Pakistan has prepared a comprehensive draft of Virtual Asset Service Provider regulations to curb the misuse of digital assets for illegal activities, including money laundering and terrorism financing. The move comes as part of efforts to meet FATF requirements and strengthen oversight of the growing virtual asset sector. Officials believe these rules will improve transparency and enhance the integrity of the financial system.
Under the draft, virtual asset service providers will be required to report suspicious activity immediately, ensuring that questionable transactions are identified without delay. The proposed framework also warns that violations may lead to license cancellations, heavy penalties or even disqualification of directors and shareholders. These measures aim to enforce strict compliance and prevent misuse of digital platforms.
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Moreover, the draft states that the Financial Monitoring Unit will have the authority to recommend action against non-compliant service providers. Partnerships involving Politically Exposed Persons will require prior approval from designated reporting officers to reduce associated risks. This condition reinforces the government’s focus on high-risk transactions within the virtual asset space.
The regulations also mandate full implementation of anti-money laundering and counter-terrorism financing protocols. Service providers must verify client identities, authenticate records and avoid partnerships where due diligence remains incomplete. These procedures are designed to ensure that only transparent and legitimate business practices operate within the sector.
Sources added that companies offering virtual asset services must maintain proper tax records and appoint qualified officers to oversee compliance. This requirement highlights the government’s intention to build a responsible and well-regulated digital asset environment. Furthermore, it reflects Pakistan’s commitment to align with global standards and create a secure landscape for virtual transactions.
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Once implemented, these regulations are expected to significantly reduce the misuse of virtual assets for unlawful purposes. The government anticipates that tighter oversight, combined with mandatory reporting and strict penalties, will help deter criminal activity. Overall, the initiative signals a major step toward improving financial security and strengthening trust in Pakistan’s digital economy.