The Securities and Exchange Commission of Pakistan (SECP) has issued a new guidebook directing its regulated entities to strengthen checks against terrorist financing, sanctions violations and other illegal financial activities.
The guidebook sets out practical steps for financial firms to screen existing and prospective customers, including beneficial owners, against relevant sanctions lists.
It also explains how entities should identify potential matches, take appropriate action and meet their reporting obligations.
Under the guidance, regulated entities must freeze the funds and assets of designated individuals and organisations without delay and report them to the relevant authorities within the prescribed time.
SECP Stresses Sanctions Screening and Compliance
The guidebook highlights the importance of regular sanctions screening, documented internal procedures and effective compliance systems. It also calls for proper record-keeping and staff training to help financial institutions identify and respond to potential violations.
The SECP has encouraged its regulated entities to review their existing policies and strengthen safeguards in line with the guidebook.
Screening is intended to cover not only customers but also beneficial owners, who may ultimately own or control a business or other legal entity. This helps firms assess whether financial relationships could expose them to sanctions-related or other prohibited activity.
Where a possible match is identified, firms are expected to assess the information carefully and follow the applicable legal and regulatory requirements.
The guidebook also outlines the importance of timely reporting and appropriate action when a match involves a designated person or entity.
Collaboration With NACTA
The publication follows awareness sessions conducted by the SECP in collaboration with the National Counter Terrorism Authority (NACTA). The sessions aimed to help regulated entities understand their obligations under targeted financial sanctions requirements.
The initiative forms part of Pakistan’s broader framework for anti-money laundering (AML), countering the financing of terrorism (CFT) and preventing the financing of proliferation.
These safeguards are intended to reduce the risk of financial services being misused to move funds for prohibited purposes and to improve compliance across sectors regulated by the commission.
Guidebook Does Not Replace Existing Laws
The SECP has clarified that the guidebook is intended as a practical reference for regulated entities and does not replace existing laws, regulations or other regulatory requirements.
Firms must continue to comply with the legal obligations applicable to their activities while using the document to review and improve their internal controls.
The guidance places emphasis on consistent screening, staff awareness and clear procedures for handling potential sanctions matches. Effective implementation will depend on whether regulated entities translate the recommendations into routine compliance practices.
Through the guidebook, the SECP aims to strengthen regulatory compliance and help prevent Pakistan’s financial system from being used for terrorist financing and other illegal activities.
