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 Securities and Exchange Commission of Pakistan (SECP) to demonstrate adequacy and effectiveness of Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) compliance framework.
The SECP has issued a directive to the securities brokers, futures brokers, insurers, Takaful operators, NBFCs and Modarabas through an SRO 245 (I)/2019 issued here on Tuesday.
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.
Therefore, the Commission hereby directs all the regulated persons to comply with following reporting requirements and submit information in the manner prescribed below to the respective supervisory departments of the Commission, in consonance with the requirements of the regulations and guidelines.
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 in the guidelines for this purpose.
Check list included six monthly information/ data on 30th June, along with the annual risk assessment and compliance check list, and on 31st December of each FY year, starting from the date of notification of this directive.
Check list also included extracts of the discussion / deliberations on Know Your Customer (KYC) / AML / CFT by board of directors and/or management committees; number of new customer accounts opened during the period according to risk categorisations i.e. high, medium and low; c) total number of foreign and domestic politically exposed persons (PEP) and their total value of investments/deposits/financing, etc, during the period.
Check list included details of all the accounts which were refused to be opened during the period; documentation of any activity for which a STR was considered but not filed along with rationale, during the period; copies of reports/mechanism to identify unusual transactions warranting further review; number of suspicious transaction and currency transaction reports submitted to Financial Monitoring Unit, during the period; detail of complaints received on account of KYC / AML, including its status i.e. in
process/ resolved / closed, during the period; details of trainings conducted on AML/CFT of staff, during the period; record of transferring customers from one risk category to another, during the six month period.
Check list also covered compliance report on statutory regulatory orders issued by the Ministry of Foreign Affairs on United Nations Security Council Resolutions and intimation from National Counter Terrorism Authority/Ministry of Interior regarding updates in list of proscribed persons under the Anti Terrorism Act, 1997, shall be submitted within three day of receiving the same, by authorised officer of the regulated person.
Any person to whom this directive applies and who contravenes or fails to comply with the requirements of this directive or submits a return which is false in material respect or where under a misstatement is made shall be liable to imposition of penalty under section 40A of the Securities and Exchange Commission of Pakistan Act, 1997, which may extend to Rs 10 million and where such contravention is a continuing one, with a further penalty which may extend to Rs 100,000 for every day, the SECP added.