Anti-Money Laundering Act, 2010

What it is

The Anti-Money Laundering Act, 2010 is the foundation of Pakistan's AML regime, enacted in March 2010 to replace an earlier ordinance. Section 3 defines the offence: acquiring, converting, possessing, using or transferring property known or reasonably believed to be proceeds of crime, or concealing its true nature or origin. The predicate offences are listed in the Act's schedule and span corruption, fraud, tax offences, narcotics and terrorism-financing-adjacent crimes. Conviction carries rigorous imprisonment of up to ten years, fines [current maximums for individuals and legal persons TO BE VERIFIED BY REVIEWING LAWYER], and forfeiture of the property involved. The Act also provides for provisional attachment of property during investigation, subject to statutory time limits.

The Act's second function is preventive. Reporting entities — banks and other financial institutions, and designated non-financial businesses and professions — must conduct customer due diligence, keep records, and file suspicious transaction reports and currency transaction reports with the Financial Monitoring Unit. The FMU analyses those reports and disseminates intelligence to investigating agencies, which include the FIA, NAB and other bodies designated under the Act.

What changed

The Act has been amended repeatedly, most consequentially in 2020, when two amendment acts were passed to meet FATF action-plan commitments. Those amendments restructured the governance framework, designated sectoral AML/CFT regulators and self-regulatory bodies for the non-financial professions — bringing real estate agents, jewellers and dealers in precious metals and stones, accountants and lawyers squarely into the regime — expanded customer due diligence obligations in the statute itself, and increased penalties, including for legal persons. Pakistan exited the FATF grey list in October 2022, but the tightened framework remained. Since 2020 the movement has been mainly in subordinate rules and regulator guidance — SBP and SECP AML/CFT regulations, sanctions and targeted-financial-sanctions rules — and in the expected extension of reporting-entity status to virtual asset service providers under the 2025 virtual assets framework [that notification, and any post-2020 amendment to the Act itself, TO BE VERIFIED BY REVIEWING LAWYER].

Who is affected

The preventive regime reaches well beyond banks: exchange companies, insurers, securities brokers and non-bank financial companies, and — since 2020 — real estate agents and developers, jewellers, accountants, lawyers and company service providers when they conduct covered activities. The offence provisions reach anyone who handles proceeds of crime, including corporate entities, and money-laundering counts are now routinely added to NAB, FIA and tax prosecutions. Directors and compliance officers of reporting entities carry personal regulatory exposure for programme failures.

What to do

First confirm whether you are a reporting entity and under which regulator or self-regulatory body you fall. If you are, maintain a written risk-based AML programme: customer due diligence and beneficial-owner identification at onboarding, enhanced measures for politically exposed persons, screening against proscribed-person and UN sanctions lists, record retention for the statutory period [TO BE VERIFIED BY REVIEWING LAWYER], and prompt STR filing — and do not tip off the customer. If the FMU or an investigating agency makes contact, or property is provisionally attached, engage counsel immediately; the attachment and forfeiture timelines are short and strict. Businesses outside the regulated perimeter should still screen counterparties in significant transactions, because receiving tainted funds is itself the offence.