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KARACHI: The State Bank of Pakistan (SBP) has amended Anti-Money Laundering, Combating the Financing of Terrorism & Countering Proliferation Financing (AML/CFT/CPF) Regulations aimed at meeting the Financial Action Task Force (FATF) recommendations.

“With a view to further aligning AML/CFT/CPF Regulations with the FATF recommendations, the SBP has decided to amend some provisions of these Regulations,” the SBP said in a circular issued to Regulated Entities (REs). These amendments will provide further clarity on implementation of AML/CFT/CPF requirements by the SBP REs.

As per amendment made in the existing clause of para-1 of Regulation-2 added the sub para 1(a) of the regulation, SBP REs will, at minimum, conduct Customer Due Diligence (CDD) of their customers/ occasional customers in circumstances and matters set out in section 7A (1) of the Act. For the purposes of section 7A (1)(b) of the Act, SBP REs will conduct CDD in respect of every occasional customer.

According to a new paragraph at Sr. No. 9 (ii) added after para 9 as under: 9 (ii), for customers that are legal persons or legal arrangements, the SBP REs shall understand the nature of the customer’s business and its ownership and control structure.

In addition, a new paragraph at Sr. No. 15, added after para 14 in Regulation -2 has been added. According to new paragraph No 15, the SBP REs shall complete the verification of the identity of the customer, occasional customer and beneficial owner before establishing a business relationship or conducting the occasional transaction or during the course of establishing a business relationship or occasional transactions.

According to amendments paragraph 2 and 4 amended in Regulation -15, no person can become sponsor shareholder/beneficial owner, director, president and/or key executive of RE, if that person does not comply with Fit and Proper Test (FPT) requirements, including if that person is Designated Person/Proscribed Person (DP/PP) or associated directly or indirectly with any DP/PP; or Convicted of or associated directly or indirectly with any person convicted of any offence, including any ML/TF offence or any predicate offence set out in Schedule-I of the Act.

For the purpose of this regulation, Fit and Proper Test shall be interpreted in accordance to BPRD Circular No. 04 of 2007 and its subsequent Circulars.

In addition, sponsor, shareholder, director, president & key executive shall have the same meaning as defined in Prudential Regulations for banks/DFIs as amended from time to time.

As per amendment in the paragraph 4, in the case of corporate group, in addition to compliance with Regulation 13, the REs shall implement policies and procedures for sharing information at a group level required for the purposes of CDD and risk management and the provision, at group-level compliance, audit, and/or AML & CFT functions, of customer, account, and transaction information from branches and subsidiaries when necessary for AML & CFT purposes. In addition, the REs will also implement the adequate safeguards on the confidentiality and use of information exchanged at group-level, including safeguards to prevent tipping-off.

Copyright Business Recorder, 2021

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