SECP issues draft amendments to AML/CFT regulations

ISLAMABAD: The Securities and Exchange Commission of Pakistan has issued draft amendments to Anti-Money laundering (AML) and Counter Financing of Terrorism (CFT) Regulations, 2018. The draft regulations, issued on the SECP’s official website, aims to further strengthen the AML and CFT laws.

The commission said that it was undertaking a reform agenda to revitalize the capital market and promote the expansion of investor base. According to the published documents, these amendments will be finalized as per the recommendations received by SECP authorities.

Earlier in December last year, SECP had issued revised and more elaborative AML/CFT guidelines for non-profit organizations.

The amendments would help further strengthening SECP’s AML/CFT regime, said a press release issued by the Commission.

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According to the detailed document, the new guidelines explicitly highlight the consequences of money laundering, terror financing, predicate crimes and other abuses on the NPO sector. The amended version would provide the non-profit sector an improved understanding of risks of terrorist financing.

These guidelines also include major findings of Pakistan’s National Inherent Risk Assessment on money laundering and terrorism financing. In November 2019, the Securities and Exchange Commission of Pakistan (SECP) had issued a concept paper to introduce the categorization of brokers for addressing the issue of custody of client assets.

The proposed amendments elaborate on the Risk Based Approach requiring regulated persons (RPs) including; securities brokers, futures brokers, insurers, Takaful operators, non-banking finance companies (NBFCs) and Modarabas to conduct risk assessment that is aligned with Pakistan’s latest National Risk Assessment and ensure implementation of Targeted Financial Sanctions.

The draft amendments also provide more clarity on verification for Beneficial Ownership, close associates and family members of politically exposed persons. The RPs are encouraged to use technological solutions for screening and monitoring of transactions as per best practices. The SECP has tried to address the regulated sector’s feedback regarding gaps in the implementation of AML/CFT Framework.

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