SECP Proposes Digital AML Reforms with IBAN Verification

The Securities and Exchange Commission of Pakistan (SECP) has proposed substantive amendments to the Anti-Money Laundering, Countering the Financing of Terrorism, and Countering Proliferation Financing (AML/CFT/CPF) Regulations, 2020, with the dual objective of strengthening regulatory safeguards and facilitating fully digital onboarding of investors.

Under the proposed regulatory framework, identity verification mechanisms will be significantly enhanced through the introduction of IBAN-based authentication. Specifically, IBAN verification conducted through SECP-notified entities—such as the National Clearing Company of Pakistan Limited (NCCPL) via the RAAST payment system—will be recognized as valid proof of identity, subject to compliance with all applicable AML requirements.

The amendments further mandate that all investor transactions be conducted exclusively through IBAN-verified bank accounts or approved e-wallets, thereby improving transaction traceability and mitigating the risk of unauthorized or non-compliant financial activity.

In addition, the framework introduces a multi-layered biometric verification regime, incorporating facial recognition technology integrated with systems maintained by the National Database and Registration Authority (NADRA), to strengthen identity authentication protocols.

The SECP has clarified that, notwithstanding these technological enhancements, regulated entities will continue to bear primary responsibility for Know Your Customer (KYC) procedures, customer due diligence, transaction monitoring, and overall compliance with AML/CFT obligations.

The draft amendments have been published for stakeholder consultation and are available on the SECP’s official website, with interested parties invited to submit comments and feedback within a 14-day period.