The Securities and Exchange Commission of Pakistan (SECP) has directed the securities brokers, futures brokers, insurance companies, Takaful operators, NBFCs and Modarabas to identify beneficial owners of investments.
The SECP has issued SRO 56(I)/2020 for draft amendments to the Securities and Exchange Commission of Pakistan (Anti Money Laundering and Countering Financing of Terrorism) Regulations, 2018.
The apex regulator has asked for the source of funding and uses technological solutions for the screening of designated/proscribed persons, ongoing monitoring of transactions and reporting of suspicious transactions.
The SECP has also sought additional information from customers intended to open new accounts with securities brokers, futures brokers, insurers, Takaful operators, NBFCs and Modarabas.
It has further tightened anti-money laundering for securities brokers, futures brokers, insurers, Takaful operators, non-banking finance companies (NBFCs) and Modarabas.
The regulated persons shall conduct ongoing due diligence on the business relationship including scrutinizing transactions undertaken throughout the course of that relationship to ensure that the transactions are consistent with the regulated persons’ knowledge of the customer, its business and risk profile and where appropriate, the sources of funds, the SECP said.
According to the SECP, the regulated persons are encouraged to make use of technological solutions required for effective screening of designated and proscribed persons, ongoing monitoring of transaction and reporting of suspicious transactions, and upgrade their system and procedures in accordance with the changing profile of various risks.
It has further directed the regulated persons including securities brokers, futures brokers, insurers, Takaful operators, NBFCs and Modarabas to identify every customer for establishing business relationships and may obtain such a range of data, information and documents from different types of customers as provided.
The securities brokers, futures brokers, insurers, Takaful operators, NBFCs and Modarabas shall take appropriate steps to identify, assess and understand its money laundering and terrorism financing risks.
In relations to foreign and domestic Politically Exposed Persons (PEPs), regulated person shall implement appropriate internal risk management systems, policies, procedures and controls to determine if any customer or a beneficial owner is PEP.
In case of foreign PEPs, regulated person shall perform EDD in addition to other requirements of these regulations. In case of domestic PEPs, where business relationship poses higher risk, regulated person shall carry out EDD in accordance with sub-regulations in addition to other requirements of these regulations.
The requirements are also applicable on family members and close associates of foreign and domestic PEPs.
You can further read the draft here.