SECP-registered intermediaries must ensure compliance with AML laws

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has declared that the registered intermediaries are legally bound to ensure compliance with the anti-money laundering (AML) laws.

In this connection, the SECP has issued an order against a registered law firm, which is also registered as an intermediary under the Intermediaries Regulations framed under the Companies Act.

The said law firm has violated Anti-Money Laundering Act, 2010 (the AML Act) and AML/CFT Sanctions Rules, 2020 (the AML Rules).

An SECP official informed that the Anti-Money Laundering Act, 2010, places compliance obligations on the company service providers (intermediaries) to conduct customer due diligence and report suspicious transactions to Financial Monitoring Unit. The intermediaries while performing their functions, shall ensure that their clients are not involved in any illegal or suspicious activities, implying money laundering or terrorist financing.

Further, the intermediaries shall also ensure that the client is not placed on the United Nations Security Council’s (UNSC) list of designated persons or entities linked to terrorist financing or against whom a ban, sanction or embargo subsists, the official added. According to the order of the Director/Head of Wing (Adjudication-I) SECP, apart from being a registered Law Firm, the Respondent, is also registered as an intermediary under the Intermediaries Regulations, framed under the Companies Act, 2017 (the law administered by the Commission). Moreover, in terms of the Intermediaries Regulations, a registered intermediary is required to ensure compliance with AML laws. Thus, the respondent’s stance that the Commission went beyond its jurisdiction conferred upon it by the SECP Act and issued a show cause notice to a law firm is not tenable. The respondent is a registered entity and falls under the ambit of the Commission to the extent of its business with regard to Intermediary Services, SECP order added.

Copyright Business Recorder, 2023