Annual AML/CFT Risk Assessment: SECP unveils user guide for brokers, insurance cos, NBFCs

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has issued a user guide for filing online annual Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Risk Assessment by regulated entities.

The SECP has issued the said guide for the securities brokers, futures brokers, insurance companies, Takaful operators, NBFCs and Modarabas.

Under SRO 245 (I)/2019, the securities brokers, futures brokers, insurers, Takaful operators, non-banking finance companies (NBFCs) and Modarabas would be required to submit annual compliance assessment checklist to the SECP to demonstrate adequacy and effectiveness of Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) compliance framework.

The SECP has notified the Securities and Exchange Commission of Pakistan (Anti-Money Laundering and Countering Financing of Terrorism) Regulations, 2018 (the "Regulations") vide SRO 770(I)/2018 dated June 13, 2018 upon recommendation of Financial Monitoring Unit, established under section 6 of the Anti-Money Laundering Act, 2010, which require all regulated persons to conduct self-risk assessment, have appropriate mechanisms to provide the risk assessment information to the Commission, and ensure implementation of targeted financial sanctions under the United Nations Security Council Resolutions, adopted by the government of Pakistan, and refrain from forming business relationship with proscribed persons and entities under the Anti-Terrorism Act, 1997 and related matters.

The said regulated persons should submit their annual risk assessment report which should cover the process adopted for risk identification. The risk assessment methodology should cover the risk emanating from customers, products, geography and delivery channels, elaborate risk tolerance level and assess residual risk after implementation of mitigation measures. Regulated persons may use the template given in Annex 1 to the guidelines for reference, but may choose their own risk assessment methodology that best suits or represents their business, in light of the AML Act, 2010 and the Regulations.

The risk assessment report should be reviewed and approved by the board of directors of the regulated persons and shall be signed by the chief executive officer/company secretary, the SECP said.

The regulated persons should submit their annual compliance assessment checklist to demonstrate adequacy and effectiveness of AML/CFT compliance framework in light of the regulations, and may use the checklist provided.

Copyright Business Recorder, 2020