With the deadline to meet Financial Action Task Force (FATF)’s conditions approaching, the Securities and Exchange Commission of Pakistan (SECP) has issued fresh guidelines on anti-money laundering (AML), proliferation financing, and combating the financing of terrorism (CFT).
The next review of FATF on Pakistan’s progress on the prescribed action plan will take place in June 2019. By then, the country needs to cover certain milestones to avoid sanctions.
The fresh guidelines pertain to the know your customers (KYC) for the insurance sector, non-banking financial institutions, and stockbrokers.
The SECP has reinforced the importance of KYC and customer due diligence (CDD) and made it necessary for the existing customers based on materiality and risk at appropriate times.
The commission has stated that the regulated person will be responsible for generating a suspicious transaction report (STR) despite having long term banking relationships with the investment if funds via banking channel.
It further says that for trusts, the regulated person should demand the trust deed that contains the information regarding settlers, objects of the trust, trustees, and any possibility of the influence of any other party on trustee regarding control and management of trust property.
Moreover, in the case of private trust where the beneficiary is also the beneficial owner, verification, and identification of the beneficiary is required. Otherwise, the regulated person should obtain the name and CNIC of each beneficiary.
The SECP has also maintained that the annual risk assessment framework and compliance assessment checklist need to be filed with the commission by June 30th of every financial year.
Moreover, May 31st of every financial year should be considered the cut-off date for data to undergo assessment and subsequent filing to the SECP on June 30.
As for data of June, it needs to be carried forward to the subsequent annual filing. The commission also required the regulated person to address the discrepancies noticed during monitoring.
If the required CDD measures cannot be completed satisfactorily, the account has to be blocked or the existing business relationship is terminated. Moreover, the regulated person needs to file an STR to the Financial Monitoring Unit (FMU).