The State Bank of Pakistan (SBP), in a bid to prevent the possible use of the banking sector for fake accounts, money laundering, terror financing and other illicit activities, has issued instructions to the banks/development finance institutions (DFIs) for compliance.
According to an official handout, the objective of the SBP instructions is to preserve the integrity, soundness and safety of the financial system.
The central bank invited all banks/DFIs towards the customer due diligence (CDD) of AML/CFT regulations, which requires them to perform such CDD measures as may be appropriate to its existing customers having regard to their own assessment of materiality and risk but without any compromise on identity and verification requirements. Thus, ongoing CDD is an essential part of an effective AML/CFT regime.
The SBP reiterated that banks/DFIs must ensure strict observance of all applicable instructions, including identification and verification of customers and their beneficial owners, collection of information on the purpose and intended nature of business relationship.
“The monitoring mechanism in place at banks/DFIs should be adequately resourced and strengthened to ensure that the transactions being conducted in the accounts are consistent with the banks/ DFIs’ knowledge of their customer, business, risk profile and the source of funds,” the handout read.
With the objective to know the ultimate beneficial ownership of accounts/ transactions, the banks/DFIs are advised to enhance their efforts to obtain relevant information and examine background and purpose of all complex, unusual large transactions and unusual patterns of transactions, which do not commensurate with customer profile or have no apparent economic or visible lawful purpose.
The apex bank advised the banks/DFIs to refer to the Security and Exchange Commission of Pakistan (SECP) circular number 16 dated August 29, 2018, through which the commission directed all companies to enhance their efforts to obtain and maintain up-to-date information relating to their ultimate beneficial owners, i.e. natural persons or individuals who ultimately own or control the company. The banks/DFIs may seek such ultimate beneficial ownership information from their relevant customers during the CDD process.
Moreover, with a view to further strengthen the measures already in place and mitigate the money laundering and terrorist financing risks, banks/DFIs are advised to immediately ensure optimal utilization of biometric technology and carry out biometric verification of the existing customers (if already not done) as per the timelines and thresholds.
SBP has categorized the customers into three priorities (high, medium and normal) to ensure enhanced vigilance.
High priority
Public-listed companies: An account turnover exceeding Rs1,000 million for any of the calendar year 2016, 2017 or for a period since January 1, 2018 to September 30, 2018.
Private companies: Account turnover exceeding Rs500 million for any of the calendar year 2016, 2017 or for a period since January 1, 2018 to September 30, 2018.
Customers other than listed companies: Account turnover exceeding Rs250 million for any of the calendar year 2016, 2017 or for a period since January 1, 2018 to September 30, 2018.
The timeline for high profile category is Nov 30, 2018.
Medium Priority
Public-listed companies: Account turnover from Rs500 million to Rs1000 million for any of the calendar year 2016, 2017 or for a period since January 1, 2018 to September 30, 2018.
Private limited companies: Account turnover from Rs250 million to Rs500 million for any of the calendar year 2016, 2017 or for a period since January 1, 2018 to September 30, 2018.
Customers other than listed companies: Account turnover from Rs100 million to Rs250 million for any of the calendar year 2016, 2017 or for a period since January 1, 2018 to September 30, 2018.
The timeline for medium profile category is January 31, 2019
All other accounts not covered in the above categories are categorized as normal, the timeline for which is June 30, 2019.
