Financial institutions to ensure complete identity verification of customers for FATF compliance

Financial institutions to ensure complete identity verification of customers for FATF compliance

KARACHI: The State Bank of Pakistan (SBP) on Wednesday made mandatory for financial institutions to ensure complete identity verification of customers before establishing a business relationship.

The central bank issued a circular for notifying instructions to the presidents and chief executives of all SBP regulated entities (REs) related to Anti-Money Laundering (AML), Combating the Financing of Terrorism (CFT) & Countering Proliferation Financing (CPF) Regulations.

The SBP amended some provisions in the regulations issued through BPRD Circular No. 05 of 2020 dated September 30, 2020 with a view to further align AML/CFT/CPF Regulations with the Financial Action Task Force (FATF) Recommendations.

A new provision has been introduced to the regulations, which said: “SBP Res shall complete the verification of the identity of the customer, occasional customer and beneficial owner before establishing a business relationship or conducting the occasional transaction or during the course of establishing a business relationship or occasional transactions.”

The SBP further directed the REs that they should conduct Customers Due Diligence (CDD) of their customers/occasional customers in circumstances and matters.

For customers that are legal persons or legal arrangements, the SBP REs shall understand the nature of the customer’s business and its ownership and control structure.

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