AML & CFTRs, 2018: SECP unfolds procedure to monitor accounts of politically exposed persons

The securities brokers, commodities brokers, insurers, Takaful operators, non-banking finance companies (NBFCs) and Modarabas would implement appropriate internal risk management systems and controls for enhanced due diligence of their customers or beneficial owners, who are "politically exposed persons" (PEPs) including senior politicians.
Under the procedure to monitor the accounts of the PEPs, the SECP has issued the procedure under the (Anti-Money Laundering and Countering Financing of Terrorism) Regulations, 2018.
The SECP has said that the "politically exposed persons" or "PEPs" include foreign PEPs, individuals who are or have been entrusted with prominent public functions by a foreign country, for example heads of state or of government, senior politicians, senior government, judicial or military officials, senior executives of state owned corporations, important political party officials.
The domestic PEPs are individuals who are or have been entrusted domestically with prominent public functions, for example heads of state or of government, senior politicians, senior government, judicial or military officials, senior executives of state owned corporations, important political party officials and persons who are or have been entrusted with a prominent function by an international organization, means members of senior management and members of the board or equivalent functions:
Provided that middle ranking or more junior individuals in the above referred categories are not included in the definition of PEPs; In relations to foreign and domestic PEPs, regulated person shall implement appropriate internal risk management systems, policies, procedures and controls to determine if any customer or a beneficial owner is PEP.
In case of foreign PEPs, regulated person shall perform EDD, in addition to other requirements of these regulations. In case of domestic PEPs, where business relationship poses higher risk, regulated person shall carry out EDD in accordance with requirements of these regulations.
The requirements are also applicable on family members and close associates of foreign and domestic PEPs, the SECP said. Regulated persons (securities brokers, commodities brokers, insurers, Takaful operators, NBFCs and Modarabas) shall perform appropriate enhanced due diligence (EDD) measures with customers that are identified as high risk by the regulated person or are notified as such by the Commission. The EDD measures included to; obtain approval from regulated person senior management to establish or continue business relations with such customers; establish, by appropriate means, the sources of wealth and/or funds or beneficial ownership of funds, as appropriate, including regulated person' own assessment to this effect and conduct during the course of business relations enhanced monitoring of business relations with the customer.
The regulated person shall pay particular attention to their branches and subsidiaries located in countries which do not or insufficiently comply with FATF recommendations (as determined by FATF) and ensure that their AML/ CFT policy is observed by branches and subsidiaries in those countries.
The regulated persons shall apply their AML/ CFT policies to all of their branches and subsidiaries outside Pakistan to the extent that laws and regulations of the host country permit.
Where the AMl/CFT requirements in the host country or jurisdiction differ from those in Pakistan, regulated person shall require their overseas branches or subsidiaries to apply the higher of the two standards, to the extent that the law of the host country or jurisdiction so permits. Where the law of the host country conflicts with the AML/ CFT requirements of Pakistan so that the overseas branch or subsidiary is unable to fully observe the higher standards, the regulated person shall report this to the Commission and comply with such further directions as may be issued.