Half the Schedule, None of the Predicate: the National Executive Committee's Decision of 27th October 2026, PVARA in Schedule IV and the Virtual Assets Act Offences Still Outside Schedule I of the Anti-Money Laundering Act, 2010

On Tuesday, 27th October 2026, the National Executive Committee on anti-money laundering and countering the financing of terrorism held its nineteenth meeting at the Finance Division under the Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb, with the Minister for Law and Justice, the Governor of the State Bank of Pakistan and the Chairman of the Securities and Exchange Commission of Pakistan among those present. The Finance Division’s press release of that date, PR No. 715, records three approvals: a revision to the thresholds for Currency Transaction Reports, the inclusion of Section 28 of the Pakistan Maritime Zones Act, 2023 (Act XVIII of 2023) in Schedule I of the Anti-Money Laundering Act, 2010 (Act VII of 2010), and the inclusion of the Pakistan Virtual Assets Regulatory Authority in Schedule IV of the same Act.

The third is the one the trade press has celebrated, and it is half a decision. A regulator in Schedule IV without its sector’s offences in Schedule I is a supervisor without a predicate.

What the two Schedules do

The Anti-Money Laundering Act, 2010 rests on two lists which do different work. Schedule I is the list of “predicate offences”: Section 2(xxvi) provides that a “predicate offence” means an offence specified in Schedule I, Section 2(xxviii) provides that “proceeds of crime” means property derived from the commission of a predicate offence or a foreign serious offence, and Section 3 makes it the offence of money laundering to acquire, convert, possess, transfer, conceal or hold property knowing or having reason to believe that it is “proceeds of crime”. The chain is closed. Property is “proceeds of crime” only if the offence that produced it is in Schedule I; if it is not, Section 3 cannot be charged on it, Section 8 cannot attach it and Section 9 cannot forfeit it, whatever the reporting entity suspected.

Schedule IV is a different list. Section 6A(1) provides that the “AML/CFT regulatory authority” means the regulators and self-regulatory bodies specified in Schedule IV, and Section 6A(2) gives each of them, for its own reporting entities, the powers to license, to impose conditions, to make regulations under Sections 7A to 7H, to inspect, to compel information and to impose sanctions, which Section 7I attaches to any contravention. The Schedule names the State Bank, the Commission, the Federal Board of Revenue for three classes of designated business, the supervisory boards for National Savings and Pakistan Post, and the professional institutes and Bar Councils; paragraph 1(vi) then adds “any other such entity or regulatory authority as may be notified by the Federal Government”.

Hence Schedule IV decides who supervises, and Schedule I decides what money is dirty. The decision of 27th October 2026 fills the first for virtual assets and leaves the second empty.

What the Virtual Assets Act already required

Much of what the press has described as new was already law. The Virtual Assets Act, 2026 (Act XIII of 2026), gazetted on 5th March 2026, provides in Section 46(1) that “Virtual Asset Service Providers” licensed under it “shall be deemed to be financial institutions” for the purposes of the Act of 2010; Section 46(2) goes wider and requires “every” “Virtual Asset Service Provider” and “Issuer”, licensed or not, to report suspicious transactions to the Financial Monitoring Unit, to keep customer due diligence records and to maintain a compliance programme under a compliance officer; and Section 46(3) directs the Authority to align its supervision with the standards of the Financial Action Task Force. The Pakistan Virtual Asset Services Regulations, 2026 (S.R.O. 1419(I)/2026) of 21st August 2026 carried that into regulations 93 to 101, as these chambers set out on 1st September 2026.

What was missing was the supervisory hook on the other side. A licensee deemed a financial institution had an “AML/CFT regulatory authority” only if a regulator in Schedule IV claimed it, and none did, since the Authority was not there and the State Bank and the Commission supervise only entities licensed under laws they administer. Schedule IV cures that, and when the notification issues the Authority will hold the Section 6A powers and the Section 7I sanctions over its licensees as the State Bank holds them over banks. That is a real step and an overdue one; The Express Tribune reported on 28th October 2026 that it sits in the action plan agreed with the International Monetary Fund on the Governance and Corruption Diagnostic Assessment.

The offences that are still outside

The Virtual Assets Act, 2026 creates its own offences, and none of them is in Schedule I. Section 50 prohibits any person from engaging by way of business in “Virtual Asset Services” in or from Pakistan without a licence, and Section 54(1) punishes the wilful provision of an unlicensed service with imprisonment up to five years or a fine up to fifty million Rupees or both. Section 51 prohibits an “Initial Virtual Asset Offering” otherwise than in accordance with the Act, and Section 54(2) punishes it with up to three years or twenty-five million Rupees. Section 52 prohibits market manipulation, market abuse and insider trading in virtual assets, and Section 54(3) punishes a natural person with up to three years or twenty-five million Rupees and a legal person with three times the profit gained or loss avoided.

Set those beside what Schedule I already contains. Section IIIB of the Schedule lists the Foreign Exchange Regulation Act, 1947 (VII of 1947), “Illegal forex business”, sub-section (1) of Section 4 read with Section 23, which is the unlicensed dealer in currency. Section VIA lists the Securities Act, 2015 (III of 2015), Section 128, insider trading, and Section 133, market manipulation, each read with Section 159. The unlicensed currency dealer and the manipulator of a share price have been predicate offenders for years; the unlicensed exchange of virtual assets and the manipulator of a token price are their exact parallels, and they are not. Since the Financial Action Task Force’s glossary of designated categories of offences lists “insider trading and market manipulation” as a category a predicate list must cover, therefore the gap is one the next mutual evaluation will read against the Schedule.

The consequence is concrete. From the day the Schedule IV notification issues, the Authority may inspect a licensed exchange, require it to file suspicious transaction reports and sanction it under Section 7I for failing to do so; but if the report concerns the proceeds of an unlicensed competitor, of an unlawful token offering or of a manipulated market, those proceeds are not “proceeds of crime” within Section 2(xxviii), no agency can charge Section 3 on them and no court can attach or forfeit them under the Act of 2010. The Authority will supervise reporting on money which the Act it is being placed under does not recognise as dirty.

Why piracy got in and these did not

The same meeting shows the mechanism working as the Act intends. Section 5(2)(b) makes it a function of the Committee to recommend to the Federal Government “the determination of offences existing in Pakistan that may be considered to be predicate offences”, and Section 42 empowers the Federal Government, by notification in the official Gazette, to add any entry to the Schedule. Piracy is a designated category in the Financial Action Task Force glossary, Pakistan has had a statutory piracy offence since the Pakistan Maritime Zones Act, 2023 received assent on 26th April 2023, and the entry closes an item on the list. Section 28 of that Act defines piracy in the terms of Article 101 of the United Nations Convention on the Law of the Sea; Section 29 is the punishment, imprisonment which may extend to ten years, and life or death where a murder is committed in its course.

Two things about that entry deserve attention before it is gazetted. The first is drafting: Section 28 creates no punishment, hence the notification should follow the Schedule’s own practice and read “Section 28 read with Section 29”, as the existing entries read “Section 4 read with Section 23” and “Section 128 read with Section 159”. The second is reporting: The Express Tribune’s account of 28th October 2026 gives the piracy offence as punishable “with up to seven years of imprisonment, up to Rs25 million fines and forfeiture of property”, and none of that is in Section 29. The fine and the forfeiture are the punishment for money laundering in Section 4 of the Act of 2010, and the seven years appears nowhere. The statute says ten.

If piracy, with no reported case under the Act of 2023, could be carried through the Committee on 27th October 2026, then the three offences of the Virtual Assets Act, 2026, against a market the Authority itself invited to apply for licences by 5th September 2026, could have been carried on the same day under the same power. They were not, and the Finance Division’s statement does not say why.

The approvals change nothing until they are notified

The Committee approved and did not enact. A Schedule I entry exists when the Federal Government notifies it under Section 42. A Schedule IV entry exists when the Federal Government notifies it under paragraph 1(vi). A Currency Transaction Report threshold exists when the Committee itself notifies it, since Section 2(xi) defines “CTR” as a report on currency transactions exceeding “such amount as may be specified by the National Executive Committee by notification in the official Gazette”. Dawn and The Express Tribune of 28th October 2026 both put the new threshold at three million Rupees against the present two million; the Finance Division’s statement gives no figure, hence the number is reported and not yet law. As at 3rd November 2026 I can find none of the three notifications in the Gazette.

The same reports say the Committee cleared “in principle” the designation of the Provincial Anti-Corruption Establishments as investigating agencies under Section 2(xviii), subject to standard operating procedures to be settled by the National Anti-Money Laundering and Counter Financing of Terrorism Authority against misuse. The press release does not mention it. That designation is owed to the Fund by 31st December 2026, and a decision in principle, subject to procedures not yet written, is not a notification either.

What is owed, and by whom

The Schedule IV notification should not go out alone. It is urgently required that it be accompanied by a Schedule I notification under Section 42 adding the Virtual Assets Act, 2026 as a new Section of the Schedule with three entries: Section 50 read with Sections 54(1) and 55, Section 51 read with Sections 54(2) and 55, and Section 52 read with Sections 54(3) and 55, Section 55 being the provision that reaches the officer with whose consent, connivance or neglect a body corporate offended. The remaining offences in Section 54, being false statements, obstruction and non-compliance, generate no proceeds and belong outside the Schedule.

One further provision must be read with that entry. Section 56 of the Virtual Assets Act, 2026 provides that only an authorised officer of the Authority may investigate an offence under that Act, whereas the laundering of its proceeds under Section 3 of the Act of 2010 can be investigated only by an “investigating or prosecuting agency” within Section 2(xviii), a list which does not include the Authority. Hence a Schedule I entry will put the predicate in one agency’s hands and the laundering in another’s, and the notification should be paired either with a Section 2(xviii) designation of the Authority or with a referral protocol under the Anti-Money Laundering (Referral) Rules, 2021.

For a licensed exchange, a custodian or a broker the position is this. The duties in Section 46(2) are owed now and do not wait for Schedule IV. The supervision under Section 6A and the sanctions under Section 7I will arrive with the notification, and the compliance officer should assume it will be in field before the year is out. And the limit on what any of it can achieve is Schedule I, which as at 3rd November 2026 treats the proceeds of an unlicensed exchange as clean money. That is the entry the Committee should have approved on 27th October 2026, it is the entry the Federal Government can still add under Section 42 without returning to Parliament, and until it is added the Authority will be a supervisor without a predicate.