KASHF FOUNDATION vs EXECUTIVE DIRECTOR ADJUDICATION — 2026 CLD 505 SECURITIES-AND-EXCHANGE-COMMISSION-OF-PAKIS

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KASHF FOUNDATION VS EXECUTIVE DIRECTOR ADJUDICATION. Reglns. 6(5)(a), 6(3)(a), 6(4), 6(8) & 13(7)---Anti-Money laundering regulatory requirements, non-compliance of ---Effect---Appellant (non-bank microfinance company) was penalized by the Securities and Exchange Commission of Pakistan (the Commission) for violations such as failure to appropriately categorize customers, verify CNICs through the NADRA Verisys system and monitor business relationships with associates of prescribed individuals---Assertion of the Commission / Respondent was that the violations were significant---Validity---While the Appellant had made significant efforts to comply with the Securities and Exchange Commission of Pakistan (Anti Money Laundering and Countering Financing of Terrorism) Regulations, 2018 ('the AML/CFT Regulations, 2018') including monitoring its customer relationships and reporting identified issues, yet several deficiencies remained in its compliance practices ; however, the Appellant took proactive steps to correct these shortcomings, including updating its policies, reporting proscribed individuals and recalling loans associated with such persons---Appellant demonstrated good faith by taking corrective actions as soon as the issues were identified, highlighting its commitment to regulatory compliance---Appellant's non-compliance, although serious, was not deliberate or intentional and the deficiencies identified were primarily technical in nature, and in isolation, they did not present an immediate or substantial risk to the financial systems or cause financial harm---Additionally, the Appellant took prompt corrective actions upon being informed of these issues, including voluntarily disclosing the violations and implementing corrective measures, which demonstrated that the infractions were not indicative of a broader systemic failure---As such, the penalty of Rs.1,000,000 initially imposed was disproportionate to the severity and scope of the violations, particularly given the Appellant's timely and proactive steps to remedy the situation---In light of the Appellant's efforts to rectify the deficiencies and its overall commitment to regulatory compliance, the Appellate Bench funds it appropriate to reduce the penalty to Rs. 350,000, reflecting both the minor nature of the violations in the broader context of the Appellant's operations and its prompt corrective measures---Appeal was disposed of accordingly.

KASHF FOUNDATION vs EXECUTIVE DIRECTOR ADJUDICATION — 2026 CLD 505 SECURITIES-AND-EXCHANGE-COMMISSION-OF-PAKISTAN

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