Suspected accountholders: SECP tells regulated entities to implement TFS

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has directed securities brokers, futures brokers, insurance companies, Takaful operators, Non-Banking Finance Companies (NBFCs), and Modarabas, to ensure implementation of Targeted Financial Sanctions (TFS) on customers/suspected accountholders of the regulated entities, which owe money, assets or property of the designated or proscribed persons under the United Nations (Security Council) Act, 1948 and Anti-Terrorism Act, 1997.

In this regard, the SECP has issued instructions to the regulated entities, ie, securities brokers, futures brokers, insurance companies, Takaful operators, NBFCs, and Modarabas, here on Wednesday to follow new reporting requirements prescribed by the SECP.

The SECP has directed the regulated entities to raise "red flags" to identify suspected persons or customers.

The SECP has issued separate "red flags" that specifically relate to non-banking financial institutions (NBFIs).

The SECP has also issued "red flags" based on behaviour of an account holder associated with proscribed individuals or entities.

The SECP has issued guidelines for implementation of Anti-Money Laundering/Counter Financing of Terrorism ("AML/CFT") framework as contained in the regulations for assistance and guidance of regulated entities.

These guidelines supplement the regulations and the AML/CFT regime by clarifying and explaining the general requirements of the AML Law to help Regulated Entity (RP) in applying AML/CFT measures, developing an effective AML/CFT risk assessment and compliance framework suitable/compatible to their business, and in particular, in detecting and reporting suspicious activities.

The guidelines also contain guidance for preparing the AML/CFT Risk Assessment; AML/CFT Compliance Assessment Checklist; ML/TF warning signs/red flags; proliferation financing warning signs/red alerts.

The AML Act requires all reporting entities to ensure implementation of TFS of freezing and prohibition obligations in relation to the money, assets or property of the designated or proscribed persons under the United Nations (Security Council) Act, 1948, and under the Anti-Terrorism Act, 1997, the SECP directive said.

The SECP, hereby, directs all the regulated entities to comply with following reporting requirements, and submit information in the manner prescribed to the respective supervisory departments of the commission, in consonance with the requirements of the regulations and guidelines: Annual risk assessment and control/compliance assessment framework based on data and information as on 30 June, to be filed by 31st July of each financial year ("FY"), starting from the date of notification of this directive, and as instructed from time-to-time by the Commission.

The SECP directed that the regulated entities should undertake and submit their internal annual risk assessment, which should be aligned with the risks identified in the latest National Risk Assessment of the country, and cover the process adopted for risk identification.

Compliance Assessment Checklist: Regulated entities should submit their annual compliance assessment checklist to demonstrate adequacy and effectiveness of AML/CFT compliance framework in light of the regulations, and are encouraged to use the checklist provided to the guidelines for this purpose, the SECP said.

The SECP further directed that the regulated entities should provide quarterly information/data on 30th of the subsequent month of every quarter, containing the specified information.

Copyright Business Recorder, 2020