Project Overview

In June 2018, the Financial Action Task Force (FATF) identified Pakistan as a jurisdiction with strategic AML/CFT deficiencies. This so-called “grey-listing” spurred a flurry of action at all levels of the Government of Pakistan with the introduction of new laws and regulatory mechanisms. As a result, the Asia Pacific Group (APG), a FATF-style regional body, noted progress made in several areas and Pakistan’s financial sector, led by banks and exchange companies, were deemed to have a satisfactory understanding of their AML/CFT obligations. Improvements were noted in the reporting of STRs and CTRs as well. Their regulators, especially the State Bank of Pakistan, were noted as having improved their understanding and implementation of a risk-based approach.

However, glaring deficiencies were noted in the regulation and supervision of Designated Non-Financial Businesses and Professions (DNFBPs). Pakistan’s National Risk Assessment of 2017 identified that funds for predicate crimes are laundered domestically in large part through real estate, precious metals (mainly gold) and stones. The MER noted further that, “DNFPBs have a poor level of understanding of ML/TF risks and AML/CFT obligations.” Furthermore, it was noted that in Pakistan, no licensing requirements exist for real estate agents, and precious metals and stone dealers whereas accountants, lawyers and notaries are required to register their businesses with professional associations without any specific ML/TF safeguards. 

While significant ML/TF risks in the DNFBP sector have been noted, DNFBPs, until recently, were not supervised for AML/CFT compliance in Pakistan. It is also evident that outreach in relation to AML/CFT to DNFBPs is very limited. While the Financial Monitoring Unit (FMU) conducted and is in a continuous process of conducting awareness-raising of AML/CFT risks in select DNFBPs sectors and guidelines have been issued for accountants, real estate agents, and precious metals and jewelry dealers, there remain serious limitations in knowledge and implementation of these guidelines. Moreover, new regulatory authorities must be sensitized to understand their powers and responsibilities in line of the amended framework as well. 

These concerns, along with a lack of DNFBP sectors and regulatory authorities to understand emerging money laundering threats requires efforts to be made at a public and private level as well. This Project aims to develop Compliance Briefs for DNFBP sectors to provide guidance on compliance with new regulatory requirements, develop Regulatory Manuals to assist new self-regulatory bodies and supervisory authorities in fulfilling their responsibilities and develop templates for regulatory bodies to publish notices and advisories to help DNFBPs better understand emerging money laundering threats that they must tackle. Additionally, handbooks developed under this Project are to be used to train Compliance Officers within each DNFBP sector to ensure improvement in compliance. The material developed within the life of the Project will be used to develop a dedicated online platform for disseminating information about DNFBP’s duties under the law and provide tutorial videos in Urdu on how to properly fill in STRs for submission to FMU. The online platform will include all relevant information from FMU as well as laws, regulations and public advisories from each sector-specific regulator (SECP, FBR, Ministry of Law/PBC). The need for such a platform is due to the sheer scale of DNFBPs operating in Pakistan – over 50,000 precious metals & gems dealers, 8000+ professional accountants and almost 600 audit firms, well over 150,000 lawyers and an unknown number of real estate agents potentially in the tens of thousands. The platform will be accessible by the vast majority of these entities and provide critical guidance to DNFBPs in far flung areas of Pakistan. This platform will also provide sustainability to the project beyond its envisaged duration. At the culmination of this project, RSIL will hand over control of the online platform to FMU.

Date: 1st January, 2021

Team Lead: Zainab Mustafa

Research Team: Zoha Shahid, Abraze Aqil, Semra Islam, Hira Luqman


Project Publications

rsil-publication-clc-amlcft-handbook real estate
rsil-publication-clc-amlcft-handbook dealers
rsil-publication-clc-amlcft-handbook accountants