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SECP announces measures to check terror financing, money laundering

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ISLAMABAD, Apr 14: In compliance with the requirements of the Financial Action Task Force (FATF), the Securities and Exchange Commission of Pakistan (SECP) has announced new measures to combat money laundering and terror financing.

The new measures relate to SECP’s fresh guidelines on anti-money laundering (AML), combating the financing of terrorism (CFT) and proliferation financing — act of providing funds for acquiring weapons of mass destruction.

The fresh guidelines pertaining to “know your customers” (KYC) for the insurance sector, stock brokers and the non-banking financial institutions (NBFC) have been released ahead of the implementation review by the FATF on the action plan given to Pakistan. The review by the FATF is scheduled to be held in Colombo next month.

The SECP has reiterated that KYC and customer due diligence was essential even for the existing customers on the basis of materiality and risk at appropriate times.

The corporate sector regulator has stated despite having a long-term banking relationships with the investment of funds through banking channel the regulated person (RT) will be responsible even for the generation of suspicious transaction report (STR). The SECP guidelines identify and verify the beneficiaries in case of trusts.

The SECP has said that in the case of “trusts”, the regulated person should obtain ‘trust deed’ which contains the details of settlers, objects of the trust, details of trustees and the details of any possibility of influence of any other person on trustee regarding management and control of trust property.

While in case of “private trust” if the beneficiary of a trust is also the beneficial owner of the trust, identification and verification of the beneficiary is required otherwise the name and CNIC of each beneficiary of a trust should be obtained.

The SECP has also highlighted that the annual risk assessment framework and compliance assessment checklist are required to be filed with it by June 30 of each financial year, while May 31 of each financial year may be taken as a cut-off date for data to conduct necessary assessment and subsequent filing to the SECP on June 30.

However, the data for the month of “June” has to be included in the subsequent annual filing.

The commission has also stated that the regulated person should respond to discrepancies arising during monitoring and if the RT is not able to satisfactorily complete required CDD measures the account will be blocked or existing business relationship has to be terminated, and the STR has to be reported to the Financial Monitoring Unit (FMU).

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