FATF conditions: MoF proposes AML/CFT rules for National Savings

Finance ministry to constitute a supervisory board to ensure implementation of new rules

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ISLAMABAD: In a bid to meet the Finance Action Task Force (FATF) conditions, the Ministry of Finance (MoF) has proposed draft rules regarding Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) for National Savings, which holds Rs4 trillion deposits of four million Pakistanis.

The draft of National Savings Schemes (AML and CFT) Rules, 2019, has been placed at the ministry’s official website for feedback and suggestions from the concerned people within next seven days.

As per the documents, “The proposed rules shall apply to all offices and persons responsible for the issuance, management, marketing, registration, replacement, sale and discharge of the instruments issued by and the accounts opened at and maintained with the National Savings centres, Pakistan Post and any other office designated as offices of issue.”

The ministry has also decided to scrutinise all the existing account holders of Central Directorate of National Savings (CDNS) within six months and complete the risk profiling by December next year aimed at meeting the FATF requirements.

The move will, for the first time, open four million accounts having Rs4 trillion deposits (as at the end of October) for the scrutiny of a private party. The prospective third party will screen these accounts and make their risk profile on the basis of Anti-Money Laundering Act (AMLA) 2010, Anti-Terrorism Act 1997 and the United Nations Security Council Act 1948.

The FATF has placed Pakistan on its grey list with effect from June 2018 and the next review on the implementation of the FATF Action Plan will take place in February next year. Before that, the Joint Review Group of the Asia Pacific Group will review Pakistan’s compliance in the third week of January.

As per the proposals, CDNS shall undertake measures to identify and assess the money laundering/terrorist financing (ML/TF) risks that may arise in relation to the development of new products and new business practices, including new delivery mechanisms, and the use of new or developing technologies for both new and pre-existing products. CDNS shall undertake risk assessments prior to the launch or use of such products, practices and technologies and take appropriate measures to manage and mitigate these risks.

Regarding Customer Due Diligence (CDD) and Know Your Client (KYC), a third party shall identify the occasional customers and walk-in-customers and verify their identity using a reliable and independent source of information i.e. NADRA verification system or biometric identification system.

The third-party shall adopt counter-measures, including, but not limited to, enhance due diligence proportionate to the risks to the business relationship and transactions with natural and legal persons belonging to such countries for which this is called upon to do so by FATF and independently of any call by the FATF to do so.

As per the draft, CDNS or third party shall maintain all necessary records on transactions, both domestic and international, including the results of any scrutiny or analysis for a minimum period as specified but not less than ten years from completion of the transaction.

Under the proposed rules, the National Savings shall develop and implement training programmes for officers and employees concerned with AML and CFT measures, on an annual basis, in order to effectively implement such measures.

Apart from the new rules and in order to provide independent oversight of implementation of the rules and take necessary enforcement actions against violations thereof, the Ministry of Finance will also constitute National Savings AML and CFT Supervisory Board.

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