Pakistan 'drafts' FATF-compliant digital asset regulations to curb money laundering, terror financing

ISLAMABAD: Pakistan is ‘preparing’ legislation to regulate digital assets in accordance with the Financial Action Task Force (FATF) framework to curb money laundering and terror financing, ARY News reported on Tuesday, citing sources familiar with the development.

In 2022, the Financial Action Task Force (FATF) announced the removal of Pakistan from its grey list after appreciating the country’s efforts in anti-money-laundering and anti-terror financing.

According to sources, virtual assets will not be allowed to be used for money laundering, terrorist financing, or corruption.

Business partnerships between Virtual Asset Service Providers (VASPs) and Politically Exposed Persons (PEPs) will require approval from a Money Laundering Reporting Officer.

Sources stated that compliance with the FATF framework will be mandatory for all anti-money laundering (AML) and counter-terrorist financing (CFT) measures. An initial draft of AML and CFT regulations for Virtual Asset Service Providers has already been prepared.

Violations of the regulations could result in license cancellation and fines. Directors, sponsors, or shareholders showing delays in preventing money laundering may also be disqualified.

Suspicious transactions will be acted upon based on recommendations from the Financial Monitoring Unit, the sources added.

Compliance with AML and CFT measures will be mandatory for virtual asset purchases. Business partnerships cannot be established without proper customer due diligence. Furthermore, corporate structure, governance, and market conduct standards will be mandatory for companies providing virtual asset services.