WASHINGTON, July 25: The International Monetary Fund has urged Pakistan to "complete and implement comprehensive legal and institutional framework for anti-money laundering and combating financing of terrorism currently under preparation prior to the APG assessment."
An IMF country report in this regard stated that Pakistan currently had several laws that dealt with various steps against money laundering and combating the financing of terrorism, adding that a "comprehensive legal and institutional framework is currently in preparation."
It said the State Bank of Pakistan had developed two prudential regulations now in force about 'Know Your Customer' and 'Anti-Money Laundering Measures.' It also highlighted measures taken by the Securities and Exchange Commission and said it had established an anti-money laundering unit.
The 50-page IMF's country report was released on July 22. It analyzed such complex issues as financial system stability assessment besides including reports on the observance of standards and codes on topics of monetary and financial policy transparency, banking supervision and securities regulation.
The 'Financial System Stability Assessment' is based on two visits to Pakistan during Feb 16-27, and April 7-15 this year as part of the joint IMF-World Bank Financial Sector Assessment Programme.
The FSAP findings, based on data available at the time of the second mission's visit, were discussed in a wrap-up session with authorities on April 16. The document stated that Pakistan's financial sector underwent considerable reforms in recent years resulting in a "sounder and more efficient" financial system.
It said the nationalized commercial banks had mostly been privatized and their financial position and resiliency to credit, market and liquidity risks have improved.
Rapid growth of credit to the private sector and exuberance in stock markets were the main emerging risks. There was a need for consolidation and liberalization of the insurance sector and strengthening of the related regulatory regime.
Likewise, the financial sustainability and proper legal and regulatory framework of pension schemes needed to be strengthened. The privatization and legal reforms in the financial sector and efforts to broaden sustainable and cost effective outreach of financial services to the under-served segments of the population needed to be continued.
The final summary note stated that Pakistan's "compliance with international supervisory standards is generally high. The SBP has made considerable progress in recent years to achieving and maintaining high regulatory standards.
"While the SECP has also achieved a relatively high degree of compliance with the IOSCO principles, there appears to be a need for additional resources and institutional capacity building at the SECP to enable the Commission to carry out its broad mandate. - APP
