Chartered Accountants Will Now Report Suspicious Transactions During Audit

Chartered accountants and management consultants will now have to strictly check records during the audit of their clients/customers including companies for detecting any suspicious business activities involving money laundering and terrorist financing and report them to the Financial Monitoring Unit (FMU) of the State Bank of Pakistan (SBP).

The Securities and Exchange Commission of Pakistan (SECP) has issued instructions to the Institute of Chartered Accountants of Pakistan (ICAP) and Institute of Cost and Management Accountants of Pakistan (ICMAP) to ensure that the accountant members should monitor their clients/customers for detecting money laundering or terrorist financing.

SECP has issued “Oversight Regulations for Self-Regulatory Bodies of Accountants, 2020” to monitor suspicious business activities taking place within the corporate sector and report these activities by submitting the Suspicious Transaction Report (STR) to the Financial Monitoring Unit (FMU) of the State Bank of Pakistan (SBP).

The ICAP and the ICMAP called, “Self-Regulatory Bodies” or “SRB” shall identify, assess and understand the money laundering/terrorist financing risks to which that SRB’s reporting entities are subject and adopt a risk-based approach to the exercise of its supervisory functions as informed by the national risk assessments and the risk assessment carried out by the SRB itself.

  • Every SRB shall under the AML Act, introduce regulations pertaining to risk assessment, mitigation, and applications of a risk-based approach.
  • Customer due diligence requirements; including but not limited to requirements to identify and verify customers, beneficial owners, and requirements to conduct ongoing monitoring.
  • Requirements to apply enhanced customer due diligence measures, including with respect to politically exposed persons.
  • Internal controls requirements.
  • Training and capacity building requirements.
  • Duty to co-operate with competent authorities.
  • Targeted financial sanction (TFS) requirements.
  • Risk assessment and mitigating requirements for new products, practices, and technologies.
  • Requirements on reliance on third parties.
  • Record-keeping requirements and countermeasures requirements.
  • Every SRB shall appoint a person to monitor and manage its compliance with its duties under the Act and Regulations made thereunder, who shall cooperate with authorities and ensure that the SRB responds to any request from any AML/CFT regulatory authority about any reporting entity.
  • Leep and maintain a record in writing of the actions it has taken in the course of performing its functions; monitor and supervise compliance with the requirements of the regulations including ensuring that reporting entities have adequate policies, controls, and procedures to implement those requirements in line with the ML/TF risks.
  • Each SRB shall conduct ongoing outreach to reporting entities to promote a clear understanding of their AML/CFT and TFS obligations and ML/TF risks.

The chartered accountants and management consultants must take account of any guidelines issued by its relevant AML/CFT regulatory authority, the FMU, Ministry of Foreign Affairs (MOFA), Ministry of Interior (MOI), and NACTA, Oversight Regulations for SelfRegulatory Bodies of Accountants, 2020 concluded.

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