SBP Introduces Stricter Measures to Combat Money Laundering and Terrorist Financing

The State Bank of Pakistan (SBP) is intensifying its efforts to combat money laundering and terrorist financing risks within the realm of branchless banking services. In a recent circular issued by SBP’s Banking Policy & Regulations Department, authorized financial institutions, including banks and microfinance banks, offering branchless banking services have been directed to implement several crucial measures.

The central focus of these measures is biometric verification (BV) for account and wallet holders involved in “cash-in” and “cash-out” transactions at branchless banking agent locations, effective from January 31, 2024. This initiative builds upon existing BV requirements established in a previous circular from December 2019.

Furthermore, SBP has called for the prioritized deployment of new BV devices, particularly in areas with high terrorist financing risks, before extending to other regions across the country. Financial institutions are also expected to upgrade their hardware and software to comply with these new instructions.

To strengthen transaction monitoring, automated systems must be improved to capture all branchless banking transactions, with a focus on identifying suspicious or unusual transactions. Such suspicious activity will be reported under the Anti-Money Laundering Act of 2010, aiding potential criminal investigations. In addition, the central bank is emphasizing the inclusion of branchless banking operations in Internal Risk Assessment Reports (IRARs) to align with SBP’s AML/CFT/CPF Regulations.

These measures reflect SBP’s dedication to enhancing anti-money laundering controls, ensuring the security and integrity of financial transactions in Pakistan’s growing branchless banking sector.

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