With the view to mitigate various risks arising from money laundering and financing of terrorism, it has been decided to revise the existing regulations M-1 to M-5 of Prudential Regulations on Corporate/ Commercial Banking with the attached “AML/CFT Regulations”. These regulations will take effect from October 31, 2012.

2.        These regulations are in addition to and not in derogation of requirements under AML Act 2010, Rules/Regulations issued there-under, or any other measures taken by banks/DFIs pursuant to their internal/group policies, Basel Core Principles, Recommendations of the Financial Action Task Force or any other AML/CFT standards prescribed by any global body.

3.         Banks/DFIs are also required to improve their Risk Based Approach (RBA) as per the attached “AML/CFT Guidelines on Risk Based Approach”. In addition, banks/DFIs may obtain guidance from international standards and best practices including relevant Recommendations, interpretative notes, best practices papers etc. of the FATF and Basel Core Principles, as appropriate. Banks/DFIs may align their AML/CFT risk assessment procedures in accordance with aforesaid Guidelines within six months from issuance of this circular.

4.         The above regulations are being issued in exercise of powers conferred under Section 41 of the Banking Companies Ordinance, 1962 and any non-compliance or circumvention of these requirements will attract penal actions, as per law.

5.         Please acknowledge receipt.

Encl: 1. AML/CFT Regulations

         2. AML/CFT Guidelines on Risk Based Approach