KARACHI: The State Bank of Pakistan (SBP) has reiterated its doubt over the possible use of the banking sector for money laundering, terrorist financing and illegal transfer of funds.

“It is reiterated that authorised dealers must ensure strict observance of all applicable instructions, including regulations or guidelines issued by the SBP while opening and maintaining foreign currency accounts,” the State Bank said in a circular issued on Tuesday.

In pursuance of the Anti-Money Laundering Act, 2010, reporting entities including authorised dealers are under obligation to conduct Custo­mer Due Diligence (CDD) and maintain record of transactions, account files and documents in accordance with the regulations issued by the SBP.

The ongoing CDD is an essential part of an effective anti-money laundering (AML) and combating the financing of terrorism (CFT) regime and applies to all customers to whom the authorised dealers are offering any type of service.

This includes monitoring and scrutiny of transactions undertaken throughout the course of business relationship between the bank and the customer to ensure that the transactions being conducted are consistent with the institution’s knowledge of the customer, purpose of account, business and risk profile, and the source of funds.

Authorised dealers were advised to ensure that consolidated data or record of transactions routed through foreign currency accounts of individuals or entities is maintained by them at their head offices on a monthly basis.

In addition to the data or record already being maintained, data of those personal foreign currency accounts maintained by individuals where aggregate amount exceeding $10,000 in other foreign currencies is deposited in, withdrawn from or remitted out from the account during the month should be maintained as per the prescribed format.

Also, the data of foreign currency accounts maintained by entities where exceeding $25,000 in other foreign currencies is deposited in, withdrawn from or remitted out from the account during the month is also required to maintain.

“The above data/record shall be maintained by the authorised dealers and produced for on-site inspection/off-site monitoring by the SBP as and when required,” the central bank said.

Published in Dawn, February 24th, 2016

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