Anti-money laundering regulations in financial institutions of Pakistan: a study of customer due diligence / Nasir Sultan

After 9/11, there has been an increase in money laundering/terrorist financing (ML/TF) crimes across the globe. As a result, the Financial Action Task Force (FATF) Recommendations were introduced to enable jurisdictions to control these criminal activities domestically and internationally. The FATF Recommendations were established as a tool for identifying, monitoring, combating and controlling ML activities. In compliance with Recommendations 10, each jurisdiction requires establishing a robust mechanism for customer due diligence (CDD) before offering financial services to clients. However, Financial Institutes (FIs) performance is not satisfactory on the CDD front, evident by the regulator's massive penalties on FIs. On the same grounds, Pakistani FIs with an international presence faced penalties by foreign regulators and closed their branches.