SECP issues fresh guidelines on anti money laundering, terror financing

Pakistan needs to meet conditions of FATF by June 2019

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ISLAMABAD: As Pakistan needs to meet conditions of the Financial Action Task Force (FATF) by June 2019, the Securities and Exchange Commission of Pakistan (SECP) has issued fresh guidelines on anti money laundering (AML), combating the financing of terrorism (CFT) and proliferation financing.

The fresh guidelines related to the know your customers (KYC) for the insurance sector, stock brokers and the non-banking financial institutions have been released ahead of implementation review by FATF on the action plan given to Pakistan.

The review by FATF is scheduled to be held in Colombo Sri Lanka in mid May .

The SECP has reiterated that KYC and customer due diligence is essential even for the existing customers on the basis of materiality and risk at appropriate times.

The corporate sector regulator has stated despite having a long term banking relationships with investment of funds through banking channel the regulated person will be responsible even for the generation of suspicious transaction report (STR).

The SECP has said that in the case of trusts, the regulated person should obtain the trust deed which contains the details of settlers, objects of the trust, details of trustees and the details of any possibility of influence of any other person on trustee regarding management and control of trust property.

While in case of private trust if the beneficiary of a trust is also the beneficial owner of the trust, identification and verification of the beneficiary is required otherwise the name and CNIC of each beneficiary of the trust should be obtained.

The SECP has also highlighted that the annual risk assessment framework and compliance assessment check list are required to be filed with SECP by June 30 of each financial year, while May 31 of each financial year may be taken as a cut-off date for data to conduct necessary assessment and subsequent filing to the SECP on June 30.

However, the data for month of June has to be included in the subsequent annual filing.

The commission has also stated that the regulated person  should respond to  discrepancies  arising during monitoring and if the RT is not able  to satisfactorily  complete  required  CDD measures the account will be blocked or the existing business relationship will be terminated, and the STR has to be reported to the Financial Monitoring Unit (FMU).

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