ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) on Wednesday proposed amendments in the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Regulations, 2018 to comply with the Financial Action Task Force (FATF) recommendations.

The draft amendments provide clarity on verification for beneficial ownership, close associates and family members of politically-exposed persons (PEPs).

The proposed amendments elaborate on the risk-based approach requiring regulated persons (RPs) to conduct risk assessment in alignment with the country’s latest National Risk Assessment (NRA) framework.

The RPs include securities brokers, futures brokers, insurers, takaful operators, non-banking finance companies and modarabas.

Under the proposed amendments, RPs will have to maintain customer due diligence “on an annual basis, or in case of any major event, or in light of latest NRA besides other instructions issued from time to time”.

The minimum information required for the purpose of know your customer and customer due diligence (KYC/CDD) has been listed to make documentation requirements simpler.

An amendment has been suggested in the Regulation 5(b) to mitigate risks and gaps in new technologies including digital financial products and virtual assets that can be exploited for money laundering or terror funding.

The RPs have also been encouraged to use technological solutions for screening and monitoring of transactions as per best practices.

The regulator said the amendments have been proposed after considering feedback from various sectors regarding gaps in the implementation of AML/CFT framework.

The amendments regarding PEPs includes explanation of “close associates” that means any natural person who is known to hold joint ownership or control of a legal instrument with a PEP; or any other close business or personal relationship with a PEP or ownership or control of a legal instrument or a person which is set up for the benefit of a PEP.

Published in Dawn, January 30th, 2020