas for continued focus.

Compliance Requirements

Core Obligations

  • CDD/KYC: Implement risk-based approach to CDD with enhanced measures for high-risk customers. NADRA verification required for Pakistani nationals.
  • Transaction Monitoring: Conduct ongoing transaction monitoring with automated alerts based on customer risk profiles.
  • Sanctions Screening: Implement comprehensive screening against UN and local terrorist lists.
  • Reporting: Submit STRs to the FMU within 7 working days. Currency transaction reports required for transactions above specified thresholds.
  • Governance: Establish robust compliance frameworks with designated compliance officers and regular training.

Key Challenges

  • Evolving Regulations: Rapidly changing regulatory requirements following FATF grey list removal.
  • Informal Economy: Significant informal sector (estimated at 35-40% of GDP) limiting visibility.
  • Identity Systems: Complex identification systems with recent digitization efforts.
  • Remittance Channels: High volume of remittances through both formal and informal channels.
  • Regional Security: Security issues affecting sanctions and terrorist financing risk assessment.

Sanctions Considerations

Pakistan maintains local terrorist designation lists requiring regular screening. Financial institutions must implement enhanced due diligence for transactions with certain countries and regions, particularly given Pakistan's complex regional geopolitics.

The country's efforts to balance economic relationships with China and Western nations create additional sanctions compliance complexities, requiring sophisticated screening and due diligence approaches.

Key Compliance Challenges

Understanding the unique obstacles facing financial institutions in Pakistan

1

Regulatory Complexity

Pakistan's financial system is regulated by multiple authorities including SBP, SECP, and FMU, each with their own AML/CFT requirements, creating a complex compliance landscape for financial institutions operating across different sectors.

2

Digital Financial Services

The rapid growth of digital financial services and mobile banking requires careful management of new payment channels while ensuring compliance with both AML regulations and data protection requirements.

3

Beneficial Ownership

Complex corporate structures and nominee arrangements create challenges in identifying and verifying ultimate beneficial owners, particularly in wealth management and private banking.

4

Sanctions Compliance

Pakistan's position as a regional financial hub requires sophisticated sanctions screening capabilities, particularly for trade finance, mobile money, and correspondent banking relationships.

5

Regulatory Expectations

Pakistani regulators maintain high expectations for AML/CFT compliance, requiring sophisticated transaction monitoring systems, regular independent audits, and continual enhancements to address emerging risks.

6

Reputational Risk

Pakistan's position as a leading financial center in South Asia creates heightened reputational risks for institutions operating in the jurisdiction, with potential AML/CFT violations attracting significant regulatory attention and media coverage.

Anqa's Approach for Pakistan

Our comprehensive AML solution tailored for Pakistan's unique regulatory landscape and market requirements.

1

Digital KYC & Onboarding Platform

Electronic KYC integration with Pakistan's identity verification systems, centralized repository, and assisted onboarding tools for agents and field staff.

2

Customer Risk Assessment Engine

Five-dimensional risk classification with Pakistan-specific parameters and behavior-driven risk adjustments aligned with local regulatory requirements.

3

Sanctions & Watchlist Screening

Comprehensive screening with Levenshtein and phonetic matching algorithms optimized for Pakistan's naming conventions and local watchlists.

4

Loan Application & Approval

Automated loan origination with offline support for rural areas and integration with KYC modules designed for Pakistan's financial ecosystem.

5

Compliance Workflow Platform

Centralized case management with customizable workflows aligned with Pakistan's regulations and reporting requirements.

6

Deployment & Pricing

No setup fees, modular pricing, cloud-based with scalable licensing (user or transaction-based).

Pakistan — AML & Compliance FAQs

  • Pakistan’s AML regime is led by the Financial Monitoring Unit (FMU) under the State Bank of Pakistan (SBP) and guided by the Anti-Money Laundering Act, 2010.

  • Businesses must verify customer identities, monitor for suspicious transactions, file STRs and Currency Transaction Reports (CTRs) with the FMU, and conduct sanctions screening.

  • An STR must be filed with the FMU when a transaction raises suspicion of criminal conduct, money laundering, or terrorist financing.

  • Yes. Fintech companies, digital wallets, and payment service providers must comply with SBP’s AML/CFT regulations, including KYC, monitoring, and reporting obligations.

  • Anqa Compliance helps Pakistani businesses simplify AML compliance by offering intuitive solutions for onboarding, sanctions screening, and regulatory reporting.

Dig Deeper – Country Compliance in Focus

Gain country-specific expertise with Anqa’s tailored AML and sanctions intelligence. Leverage our technology, risk-based strategies, and deep regional knowledge to stay ahead of regulatory expectations.

View Country Compliance Profile