Investor onboarding: SECP introduces consolidated framework
ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has introduced a consolidated framework for investor onboarding, seeking to simplify and harmonise account opening and customer due diligence requirements applicable to its regulated persons.
SECP officials told media here on Wednesday that the framework had been developed to promote financial inclusion, enhance investor protection, strengthen the compliance culture and facilitate ease of doing business.
The consolidated framework is aimed at removing interpretational ambiguities arising from multiple onboarding and due diligence requirements applicable to different categories of investors and market intermediaries.
Under the framework, officials said that the regulated entities, including Securities Regulated Intermediaries (SRIs), Centralized Gateway Portal (CGP), Centralized KYC Organization (CKO) and Asaan Connect, have been required to establish appropriate connectivity and mechanisms for sharing customer information and documents, subject to applicable procedures and customer consent.
The SECP officials have also emphasised confidentiality and data security, requiring the relevant regulated entities to take sufficient measures to protect information in their possession.
Digital account opening
The new framework permits SRIs to open accounts and establish customer relationships at their places of business as well as remotely through digital channels.
Accounts may be opened through websites or portals, mobile applications or other approved technological and digital mediums. The framework is intended to facilitate a more seamless onboarding process and reduce the need for physical interaction.
The SECP has also provided for greater integration among the relevant intermediaries. CMIIs and CKO are required to enable API integration with authorised intermediaries to facilitate straight-through processing and eliminate manual input, including the requirement for signatures on white paper.
The integration is intended to facilitate instant issuance of UINs, opening of CDC sub-accounts, integration with client accounts and completion of other onboarding formalities on a 24/7 basis without manual or human intervention.
KYC and verification requirements
The consolidated framework prescribes standardised customer information fields and documents for normal as well as Sahulat/Sehl accounts and insurance products.
Copies of identity documents are required to be validated through NADRA Verisys, Multi Biometric Verification System (MBVS) or any alternative system offered by NADRA from time to time.
The relevant regulated entity is also required to retain a copy or log of the NADRA verification or other evidence as may be specified under the framework.
Enhanced due diligence for high-risk customers
The SECP has retained enhanced due diligence (EDD) requirements for customers identified as high-risk.
According to the framework, SRIs shall conduct EDD and may obtain additional information or documents from such customers. The risk rating is to be determined on the basis of the Customer Risk Profile (CRP) model of the relevant SRI.
The SECP has further stressed that customer risk categorisation should be undertaken holistically, taking into account multiple factors, including customer profile and product type.
The framework also specifies limits and features for different types of accounts.
For example, the Sahulat Sarmayakari Account is available to resident Pakistanis under simplified due diligence. The framework prescribes an investment limit of Rs3 million at any point in time and a maximum transaction limit of Rs1 million.
The types of schemes available under this category include money market and low-risk income schemes as well as money market and debt-sub-funds of VPS.
The Sarmayakari Account, meanwhile, is available to Pakistani individuals possessing valid identification documents, including CNIC/SNIC, NIC-OP/SNICOP, POC and Form-B, subject to the applicable requirements. Such accounts may be opened either individually or jointly, with customer due diligence requirements including obtaining source of income/funds.
The consolidated framework also covers onboarding requirements for insurance products and provides simplified due diligence and specified transaction or premium limits for certain categories.
The SECP officials have clarified that all other requirements under the applicable regulatory framework will continue to remain applicable unless specifically modified by the consolidated framework.
Circular No. 6 of 2023 repealed
The SECP has repealed Circular No. 6 of 2023 dated April 19, 2023 through the new consolidated framework.
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