ISLAMABAD: The government has enhanced the currency transaction threshold by 50pc to Rs3 million for banks to trigger suspicious reports to the Financial Monitoring Unit (FMU) of the State Bank of Pakistan under the Anti-Money Laundering Act (AMLA).

The increase in threshold from Rs2m to Rs3m for Currency Transaction Reports (CTRs) under the framework for analysing Suspicious Transaction Reports (STRs) and CTRs was approved by the National Executive Committee (NEC) on Anti-Money Laundering and Countering Financing of Terrorism (AML-CFT).

An STR is reported when a suspicious transaction or activity involving money laundering and terrorism financing is indicated. However, a CTR is required to be reported when a cash transaction is equal to or exceeds the specified threshold — now raised to Rs3m.

The NEC, led by Finance Minister Muhammad Aurangzeb, is responsible for setting limits for banks, financial institutions or other agencies dealing with financial transactions to generate CTRs and STRs on the amount of currency transactions through notifications in the official Gazette.

It serves as a strategic forum for strengthening Pakistan’s AML-CFT framework and ensuring timely coordination, inter-agency cooperation and consistent monitoring for effective implementation of the measures discussed.

The committee also approved the inclusion of Section 28 of the Pakistan Maritime Zones Act 2023 in Schedule I of the AMLA, meaning that maritime piracy has been covered as a predicate offence.

Section 28 of the Maritime Zones Act 2023 defines “piracy” as any illegal act of violence, detention or depredation committed for private ends by the crew or the passengers of a private ship or a private aircraft and directed against another ship or aircraft or against persons or property onboard.

The NEC also approved the inclusion of the Pakistan Virtual Assets Regulatory Authority (PVARA) in Schedule IV of the AMLA, meaning that the crypto body would also have regulatory powers over virtual and digital assets to meet AML-CFT requirements, like the SBP, Securities and Exchange Commission of Pakistan and Federal Board of Revenue, among others.

Under the AMLA, the FMU is designated to receive STRs and CTRs from reporting entities, analyse them and, if need be, seek the entire record and information related to the transaction in question from any agency or individual in Pakistan.

All agencies and individuals are bound to promptly provide the requested record and information to enable the FMU to share its analysis on a confidential basis with the concerned investigating or prosecuting agencies, or with the financial intelligence units of other countries to make reciprocal arrangements to share, request and receive information relating to money laundering, the financing of terrorism and other offences.

An official statement said the meeting reviewed compliance with its past decisions and progress on Pakistan’s AML-CFT regime, including the performance of the FMU, institutional capacity and initiatives involving artificial intelligence and machine learning.

Aurangzeb emphasised the importance of regular and timely follow-up and stronger coordination among the relevant institutions to ensure effective implementation of the national AML-CFT framework. He also called for strengthening the FMU’s analytical and operational capacity through a clear implementation roadmap with defined timelines.

The NEC also highlighted the importance of keeping Pakistan’s AML-CFT framework responsive to evolving financial risks and emerging technologies, while strengthening the analytical capabilities of relevant institutions.

ISLAMABAD: The government is set to roll out a new private equity policy framework covering enhanced risk portfolios, targeting $10 to $15 billion in tax-neutral investment from domestic and international players in the private equity market.

The government aims to finalise the policy framework within the next two weeks, which would entail policy actions to be introduced through the finance bill for the next fiscal year (FY27-28).

Regulatory actions would follow immediately after the finalisation of the framework without waiting for the next year’s budget, an official told Dawn.

The framework is based on models such as those in the United Kingdom, the Middle East and India, which are estimated to have attracted $100-150bn. This was conveyed to Finance Minister Muhammad Aurangzeb during a meeting of the prime minister’s committee for developing the National Private Equity Framework.

The meeting reviewed progress on regulatory and tax reforms, domestic capital mobilisation and the development of investment opportunities to support a robust private equity ecosystem in Pakistan.

It also reviewed the potential of Pakistan’s private equity market, including opportunities arising from acquisitions, business consolidation, new projects and exits by existing investors.

The introduction of regulatory changes for banks enhancing their exposures to real estate investment trusts (REITs) had increased the portfolio from Rs22bn in 2021 to over Rs280bn now, a participant said, adding that the potential for private equity investments had no limits, provided a conducive environment was created.

Additionally, the meeting focused on the mobilisation of domestic institutional capital, including resources available with banks, insurance companies, mutual funds, pension schemes and development finance institutions, alongside potential participation from local corporations and family offices.

The committee also discussed various investment structures and mechanisms to facilitate the deployment of these resources into private equity funds and commercially viable businesses and projects.

Informed sources said foreign investors and institutional funds, particularly those from friendly nations, always sought a proper policy framework with rules-based exit and entry facilitations to secure their investments whenever top government Pakistani delegations sought investments or presented various investment opportunities, including in minerals, real estate, agriculture, oil and gas, tourism or manufacturing.

The prospects of developing a substantial pipeline of investable opportunities over the next five to 10 years were also discussed, supported by significant domestic liquidity that could be channelled towards productive economic activity through an effective private equity ecosystem.

Aurangzeb appreciated the progress achieved across key workstreams and underscored the importance of translating regulatory and policy reforms into practical investment opportunities.

He emphasised the need for a transparent, commercially viable and investor-friendly framework that would help mobilise domestic savings, attract institutional investment and support private-sector-led economic growth.

Moreover, he noted that mobilising domestic capital should be the immediate priority, providing the foundation for a credible and functioning private equity market capable of subsequently attracting foreign institutional investors and facilitating international co-investment.

Reviewing progress on regulatory reforms, the committee discussed measures concerning fund structures, transparency, investment arrangements and the participation of financial institutions in private equity funds.

The State Bank of Pakistan (SBP) briefed participants on recent regulatory changes, including the enhancement of the permissible investment limit for banks in a single private equity fund from 10 per cent to 20pc.

On taxation, the meeting reviewed recommendations for establishing a clear, competitive and predictable tax framework for private equity funds. Discussions included the proposed treatment of private equity funds as pass-through vehicles, with taxation applied at the investor level, as part of efforts to develop a globally competitive private equity ecosystem.

The finance minister stressed the importance of comprehensively evaluating relevant international taxation models and adapting them to Pakistan’s economic and regulatory environment.

He directed that any proposed tax arrangements must support legitimate investment activity while preventing opportunities for tax arbitrage, unintended distortions or regulatory inconsistencies.

The committee also underscored the need for a coordinated approach across regulatory and taxation authorities to ensure consistency in the treatment of different investment vehicles and facilitate the development of a well-functioning private equity market.

The finance minister directed relevant stakeholders to build on the progress achieved, address outstanding regulatory and taxation issues, and advance work on domestic capital mobilisation and the identification of viable investment opportunities to move the National Private Equity Framework towards implementation.

Reiterating the government’s broader reform priorities, the minister advised that the development of a robust private equity ecosystem should contribute to deeper domestic capital markets, improved access to long-term risk capital, greater private-sector investment and sustainable economic growth.