To curb money laundering and keep an eye on foreign accounts, the State Bank of Pakistan (SBP) has directed all authorized dealers in foreign exchange to maintain and consolidate all records regarding transactions with any foreign currency accounts. The directive includes foreign currency accounts for both – individuals and entities.
SBP’s New Directives Regarding Foreign Currency Accounts
The circular issued by the SBP says that foreign currency dealers have to maintain the records at their head offices on a monthly basis. The monthly record management guidelines for individuals and entities state:
- The data of personal foreign currency accounts maintained by individuals where the transaction amount total exceeds $10,000 or equivalent value in other foreign currencies and is deposited, withdrawn or remitted out from the individual’s account during a month should be recorded.
- The data of foreign currency accounts maintained by entities where the transaction amount total exceeds $25,000 or equivalent value in other foreign currencies and is deposited, withdrawn or remitted out from the entity’s account during a month has to be recorded.
SBP has published different templates for recording data regarding both types of foreign currency account holders.
This step will help the government preserve the integrity and welfare of the financial system. Other than that, the government will be able to prevent money laundering, illegal transfer of funds and terrorist financing. Authorities have been trying to manage the matter more effectively and this move will ensure that anything suspicious does not go unnoticed.
What Else Has SBP Done to Curb Financial Malpractices?
SBP has made several efforts, in the past, comparable to the recent one. It issued an order in 2015 which required all reporting entities and authorized dealers to conduct Customer Due Diligence (CDD). Banks and dealers were to maintain all records of these CDD documents, transactions and files in accordance with SBP’s guidelines.
CDD is believed to be an effective measure in favor of Anti Money Laundering (AML) and Combating the Financing of Terrorism (CFT) and applies to all dealers operating in Pakistan and their customers.
Any transactions between banks and their customers throughout the course of their business relationship are also recorded. This ensures that the authorities remain aware of the bank’s knowledge about their customers. Banks record all details regarding the customer’s purpose of account, business and risk profile and their source of funds. After the new orders, banks and dealers are to observe more strict examination of any foreign currency accounts.
SBP will review the data occasionally and requires of the dealers and banks to have the data readily available when required for on-site or off-site inspections.