The Securities and Exchange Commission of Pakistan (SECP) has recently announced a series of reforms aimed at increasing transparency and combating financial crimes. The proposed amendments to the Companies Regulations 2024 focus on setting up a centralized Ultimate Beneficial Owner (UBO) Registry for the corporate sector, in line with global guidelines on financial transparency.
- The proposed changes include the requirement for companies to submit UBO information to the SECP through the eZfile portal, along with other relevant regulatory returns.
- This information can be accessed by financial institutions as and when required.
The UBO Registry is designed to help prevent financial and economic crimes, such as money laundering, financing terrorism, tax fraud, and corruption. By making it clear to whom money is being sent, the registry provides a crucial tool for financial institutions to detect potential financial crimes.
“In terms of the proposed changes, companies would be required to submit UBO information, already being obtained from their shareholders, to the Commission [SECP] through the eZfile portal along with other relevant regulatory returns/forms,”
“This information can be accessed by Financial Institutions, as and when required.”
Pakistan was removed from the FATF grey list in 2022, after it was listed in 2018 due to “strategic counter-terrorist financing-related deficiencies.” The country’s commitment to global best practices is demonstrated by its decision to introduce the UBO Registry, which aligns with FATF standards.
| International Organizations | Key Reforms |
|---|---|
| FATF (Financial Action Task Force) | Strategic counter-terrorist financing-related deficiencies |
| OECD (Organization for Economic Cooperation and Development) | Global best practices |
Key Benefits
• The UBO Registry will help prevent financial and economic crimes
• Financial institutions will have access to accurate and up-to-date UBO data
• The registry will align Pakistan’s ‘Anti-Money Laundering and Countering the Financing of Terrorism’ framework with global standards
The owner or person in charge of a company.
A regulatory framework designed to prevent the misuse of the financial system for money laundering and other financial crimes.
These reforms are part of the SECP’s efforts to enhance transparency and combat financial crimes in Pakistan. The proposed changes to the Companies Regulations 2024 are designed to align with global best practices and strengthen investor confidence in the country’s financial ecosystem. The SECP has also notified the final amendments to the Non-Banking Finance Companies and Notified Entities Regulations, 2008. These reforms focus on revising the Total Expense Regime (TER) for mutual funds and pension funds, while introducing significant measures to enhance Shariah compliance within the mutual fund industry.
A cap on the total expenses of mutual funds and pension funds.
A document verifying the Shariah compliance of a mutual fund or pension fund.
The amendments introduce a relaxation for obtaining a Shariah Compliance Certificate for Collective Investment Schemes (CIS) that share a similar structure and strategy with an existing Shariah-compliant scheme. Additionally, all CIS lacking a Shariah Compliance Certificate must obtain one by September 30, 2025.
Example: A mutual fund can obtain a Shariah Compliance Certificate by demonstrating its compliance with Shariah principles.
Example: Financial institutions can use the Shariah Compliance Certificate to verify the Shariah compliance of mutual funds and pension funds.
The amendments also introduce an Annual Shariah Advisor’s Report, which will be included in the financial statements distributed to unit holders and Voluntary Pension System (VPS) participants. This will provide investors with more information about the mutual funds and pension funds they invest in.
A pension system that allows individuals to contribute to their own retirement funds.
A report that provides an assessment of a mutual fund or pension fund’s Shariah compliance.
These reforms demonstrate the SECP’s commitment to promoting transparency and combating financial crimes in Pakistan. By introducing the UBO Registry and revising the Total Expense Regime (TER) for mutual funds and pension funds, the SECP is taking a significant step towards aligning with global best practices and strengthening investor confidence in the country’s financial ecosystem.
Standards and guidelines set by international organizations, such as the FATF and the OECD, that countries can follow to improve their financial regulations and combat financial crimes.
Crimes that involve the misuse of the financial system, such as money laundering, financing terrorism, and tax evasion.
The proposed amendments to the Companies Regulations 2024 and the introduction of the UBO Registry are a significant step towards promoting transparency and combating financial crimes in Pakistan. By aligning with global best practices and strengthening investor confidence, the SECP is taking a crucial role in shaping the country’s financial future.
“This reform is expected not only to highlight Pakistan’s commitment to global best practices but also strengthens investor confidence in the country’s financial ecosystem.”
“In line with FATF standards, the centralized corporate UBO Registry will ensure maintenance of an accurate, up-to-date and comprehensive UBO data.”
By introducing the UBO Registry and revising the Total Expense Regime (TER) for mutual funds and pension funds, the SECP is taking a significant step towards promoting transparency and combating financial crimes in Pakistan. These reforms demonstrate the SECP’s commitment to aligning with global best practices and strengthening investor confidence in the country’s financial ecosystem.
news is a contributor at FondBank. We are committed to providing well-researched, accurate, and valuable content to our readers.
