DNFBP Compliance Forum Meetings

With increased regulation and introduction of anti-money laundering (AML) and countering the financing of terrorism (CFT) legislation, money launderers and terrorist financers have developed complex mechanisms to conduct illegal activities due to which keeping up with emerging money laundering threats has become integral to dealing with this type of criminal activity. Development of new technologies, and increased use of “gate-keepers” such as accountants and lawyers by criminals has exacerbated the need for designated non-financial businesses and professions (DNFBPs) to play their part within implementation of the AML/CFT framework.

In its assessment of Pakistan, the Financial Action Task Force (FATF) has highlighted significant deficiencies within the supervision and regulation of DNFBPs. In its most recent assessment in February 2021, FATF retained Pakistan in the list of ‘jurisdictions under increased monitoring’ informally known as the ‘Grey-List’ and introduced a 6-point Action Plan to guide Pakistan’s efforts with regards to its AML/CFT obligations. Within the six areas that have been highlighted by FATF, two relate to the regulation and monitoring of DNFBPs. The Action Plan requires that supervisors must have the capacity to conduct on and off-site visits commensurate to the risks associated with these sectors and that DNFBPs are being monitored for compliance with targeted financial sanctions (TFS) related obligations.

This reflects the need to not only increase regulation of DNFBPs but to initiate a process wherein DNFBPs first understand the existing and emerging money laundering (ML) threats that they are dealing with and are equipped enough to comprehend the obligations that they have been subjected to under the amendments made to the Anti-Money Laundering Act (2010) (AMLA 2010) in September 2020. These obligations require DNFBPs to conduct consumer due diligence (CDD), implement a risk-based approach and comply with TFS obligations to ensure that they are not dealing with any proscribed persons or entities. In light of this, the Research Society of International Law (RSIL), in collaboration with the American Bar Association – Rule of Law Initiative (ABA-ROLI) conducted compliance forum meetings with representatives from DNFBP sectors including real estate agents (REAs), dealers in precious stones and metals, lawyers and accountants to discuss emerging money laundering threats which affected Pakistan and to expound upon implementation of a risk-based approach within DNFBP activities. The meetings were attended by representatives from regulatory and supervisory authorities as well. The RSIL team gave various presentations on the basis of the FATF framework, Pakistan’s new Action Plan centered around curbing money laundering, as well as the current legal architecture and supervisory framework governing DNFBPs in Pakistan.