The Securities and Exchange Commission of Pakistan (SECP) has directed Assets Management Companies (AMCs) to demonstrate the highest standards of professionalism by complying with all regulatory directives including Anti-Money Laundering (AML) and combating the financing of terrorism (CFT) framework in letter and spirit.
This has been stated by Commissioner (SCD) Farrukh H Sabzwari in an order while disposing of proceedings against an asset management company.
The SECP has concluded the proceedings initiated under Section 40A of the Securities and Exchange Commission of Pakistan Act, 1997 against the company by imposing an aggregate fine of Rs 250,000 on the AMC.
Commissioner Sabzwari said that the AMCs should continue to demonstrate the highest standards of professionalism by complying with all regulatory directives from time to time, which are issued for the protection of markets and investors. Any undue delay or negligence in compliance with such directions cannot be viewed leniently. Even if the fault lied with previous management, all AMCs are required to ensure compliance with the AML/CFT regulatory framework in letter and spirit.
Therefore, the company is hereby directed to provide a time bound plan wherein it should provide a roadmap for ensuring complete compliance with the AML and CFT regulatory framework, the commissioner added.
A scope specific inspection of the AMC was ordered under powers conferred upon the Securities and Exchange Commission of Pakistan ("SECP or the Commission") under Section 2821 of the Companies Ordinance, 1984. The scope of the inspection extended to review and assess the level of compliance of the AMC with respect to the AML and CFT Regulations. However, during the course of inspection, various violations/ non-compliances were observed. The inspection team highlighted several deficiencies in the customers' record/documentation (selected on sample basis) which were in violation of several provisions of AML and CFT Regulations.
The CEO emphasized that the new management of the company was fully up to the task and has adopted zero-tolerance policy with regard to internal controls and compliance related matters and is very serious about adopting and implementing applicable SECP guidelines. This is also evident by the improvements the new management has made since March 2019. Hence, the management is keen to adopt KYC/AML and CFT related regulatory framework (as per the SECP Guidelines) and this will definitely improve and strengthen the internal controls of the company with the passage of time.
The CEO asserted that only old accounts remain to be screened for which requires one and a half months time to complete.
The CEO of the company also reiterated that since her joining in March 2019, efforts have been made at a much faster pace and she was trying her best to improve the compliance function. In this regard, the compliance function has already been beefed up with additional resources, exclusively for ensuring that requisite documents were obtained to verify the identity of the customer and the beneficial owners.
Farrukh H Sabzwari said that the company needs to take cognizance of weaknesses in existing procedures and systems and take steps to improve and strengthen its operational procedures and systems including conducting comprehensive training programs for its staff.
The commissioner is of the considered view that given more time the current renewed focus and continuous monitoring will bear fruit. The AMC is required to focus on the review and monitoring on a continuous basis. She must demonstrate the same vigor in planning and implementing an overhaul of the AMLl/FT compliance framework, the SECP added.
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