Asset Management Companies Ordered to Consult SECP on Anti Money Laundering/Terror Financing Regulations

Securities and Exchange Commission of Pakistan (SECP) has directed Asset Management Companies (AMCs) to immediately consult SECP in case of any confusion or misunderstanding on the implementation of Anti-Money Laundering (AML) and Countering Financing of Terrorism (CFT) regulations.

According to an order issued by the SECP, the AMCs should refer to or consult with SECP in case of any confusion or misunderstanding with regards to the implementation of AML/CFT regulations as they want to fully enforce Anti-Money Laundering and Countering Financing of Terrorism Regulations.

SECP’s order has disposed of proceedings against a public limited company licensed to undertake the business of asset management and investment advisory services, initiated through the show-cause notice for violations of the Securities and Exchange Commission of Pakistan (Anti-Money Laundering and Countering Financing of Terrorism) Regulations 2018 (AML and CFT Regulations).

The scope of the inspection extended to review and assess the level of compliance of the AMC with respect to the AML and CFT regulations. However, during the course of inspection, various violations/non-compliances were observed. The inspection team highlighted several deficiencies in customers’ records/documentation (selected on a sample basis) which were in violation of several provisions of AML and CFT regulations.

The SECP commissioner observed that the AML and CFT regulations were effective immediately after their issuance and warranted that the company initiated the process at its earliest. Had the company done so, all discrepancies/deficiencies of the legacy accounts would have been removed by the time the inspection took place.

The commissioner said that a 10-month delay indicates weakness in the responsiveness of the management. He added,

In my view, given AMCs size and very professional management, it is obligated to ensure that it is implementing the AML and CFT regulations in letter and spirit.

SECP’s order said that AMC needs to realize that in the absence of requisite documents/information, the screening of the unit holder’s database is rendered ineffective and does not serve the purpose/objective of screening of unitholders/beneficial owners completely. The absence of such critical information is likely to expose the company to an inefficient screening of its customers with SROs/notifications issued by NACTA/provincial governments/Ministry of Foreign Affairs, etc, the SECP added.


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