Pakistan has developed an initial draft of regulations for Virtual Asset Service Providers (VASPs) as part of its efforts to comply with Financial Action Task Force (FATF) requirements and curb the illegal use of virtual assets.
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The proposed regulatory framework is designed to prevent money laundering, terrorism financing, corruption, and other unlawful activities conducted through digital assets. Under the draft rules, any suspicious virtual asset transactions will be strictly prohibited, and VASPs will be required to promptly report questionable activity to authorities.
The draft outlines strict consequences for violations, including license cancellation, financial penalties, and possible disqualification of directors, sponsors, or shareholders. Enforcement action may be initiated on the recommendations of the Financial Monitoring Unit (FMU).
Additionally, partnerships or dealings with Politically Exposed Persons (PEPs) will require prior approval from the Money Laundering Reporting Officer, ensuring enhanced oversight.
The regulations mandate robust anti-money laundering (AML) and counter-terrorism financing (CTF) controls. VASPs must verify and authenticate all client information, and no partnership or business relationship may proceed without completed customer due diligence (CDD).
Sources say that companies offering virtual asset services must be registered tax filers with a credible tax record. They will also be required to appoint trained reporting officers to supervise AML and CTF compliance efforts.
The drafted rules are aimed at strengthening Pakistan’s financial system and enhancing transparency in virtual asset transactions. The government hopes that implementing these measures will significantly reduce the misuse of digital assets and align the country with global financial standards.
