SECP issues TFS guidebook, warns of fines up to Rs100m

October 13, 2026 (MLN): SECP has issued a guidebook on Targeted Financial Sanctions (TFS) for regulated entities, setting out practical methods for screening customers and beneficial owners, verifying potential matches, freezing assets without delay and reporting on time.

The guidebook was issued after joint awareness sessions held by SECP and the National Counter Terrorism Authority (NACTA).

The step aims to prevent the misuse of financial services and safeguard the financial system, SECP said. It urged regulated entities to adopt clear procedures, regular screening and effective compliance controls.

The guidebook covers securities brokers, insurance and takaful operators, non-banking finance companies, asset management companies, modarabas and other licensed intermediaries. It describes TFS as binding, non-discretionary measures that apply irrespective of customer risk rating, transaction size or the value of the business relationship.

Entities must screen customers, beneficial owners, associates and counterparties against the UN Security Council consolidated list, including the 1267 and 1988 lists, NACTA’s lists of proscribed persons and organizations, and domestic SROs.

New customers must be screened before a relationship begins. Existing customers must be screened on receipt of every new SRO or notification.

Entities using manual systems must complete this within 24 hours, while those with automated systems must run real-time screening at onboarding, batch screening after list updates and periodic re-screening.

Screening must use fuzzy matching to catch spelling variations, aliases and transliterations, and potential matches must be checked against secondary identifiers such as CNIC or passport number, date of birth and nationality.

On a confirmed match, entities must freeze assets without prior notice for existing customers, or reject the customer or transaction where no relationship has begun.

They must file a suspicious transaction report with the Financial Monitoring Unit (FMU) through goAML, and simultaneously notify SECP, along with the Ministry of Foreign Affairs for UN designations or NACTA for proscribed persons.

Partial matches call for suspending transactions pending verification and reporting to SECP, while false positives must be recorded in a log for inspection. Attempted transactions involving designated persons must also be reported.

A compliance report on each SRO must reach SECP within 48 hours. Where screening finds no match, a NIL report must still be submitted within the timeline set in the SRO. Entities must submit an annual Institutional Risk Assessment Report and Compliance Assessment Matrix by 30 April, along with quarterly data returns. All records must be kept for at least five years.

The guidebook requires a board-approved sanctions compliance programme, a trained compliance officer with authority to freeze assets, staff training, and an annual internal audit reported to the board audit committee.

It also lists red flags for monitoring, including customers who refuse to provide screening information, transactions structured to stay below thresholds, complex ownership structures that hide beneficial owners, and frequent changes in customer details.

Non-compliance may attract fines of up to Rs 100m, penalties on the CEO and compliance officer including possible disqualification, suspension or revocation of license, and referral to law enforcement agencies. Entities can appeal sanctions before the SECP Appellate Bench within 30 days.

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