The State Bank of Pakistan (SBP) Tuesday asked banks to maintain consolidated record of transactions routed through Foreign Currency Accounts (FCAs) aimed at preventing the possible use of the banking sector for money laundering, terrorist financing and illegal transfer of funds. In addition to maintenance of all transactions data, Authorised Dealers (ADs) have been advised particularly for maintenance of record of transactions exceeding $10,000 for individual accounts and $25,000 for entities of foreign currency accounts on monthly basis.
According to EPD Circular Letter No 03 of 2016 issued on February 23, 2016, with the view to preserving the integrity, soundness and safety of the financial system, the SBP has been endeavouring to prevent the possible use of the banking sector for money laundering, terrorist financing and illegal transfer of funds. To this end, SBP has been issuing various instructions/guidelines to the banks from time to time.
In pursuance of sub-section (7) of section 7 of the Anti-Money Laundering Act, 2010 (as amended in 2015), reporting entities including Authorised Dealers are under obligation to conduct Customer Due Diligence (CDD) and maintain record of transactions, account files and documents obtained through such diligence in accordance with the regulations issued by the SBP.
In this regard, the SBP reiterated that Authorised Dealers must ensure strict observance of all applicable instructions including Regulations/Guidelines regarding KYC/CDD while opening and maintaining foreign currency accounts. The SBP said that ongoing CDD is an essential part of an effective Anti Money Laundering (AML) and Combating the Financing of Terrorism (CFT) regime and applies to all customers to whom the Authorised Dealers are offering any type of service. This includes monitoring and scrutiny of transactions undertaken throughout the course of business relationship between the bank and the customer to ensure that the transactions being conducted are consistent with the institution's knowledge of the customer, purpose of account, business and risk profile, and the source of funds.
Authorised Dealers (ADs) are advised to ensure that consolidated data/record of transactions routed through foreign currency accounts of individuals/entities is maintained by them at their head offices on monthly basis.
In addition to the data/record already being maintained, ADs have been advised for data of those personal foreign currency accounts maintained by individuals, where aggregate amount exceeding US $10,000 or its equivalent in other foreign currencies is deposited in, withdrawn from or remitted out from the account during the month as per the SBP format.
Similarly, the SBP also asked for data of foreign currency accounts maintained by entities, where aggregate amount exceeding US $25,000 or its equivalent in other foreign currencies is deposited in, withdrawn from or remitted out from the account during the month. According to circular, the data/record shall be maintained by the Authorised Dealers and produced for on-site inspection/off-site monitoring by the SBP as and when required.
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