SBP amends AML regulations to comply with FATF demands

Published January 28, 2021
The State Bank of Pakistan (SBP) has amended some provisions of Anti-Money Launde­r­ing, Combating the Financing of Terrorism & Countering Prolife­ra­tion Financing (AML/CFT/CPF) re­­gulations. ─ Wikimedia Commons/File
The State Bank of Pakistan (SBP) has amended some provisions of Anti-Money Launde­r­ing, Combating the Financing of Terrorism & Countering Prolife­ra­tion Financing (AML/CFT/CPF) re­­gulations. ─ Wikimedia Commons/File

KARACHI: The State Bank of Pakistan (SBP) has amended some provisions of Anti-Money Launde­r­ing, Combating the Financing of Terrorism & Countering Prolife­ra­tion Financing (AML/CFT/CPF) re­­gulations to align with the Financial Action Task Force (FATF) recommendations.

The central bank on Wednesday issued details of the previous and amended regulations saying that these amendments will provide further clarity on implementation of AML/CFT/CPF regulations.

The global anti-money laundering watchdog FATF in October 2020 kept Pakistan on its monitoring list asking it to improve controls on terrorist financing while lauding authorities for some progress. The Paris-based watchdog said that Pakistan has largely completed 21 out of 27 tasks, while it has made varying levels of progress on the rest of the plan.

Pakistan has been struggling hard to come out from the grey list and avoid to be put in black list that could bring sanctions on Pakistan while its funding from IMF could also be jeopardised.

The latest amendments in the regulations suggested that the policies, controls, procedures and preventive measures will be developed and implemented proportionate to level of money laundering/terrorist finan­cing/proliferation financing risks.

The SBP asked the banks to obtain additional information on the customer (eg occupation, volume of assets, information available through public databases, internet, etc), and update more regularly the identification data of customer and beneficial ownership.

It further asked to obtain additional information on the intended nature of the business relationship and transactions, information on the source of funds or source of wealth of the customer, additional information on the reasons for intended or performed transactions and purpose of transaction.

“Take reasonable measures to establish the source of funds and wealth involved in the transaction or business relationship to be satisfied that they do not constitute the proceeds from or for crime,” it added.

Already banks are over cautious while dealing with their customers. For example banks now ask to attach CNIC copy while paying utilities bills; each bill requires a copy of CNIC creating serious hurdles for common man still using banks to pay their utility bills and school fees.

“All business relations with customers shall be monitored on an ongoing basis to ensure that the transactions are consistent with the SBP’s regulated entities (REs) knowledge of the customer, its business and risk profile and where appropriate, the sources of funds,” said the amended regulations.

Published in Dawn, January 28th, 2021

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