SBP introduces new amendments to control money laundering

All Banks and DFI's will be required to incorporate procedures to record and maintain data of account opening cases rejected by compliance or central account opening units

Karachi: On Wednesday, the State Bank of Pakistan (SBP) made a number of changes in respect to regulations for anti-money laundering and terror financing, issuing instructions to all developing finance institutions and banks to adhere to tough measures and reduce risk to the bare minimum.

SBP outlined the reasons for introduction of the National Risk Assessment in Pakistan. The central bank mentioned that all ministries, law enforcement agencies, their own financial monitoring unit, regulatory bodies and relevant stakeholders were taken into confidence before formulating this risk assessment plan.

As per the SBP circular, Banks/DFIs will make comprehensive assessment of controls on asset products and related customers to ensure effective implementation of due diligence requirements as per their own assessment of materiality and risk without compromising on identity and verification requirements. This shall include monitoring of the customers and related risks on ongoing basis as per standard norms and best practices to mitigate the risks related to such products/ customers.

The adequacy of staff posted for effective monitoring and reporting of suspicious transactions is a critical factor of customer due Diligence. Banks/DFIs shall place adequate number of analysts for monitoring and reporting purpose. Moreover, steps should be taken by banks/DFIs to develop knowledge and skills of their staff and utilize technology solutions required for effective monitoring and reporting of suspicious transactions.

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The circular mentioned that Banks/DFIs shall incorporate procedures to record and maintain data of account opening cases rejected by compliance or central account opening units, the cases where customers’ risk ratings recommended by business units were challenged or revised, and the cases where accounts were closed based on ML/TF risks.

SBP also added “All banks/DFIs are also advised to complete their internal risk review of remaining legacy portfolio of customers who opened their bank accounts prior to introduction of revised AML/CFT framework in 2012 at the earliest but not later than December 31, 2017.”

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