15 October 2004	Friday	29 Shaban 1425

ISLAMABAD, Oct 14: The chairman Securities and Exchange Commission of Pakistan (SECP), Dr Tariq Hassan on Thursday said the anti-financial crimes law would be finalized within next two months.

The chairman was replying to queries of the media persons during a press conference held in connection with the commissions latest moves regarding consolidation of the insurance sector.

The law would check a number of unlawful activities including the fraudulent undertakings by registered companies and those companies, which commit illegal profiteering by use of money of the shareholders.

The SECP in consultations with the department concerned was also moving ahead to form a sort of financial intelligence bureau or anti-money laundering unit very soon, Dr Hassan said.

The SECP, he said, was working to ensure the assistance of the provinces in this regard, because, the anti-money laundering body would be extended to provinces as well.

About the law regarding checking Benaami, he said, the SECP had submitted its proposals to the ministry of finance. Talking about the SECP's latest moves to consolidate the insurance sector, he said, those insurance companies which failed to meet the paid up capital requirement, as per the Insurance Ordinance 2002, by the end of the current year would be stopped from underwriting new business in the country.

"The paid-up capital requirement is Rs150 million for life insurance companies and Rs80 million for general insurance companies by December 2004. The capital requirement would be increased phase-wise," he said.

Out of the 48 insurance companies operating in the country in January,2001, eight were directed to stop underwriting new insurance business in January 2003 for not fulfilling the paid up capital requirement, the chairman observed.

Further, he said, two mergers took place, which reduced the number of insurance companies to 38. Out of the existing 38 companies, 10 may not be in a position to enhance their paid-up capital as required by December this year and would be given no extension and stopped from making new business, he said.

"The commission feels that 28 insurance companies would be having almost 92 per cent of the insurance business in January 2005 and would largely and satisfactorily serve the public interests," Dr Hassan said.

About the Financial Sector Assessment Programme (FSAP), the chairman said, on the request of the Government of Pakistan, the World Bank (WB) had sent a FSAP mission to Pakistan this year, which, on April 6-13, held discussions with various government departments including SECP on key issues being faced by the financial sector including insurance/pension.

The mission, he said, had submitted recommendations to the commission regarding insurance and private pension market and had also highlighted weaknesses in the sector.

The commission, he said, was positively responding to the recommendations of the mission and had devised short-term and long-term policies. Elaborating, he said, the short-term reforms included strengthening of the regulatory and supervisory capacity of the commission by having more professional supervisory staff for on- site inspection and organizing internal training programme with donor support.

During the short-term reforms the state-owned insurance companies/corporations would also be reformed. Capital and solvency recruitments, both for life and non-life insurance companies, would gradually be enhanced to protect policy-holders interests and also increase the claim paying ability of the insurance companies in line with the international standards.

Similarly, he said, asset valuation rules would be adjusted and maximum discount rate would be specified in line with the European Union approach. The code of governance for insurance would be applied on all insurance companies including state- controlled insurers, he said.

Policyholders' liability basis would be prescribed possibility with setting up of an Actuarial Standards Board, Dr Hassan said. Suitable amendments would also be proposed to the Central Board of Revenue (CBR) in the Fourth-Schedule of the Income Tax Ordinance.

The long-term reforms, he said, included action against unlicensed entities offering insurance services and establishing a regulatory framework for the occupational pension schemes.

IAIS MEMBERSHIP: The SECP chairman said the commission was also given the membership of the International Association of Insurance Supervisors (IAIS) during the IAIS conference held in Jordan from October 5 to 7 this year. Dr Hassan said he had attended the conference.

The membership, he said, would be helpful in strengthening the commission's regulatory capacity and enabling it to coordinate with insurance regulators of other jurisdictions. It would also help the country's insurance sector to be on a par with other countries, he said.