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Tag: FATF

  • National Savings tightens checks on investors

    National Savings tightens checks on investors

    ISLAMABAD: The government has tightened monitoring of investors of national savings to comply with conditions of Financial Action Task Force (FATF) and prevent transactions related to money laundering and terror financing.

    The Central Directorate of National Savings (CDNS) has prepared a comprehensive plan to examine the customers and issued instructions to all its regional offices in the country.

    The plan has been prepared by the National Savings (AML&CFT) Supervisory Board in consultation with the Financial Monitoring Unit (FMU).

    Under the plan the offices of the national savings have been advised to follow the guidelines in examining and monitoring the customs of the saving certificates and prize bonds.

    All those customers will be examined where overall investment quantum, account balance or transactional activity is not in line with their businesses, known means or stated purpose of products.

    The authorities issued red flags for transactional patterns related to all products, including certificates, accounts and prize bonds.

    Following are the red flags to identify suspicious transactions:

    ·         Nominee is not a close relative or change in nominee (for instance, to include non-family members).

    ·         Third party check is provided for investment.

    ·         Purchase of a long-term investment product followed shortly thereafter by a request to liquidate the position to get back the invested amount.

    ·         Overall investment quantum, account balance or transactional activity is not in line with the customer’s business, known means or stated purpose of the product.

    ·         Client is frequently purchasing savings certificates / prize bonds through unusual payments in cash which do not commensurate with his/her profile.

    ·         Unusually high levels of investments or unusually large transactions in relation to what might reasonably be expected of clients with a similar profile.

    ·         When transactions are conducted without any apparent legitimate or economic reason.

    ·         Where multiple deposits are made by unrelated individuals.

    ·         Large cash is deposited followed by early withdrawal.

    ·         Where large deposits and withdrawals are made routinely, and the end of day balance is very low or nil.

    ·         When a customer insists to buy multiple savings certificates/prize bonds through structured/broken cash transactions to avoid CTR reporting threshold (PKR 2.0 Million and above).

    ·         Two or more customers (Linked/associated with each other) working together to break one cash transaction into two or more transactions to evade the CTR reporting requirement.

    ·         Purchase of higher denomination Prize Bonds against cash without providing any plausible justification.

    ·         Encashment of higher denomination Prize Bonds without any plausible justification.

    ·         When a customer is frequently converting one product into another (especially in the name of an unrelated third party) without any plausible justification.

    ·         Numerous prizes are repeatedly/very frequently being claimed by the customer against winning prize bonds during a short span of time.

  • FBR sets up body to regulate jewelers, real estate agents

    FBR sets up body to regulate jewelers, real estate agents

    ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday approved a body to regulate transactions by jewelers, real estate agents and accountants under anti-money laundering (AML)/Counter Financing of Terrorism (CFT) laws.

    According to an office order, the FBR approved the operationalization of Directorate General of Designated Non-Financial Business and Professions (DNFBPs), with its headquarter at Islamabad within the existing sanctioned strength and budget grant of FBR with immediate effect.

    The Designated Non-Financial Businesses and Professions (DNFBPs) are real estate agents, jewelers and accountants.

    The FBR issued SRO 924(I)/2020 dated September 30, 2020 related to DNFBPs to comply with conditions under Finance Action Task Force (FAFT).

    Under the latest office order, the FBR sets up field formations at Islamabad, Quetta, Gilgit-Baltistan, Lahore and Karachi.

    The FBR has assigned additional responsibilities to customs and Inland Revenue officials to operate the Directorate General of DNFBPs.

    Dr. Bashirullah Khan (IRS/BS-20) has been assigned additional responsibility of Director General, Directorate General of DNFBPs.

    Other officials who have been given additional charge as Director of Directorate General of DNFBPs are included: Asem Iftekhar, (IRS/BS-20) Karachi, Zafar Iqbal Khan (IRS/BS-20) Islamabad, Irfan Javed (PCS/BS-20), Quetta, Rashid Habib Khan (PCS/BS-20) Gilgit Baltistan, Ahmad Kamal (IRS/BS-20) Lahore and Muhammad Tahir (PCS/BS-19) Director (HQ) DNFBPs Islamabad.

    RELATED STORY

    FBR issues SRO to regulate accountants, jewelers, real estate agents under AML/CFT

  • Pakistan remains in FATF’s grey list; new deadline February 2021

    Pakistan remains in FATF’s grey list; new deadline February 2021

    KARACHI: The Financial Action Task Force (FATF) on Friday decided to keep Pakistan in ‘grey list with the announcement that the country needs to do more.

    FATF President Dr Marcus Player, addressing a webinar to announce the decisions taken by the plenary in its three-day meeting period, said that the forum has decided that Pakistan “needs to do more” when it comes to fulfilling the requirements set out by the task force.

    It was acknowledged that of the 27 conditions that were put forth to Pakistan, 21 have been fulfilled.

    To a question, Dr Player said that once the remaining six conditions are fulfilled, an “on site visit” will be approved under which a team from the FATF will visit the country for the next review.

    “Our discussions are confidential, and the members decided by consensus that Pakistan needs to complete these six items for an onsite visit to be granted.

    “As soon as the plenary decides that Pakistan has completed all the 27 items, then an onsite visit will be made. After that, it will be decided whether the country will be allowed to exit the grey list or not.”

    He said that the new deadline for Pakistan to fulfil the remaining conditions is February 2021.

    Hammad Azhar, federal minister for Minister for Industries and Production in a twee said that Pakistan has achieved impressive progress on its FATF action plan. The country complied with 21 out of 27 action items now stand cleared. Remaining 6 rated as partially complete. Within a year, we progressed from 5/27 to 21/27 completed items. FATF acknowledged that any blacklisting is off the table now.

    “Instead of current Action Plan, discussions remained focused on how Pak can be facilitated for our upcoming 2nd evaluation (MER), due mid next year. I congratulate our Federal and Provincial Teams who have worked day and night even during the pandemic to ensure this turn around,” he added.

  • National Savings: Rules notified for identification of customers, beneficial owners

    National Savings: Rules notified for identification of customers, beneficial owners

    ISLAMABAD: National Savings (AML and CFT) Supervisory Board for National Savings Schemes has issued SRO 956(I)/2020 for identification and verification of customers, beneficial owners of saving schemes.

    According to the SRO regulations shall be called the National Savings (AML and CFT) Regulations, 2020.

    The chapter III of the regulations explained the identification and verification of customers and beneficial owners.

    Identification and verification.- (1) Central Directorate of National Savings (CDNS) shall –

    (a) conduct CDD in the circumstances and matters set out in subsection

    (1) of section 7A of AML Act; and

    (b) for the purposes of conducting CDD as required under sub-section

    (2) of section 7A of the AML Act in the circumstances set out under sub-section (1) of the said section 7A comply with sub-regulations (2) to (18) of regulation 4.

    (2) CDNS shall –

    (a) identify the customer; and

    (b) verify the identity of that customer using reliable and independent documents, data or information as set out in sub-regulation (9) of regulation 4.

    (3) Where the customer is represented by an authorized agent or representative, CDNS shall –

    (a) identify every person who acts on behalf of the customer;

    (b) verify the identity of such person by using reliable and independent documents, data or information as set out in sub-regulation (9) of regulation 4; and

    (c) verify the authority of the person who is acting on behalf of the customer.

    (4) CDNS shall also identify the beneficial owner and take reasonable measures to verify the identity of the beneficial owner by using reliable and independent documents, data or sources of information as set out in regulation (9) of regulation 4, such that CDNS is satisfied that it knows who the beneficial owner is.

    (5) For customers that are legal persons or legal arrangements, CDNS shall understand the nature of such customer’s business and its ownership and control structure.

    (6) For customers that are legal persons or legal arrangements, CDNS shall identify the customer and verify its identity by obtaining the following information, in addition to the information required in sub-regulation (9) of regulation 4, namely:

    (a) name, legal status and proof of existence;

    (b) the powers that regulate and bind the legal person or arrangement, as well as the names of the relevant persons having a senior management position in the legal person or arrangement; and

    (c) the address of the registered office and, if different, a principal place of business.

    (7) For customers that are legal persons, CDNS shall identify and take reasonable measures to verify the identity of beneficial owners by –

    (a) identifying the natural person, if any, who ultimately has a direct or indirect controlling ownership interest, as defined under relevant laws, in a legal person; and

    (b) to the extent that there is doubt under clause (a), as to whether the person with the controlling ownership interest is the beneficial owner or where no natural person exerts control through ownership interests, the identity of the natural person, if any, exercising control of the legal person or arrangement through other means; and

    (c) where no natural person is identified under clause (a) or clause (b), the identity of the relevant natural persons who hold the position of senior managing official.

    (8) For customers that are legal arrangements, CDNS shall identify and take reasonable measures to verify the identity of beneficial owners as follows, namely:-

    (a) for trusts, the identity of the settlor, the trustee, the protector, if any, the beneficiaries or class of beneficiaries, and any other natural persons exercising ultimate effective control over the trust, including through a chain of control or ownership;

    (b) for waqfs and other types of legal arrangements, the identity of persons in equivalent or similar positions as specified in clause (a); and

    (c) where any of the persons specified in clause (a) or (b) is a legal person or arrangement, the identity of the beneficial owner of that legal person or arrangement shall be identified.

    (9) For the purposes of verification of identity of customers or beneficial owners in sub-regulations (2) to (8), reliable and independent document, data or sources of information includes –

    (a) For a natural person, a copy of:

    (i) Computerized National Identity Card (CNIC) issued by NADRA; or

    (ii) National Identity Card for Overseas Pakistanis (NICOP) or passport for non-residents or overseas Pakistanis or those who have dual nationality; or

    (iii) Pakistan Origin Card (POC) or passport for Pakistanis who have given up Pakistan nationality; or

    (iv) Form B or Juvenile card to children under 18 years of age; or

    (v) where the natural person is a foreign national, either an Alien Registration Card (ARC) or a passport having valid visa on it or any other proof of legal stay along with passport.

    (b) for a legal person, a certified copy of –

    (i) resolution of board of directors for opening of account specifying the persons authorized to open and operate the account (not applicable for single member company);

    (ii) memorandum of association;

    (iii) articles of association, wherever applicable;

    (iv) certificate of incorporation;

    (v) Securities and Exchange Commission of Pakistan (SECP) registered declaration for commencement of business as required under the Companies Act, 2017 (XIX of 2017), as applicable;

    (vi) list of directors required to be filed under the Companies Act, 2017 (XIX of 2017), as applicable;

    (vii) identity documents as per clause (a) of all the directors, beneficial owners and persons authorized to open and operate the account.

    (viii) any other documents as deemed necessary including its annual accounts and financial statements or disclosures in any form which may help to ascertain the detail of its activities, sources and usage of funds in order to assess the risk profile of the prospective customer.

    (c) for a legal arrangement, certified copies of –

    (i) the instrument creating the legal arrangement;

    (ii) registration documents and certificates;

    (iii) the legal arrangement’s by-laws, rules and regulations;

    (iv) documentation authorizing any persons to open and operate the account;

    (v) identity document as per clause (a) of sub-regulation (9) of the authorized persons, beneficial owners and of the members of governing body, board of trustees or executive committee, if it is ultimate governing body, of the legal arrangement; and

    (vi) any other documents as deemed necessary including its annual accounts and financial statements or disclosures in any form which may help to ascertain the subject of the trust, the detail of its activities, sources and usage of funds in order to assess the risk profile of the prospective customer.

    (d) In respect of government institutions and entities not covered above, –

    (i) CNICs of the authorized persons; and

    (ii) letter of authorization from the concerned authority.

    (10) CDNS shall verify the identity of the customer and beneficial owner before or during the course of establishing a business relationship or conducting occasional transactions.

    (11) CDNS may complete verification of the identity of the customer and the beneficial owner after the establishment of the business relationship, provided that –

    (a) this occurs as soon as reasonably practicable;

    (b) this is essential not to interrupt the normal conduct of business; and

    (c) the risks are proven to be low.

    (12) CDNS shall have and implement risk management procedures concerning the conditions under which a customer may utilize the business relationship prior to verification.

    (13) CDNS shall conduct ongoing due diligence on the business relationship, including –

    (a) scrutinizing transactions undertaken throughout the course of the relationship to ensure that the transactions being conducted are consistent with CDNS’s knowledge of the customer, their business and risk profile, including where necessary, the source of funds; and

    (b) undertaking reviews of existing records and ensuring that documents, data or information collected for the CDD purposes are kept up-to-date and relevant, particularly for higher risk categories of customers.

    (14) CDNS shall apply CDD requirements to existing customers on the basis of materiality and risk, and shall conduct ongoing due diligence on such existing relationships at appropriate times, taking into account whether and when CDD measures have previously been undertaken and the adequacy of the data and documents previously obtained.

    (15) CDNS shall apply the countermeasures sanctioned by the Federal Government, pursuant to recommendations by the National Executive Committee, when called upon to do so by the FATF.

    (16) CDNS shall apply EDD in the following circumstances, including but not limited to –

    (a) business relationships and transactions with natural persons or legal persons and legal arrangements when the ML and TF risks are higher;

    (b) business relationships and transactions with natural persons or legal persons and legal arrangements from countries for which this is called for by the FATF; and

    (c) PEPs and their close associates and family members.

    (17) EDD measures may include, but shall not be limited to, the following measures, namely:-

    (a) obtaining additional information on the customer (e.g. volume of assets, information available through public databases, internet, etc.), and updating more regularly the identification data of customer and beneficial owner;

    (b) obtaining additional information on the intended nature of the business relationship;

    (c) obtaining information on the source of funds or source of wealth of the customer;

    (d) obtaining information on the reasons for intended or performed transactions.

    (e) obtaining the approval of Senior Management to commence or continue the business relationship; and

    (f) conducting enhanced monitoring of the business relationship by increasing the number and timing of controls applied and selecting patterns of transactions that need further examination.

    (18) In relation to clause (c) of sub-regulation (16), CDNS shall –

    (a) implement appropriate risk management systems to determine if a customer or beneficial owner is a PEP or a close associate or family member of a PEP, both prior to establishing a business relationship or conducting a transaction, and on an on-going basis throughout the course of the business relationship;

    (b) at a minimum, apply the following EDD measures –

    (i) obtain approval from senior management to establish or continue a business relationship where the customer or a beneficial owner is a PEP, close associate or family member of a PEP or subsequently becomes a PEP, close associate and family member of a PEP;

    (ii) take reasonable measures to establish the source of wealth and the source of funds of customers and beneficial owners identified as a PEP, close associate or family member of a PEP; and

    (iii) conduct enhanced ongoing monitoring of business relations with the customer or beneficial owner identified as a PEP, close associate and family member of a PEP.

    (19) CDNS may allow the application of SDD only where lower risks have been identified through an adequate analysis through its own risk assessment and any other risk assessments publicly available or provided by Supervisory Board in accordance with subregulation (3) of regulation 3 and commensurate with the lower risk factors.

    (20) SDD measures may include but shall not be limited to –

    (a) verifying the identity of the customer and the beneficial owner after the establishment of the business relationship;

    (b) reducing the degree of on-going monitoring and scrutinizing transactions; and

    (c) not collecting specific information or carrying out specific measures to understand the purpose and intended nature of the business relationship but inferring the purpose and nature from the type of transactions or business relationship established.

  • FBR issues SRO to regulate accountants, jewelers, real estate agents under AML/CFT

    FBR issues SRO to regulate accountants, jewelers, real estate agents under AML/CFT

    ISLAMABAD: Federal Board of Revenue (FBR) on Tuesday issued a notification to regulate the profession/business of accountants, jewelers, real estate agents in ongoing efforts against money laundering and countering finance of terrorism.

    The regulations have been issued through SRO 924(I)/2020 dated September 30, 2020 to comply with the conditions under Finance Action Task Force (FATF), which is scheduled to meet October 2020 to evaluate Pakistan’s performance.

    The regulations are called the Federal Board of Revenue Anti Money Laundering (AML) and Countering Financing of Terrorism (CFT) Regulations for DNFBPs, 2020.

    The Designated Non-Financial Businesses and Professions (DNFBPs) are real estate agents, jewelers and accountants.

    The regulations have been issued by FBR’s FATF Cell.

    Under the new regulations, every DNFBP shall be registered with the FBR. The DNFBP shall provide any information or documentation that may be required by the Board for the purposes of registration or keeping the DNFBP registration up to date, including but not limited to criminal records of the senior management and beneficial owners.

    The DNFBP shall notify the FBR if it ceases operations as a DNFBP within thirty business days after ceasing operations, in the form and manner that may be required by the FBR, and the FBR shall deregister the DNFBP if the appropriate information is provided.

    The DNFBPs shall maintain records as set out in section 7C of the AML Act which are sufficient to permit reconstruction of individual transactions including the nature and date of the transaction, the type and amount of currency involved and the customer involved in the transaction so as to provide, when necessary, evidence for prosecution of criminal activity.

    The record may be maintained in paper or electronic form or on microfilm. The records of identifications data obtained through Customers Due Diligence (CDD), including Enhanced Due Diligence (EDD) process, including copies of identification documents, application forms, verification documents and other documents along with business correspondence, and results of any analysis undertaken shall be maintained for a minimum period of five years after the business relationship is terminated.

    The DNFBPs shall retain such records till disposal of case where transactions, customers or instruments are involved in litigation or the same are required by a court of law or other competent authority, the DNFBP shall retain such records until such time as the litigation is resolved or until the court of law or competent authority indicates that the records no longer need to be retained.

    The DNFBP shall satisfy promptly any enquiry or order from Board, designated law enforcement Agencies and FMU, for supply of CDD information and transaction records as per the relevant provisions of AML Act.

    The DNFBPs shall conduct CDD in the circumstances and matters set out in section 7A(1) of the AML Act when they engage in the following activities, namely:-

    Real Estate Agents- when they are involved in transactions for a client concerning the buying and selling of real estate;

    Jewelers and Dealers in precious metals and stones – when they engage in any cash transaction with a customer or client equal to or above Rs. 2 Million; and

    Accountants when they prepare for, or carry out, transactions for their clients concerning the activities described in section 2(xii)(c) and (d) of the AML Act.

    The DNFBP shall identify the customer whether entering into a business relationship or conducting an occasional transaction, and whether natural or legal person or legal arrangement and verify that customers identity using reliable, independent sources documents, data or information as required under these regulations.

    The DNFBP shall identify the beneficial owner and take reasonable measure to verify the identity of the beneficial owner by using reliable and independent document, data or sources of information as set out in these Regulations, such that the DNFBP is satisfied that it knows who the beneficial owner is.

    Where the customer is represented by an authorized agent or representative, the DNFBP shall –

    Identify every person who acts on behalf of the customer,

    Verify the identity of that person by using reliable and independent documents, data or information as set out in these regulations;

    and Verify the authority of that person to act on behalf of the customer.

    For the purposes of verification of identity of customer or beneficial owner in these regulations, reliable and independent document, data or sources of information includes –

    (a) for a natural person, copy of –

    Computerized National Identity Card (CNIC) issued by NADRA; OR

    National identity card for overseas Pakistanis (NICOP) and/or duly issued machine readable passport for non resident/overseas Pakistanis or those who have dual nationalities; or

    Copy of Pakistan origin card (POC) issued by NADRA; and/or passport for Pakistanis who have given up Pakistan nationality; or Form B or smart/juvenile card issued by NADRA to children under age of 18 years; or

    Where the natural person is a foreign national, either Alien Registration Card (ARC) issued by National Aliens Registration Authority (NARA), Ministry of Interior or Passport having valid visa on it or any other proof of legal stay along with the passport.

    The DNFBPs shall apply EDD in the following circumstances, including but not limited to:

    business relationship and transactions with natural and legal persons when the risks are higher;

    business relationship and transactions with natural and legal persons from countries for which this is called for by the FATE and

    PEPs and their close associates and family members.

    EDD measures may include but shall not be limited to the following measures:

    Obtaining additional information on the customer (e.g. volume of assets, information available through public databases, internet, etc.), and updating more regularly the identification data of customer and beneficial owner;

    Obtaining additional information on the intended nature of the business relationship;

    Obtaining information on the source of funds or source of wealth of the customer;

    Obtaining information on the reasons for intended or performed transactions. Obtaining the approval of senior management to commence or continue the business relationship;

    Conducting enhanced monitoring of the business relationship, by increasing the number and timing of controls applied, and selecting patterns of transactions that need further examination.

    The record to be maintained and furnished by the Accountants, Real Estate Agents and Jewelers under these rules and as required by AML Act shall be subject to inspection by FBR, as laid down in section 6A(2)(f) of AML Act, who may be assisted by other law enforcement agencies.

    Any violation of any provision of these regulations shall be subject to sanctions issued under the AML Act.

  • Pakistan makes substantial progress in completing remaining FATF Action Plan: Hafeez Shaikh

    Pakistan makes substantial progress in completing remaining FATF Action Plan: Hafeez Shaikh

    ISLAMABAD: Pakistan has made substantial progress towards completing remaining action plan of Financial Action Task Force (FATF) through increasing the effectiveness of its AML/ CFT Regime, Dr Abdul Hafeez Shaikh, Adviser to the Prime Minister on Finance and Revenue told International Financial Accountability.

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  • FATF maintains Pakistan’s grey list status till June 2020

    FATF maintains Pakistan’s grey list status till June 2020

    KARACHI: Financial Action Task Force (FATF) on Friday maintained Pakistan’s status of grey list till June 2020 and asked the country to complete its full action plan.

    “To date, Pakistan has largely addressed 14 of 27 action items, with varying levels of progress made on the rest of the action plan. The FATF strongly urges Pakistan to swiftly complete its full action plan by June 2020,” a statement received from Paris, France after conclusion of FATF plenary meeting (February 19-21, 2020).

    The statement said:

    “Since June 2018, when Pakistan made a high-level political commitment to work with the FATF and APG to strengthen its AML/CFT regime and to address its strategic counter-terrorist financing-related deficiencies, Pakistan’s political commitment has led to progress in a number of areas in its action plan, including risk-based supervision and pursuing domestic and international cooperation to identify cash couriers. Pakistan should continue to work on implementing its action plan to address its strategic deficiencies, including by:

    (1) demonstrating that remedial actions and sanctions are applied in cases of AML/CFT violations, relating to TF risk management and TFS obligations;

    (2) demonstrating that competent authorities are cooperating and taking action to identify and take enforcement action against illegal money or value transfer services (MVTS);

    (3) demonstrating the implementation of cross-border currency and BNI controls at all ports of entry, including applying effective, proportionate and dissuasive sanctions;

    (4) demonstrating that law enforcement agencies (LEAs) are identifying and investigating the widest range of TF activity and that TF investigations and prosecutions target designated persons and entities, and those acting on behalf or at the direction of the designated persons or entities;

    (5) demonstrating that TF prosecutions result in effective, proportionate and dissuasive sanctions

    (6) demonstrating effective implementation of targeted financial sanctions (supported by a comprehensive legal obligation) against all 1267 and 1373 designated terrorists and those acting for or on their behalf, including preventing the raising and moving of funds, identifying and freezing assets (movable and immovable), and prohibiting access to funds and financial services;

    (7) demonstrating enforcement against TFS violations including administrative and criminal penalties and provincial and federal authorities cooperating on enforcement cases;

    (8) demonstrating that facilities and services owned or controlled by designated person are deprived of their resources and the usage of the resources.

    “All deadlines in the action plan have expired. While noting recent and notable improvements, the FATF again expresses concerns given Pakistan’s failure to complete its action plan in line with the agreed timelines and in light of the TF risks emanating from the jurisdiction.

    The statement said that in case the country failed to comply the FATF will take action, which could include the FATF calling on its members and urging all jurisdiction to advise their FIs to give special attention to business relations and transactions with Pakistan.

  • Biometric verification of all saving scheme investors to be conducted under FATF recommendations

    Biometric verification of all saving scheme investors to be conducted under FATF recommendations

    ISLAMABAD: The government will conduct biometric verification of all investors of National Saving Schemes in order to make compliance with recommendations of Financial Action Task Force (FATF), a statement issued by Finance Division said on Saturday.

    Asia Pacific Group in its recently published Mutual Evaluation Report (MER 2019), has pointed out number of deficiencies on the part of Central Directorate of National Savings (CDNS) in terms of compliance to FATF recommendations, which has negatively affected the overall grading of different recommendations specially the recommendation 10, 11, 12 and 15.

    In this context, CDNS is committed to mitigating the deficiency to improve customer service delivery and to comply the FATF recommendation to safeguard the interest of the investors, it said.

    Banks under the supervision of SBP have already put in place all the required systems and KYC processes to comply the FATF recommendation.

    Finance Division through promulgation of National Savings Schemes (AML-CFT) Rules, 2019 has decided to engage an AML-CFT compliant bank, through competitive bidding, to put in place the requirement as well as the necessary training of employees of Central Directorate of National Savings (CDNS).

    Accordingly, Expression of Interest, in consultation with SBP, has been sought from the interested bank to conduct KYC (Know Your Customer) and other requirement of new as well as existing client of CDNS.

    This will include the biometric verification and screening of potential clients in UN Proscribed Person List.

    All these screenings are meant to stop any ill-gotten money to become part of financial system and to safeguard the valued investor from the menace of Money Laundering and Terrorist Financing.

    Central Directorate of National Savings (CDNS) as it stands today is one of the longstanding institutions in the country with a legacy of more than 140 years.

    The institution has always been a symbol of unshakable trust of the public.

    National Savings is playing its pivotal role to inculcate the Culture of Savings, facilitate Financial Inclusion and extending Social Security Net to the deserving sections of the society.

    Around 33 percent of CDNS deposits are in Welfare Schemes which attribute around 2 percent incremental rate of profit over and above other regular savings schemes.

    Currently, CDNS manages portfolio of Rs. 4,038 billion (November 2019) of more than 7 million investors.

    National Savings Schemes (“NSS”) provide risk free and competitive avenue to all segments of society specially the most vulnerable i.e. senior citizens, pensioners, widows, physically challenged persons and family members of Shuhada.

    On the other hand, it provides a non-inflationary and cost effective borrowing to the government to bridge the overall fiscal deficit which ultimately reduces dependency on external borrowing.

    About 19 percent of domestic debt consists of NSS while these deposits are equal to 28 percent of total deposit of scheduled bank.

    One of the main challenges to CDNS was its manual operations and lack IT, therefore, CDNS has started its journey of automation in 2009 and successfully completed PSDP funded Automation Project Phase I & II in 2013 and 2017.

    Through these project 223 National Savings Centre (“NSC”) i.e. (60 percent out of total 376) have been successfully automated.

    Automation of remaining 153 is in active process with support of Department for International Development (DFID), UK.

    Meanwhile, CDNS has upgraded its core business solution from decentralized to centralized architecture.

    Around 144 branches have already been shifted to upgraded solution where customer transaction time has significantly reduced.

    Also, the provision of Alternate Delivery Channels (ATM) is in final stages which will further improve the service delivery. Introduction of technology has provided CDNS the opportunity to modernize its process which include swift data reporting, reconciliation with other departments, budgeting and forecasting, customer data base etc.

    Due to IT progress CDNS is now capable to implement number of initiatives which was not possible due to manual operation.

  • IR officers oppose proposed setup of Pakistan Revenue Authority

    IR officers oppose proposed setup of Pakistan Revenue Authority

    KARACHI: Senior officers of Inland Revenue Service (IRS) has strongly opposed the formation of planned Pakistan Revenue Authority (PRA) and said it will have negative effect on revenue collection.

    The concerns were raised at a meeting of IRS Officers Association held on Thursday, which was attended by more than 120 IRS officers.

    It was unanimously agreed that the officers were in support of a meaningful and transparent reforms aimed at creating a viable automated and effective revenue organization.

    However, they showed their concerns over the discreetly and secretly approved haphazard reform plans which has apparently been prepared by non-service elements.

    It is neither any detailed plan nor it is legal in the strict sense of the constitutional and statutory impediments in the federal setup of the country, according to a statement.

    It said that the IRS is the largest service rank and is equipped with on-job training with necessary professional skills for effective tax collection given the country’s socio-economic ground realities.

    The reforms in revenue or in any state body, if experimented without involving the stakeholders as well as being oblivious of the ground realities, are bound to fail.

    In this backdrop, the concerns were raised that the under discussion reforms cannot be perceived to bring any betterment rather are to end up in creating confusion and uncertainty.

    It would frustrated the pace of tax collection which is much needed for defence and development of the country,” it said, adding that it would also frustrate the documentation and revenue drive in place by IRS against the Benami transactions/properties, to tax assets held abroad and weaken the case of Pakistan in the FATF proceedings.

    The meeting agreed that these reforms are aimed at creating a controversial authority wherein non-civil servants could be hired representing business communities and professional organization which might encourage tax avoidance and evasion instead of revenue collection.

    The reforms were perceived as a kind of coup against the willing, professional, sound and hands on experienced professionals of IRS who, despite business friendly tax policies, have raised tax revenues to five times in last ten years and that too with limited / meager resources, with no financial autonomy.

    They found that reforms under discussions conveyed the impression of some conspiracy hatched by non-professionals in a conniving and shabby manner which would lead to further deformation and deterioration of the service as well as the national economy.

    The participants showed unflinching support and solidarity with the chief commissioners for conveying the IRS community’s concerns to the Chairman FBR during the Chief Commissioners Conference held recently in Islamabad.

    Simultaneously, the house also expressed solidarity and support to the lower pay scale employees of IRS and assured them their concerns with regard to service conditions in the proposed reforms programme would be conveyed to the higher ups with the suggestion that representatives of these employees should also be made part of the consultative/inclusive process.

    The meeting ended with the resolution reiterating that the IRS officers and employees are not against reforms but the process should be inclusive giving due weightage to the concerns of all the stakeholders.

  • SBP emphasizes more efforts for taking Pakistan out of FATF grey list

    SBP emphasizes more efforts for taking Pakistan out of FATF grey list

    KARACHI: Dr. Reza Baqir, Governor State Bank of Pakistan (SBP) on Monday emphasized on putting more effort against money laundering and terrorist financing to ensure that Pakistan is out of grey list in the next meeting of FATF.

    While inaugurating the conference on Anti-Money Laundering (AML)/ Combating Financing of Terrorism (CFT) and Trade-Based Money Laundering (TBML), Dr. Reza Baqir, Governor State Bank stated that significant progress has been made between May and September 2019 to meet the action plan items set by Financial Action Task Force (FATF) in different areas to demonstrate effectiveness of AML safety regime of Pakistan.

    There was a major rethink of the approach being taken by the authorities in early to mid 2019. Consequently, a number of steps were taken to significantly strengthen our approach to making progress on these issues.

    He however, stressed for the need of putting more effort to make progress on remaining areas to ensure that Pakistan is out of grey list in the next meeting of FATF.

    He was speaking to the conference conducted by SBP and Asian Development Bank today at SBP, Karachi in a collaborative effort to mitigate the risks of money laundering and financing of terrorism.

    Speaking at the conference, the Governor informed the audience that since the grey-listing, State Bank has arranged many AML/CFT outreach and awareness programs for its regulated entities and stakeholders and that the conference is a useful platform to understand the AML/CFT challenges being faced globally and the best practices followed in mitigating such challenges.

    In the context of implementing AML/CFT requirements, the Governor urged the financial sector to make efficient use of technologies for assessment of risks, controls and ongoing monitoring of financial transactions and enhance capacity by continuous training of their employees.

    Dr. Baqir emphasized that trade based money laundering poses complex and sophisticated challenges and that SBP inspection teams conducted thematic inspections of banks with respect to export and import of specific goods.

    He also referred to State Bank’s framework for managing risks of trade based money laundering and terrorist financing which has been issued to encourage authorized dealers (banks) to effectively manage the trade based money laundering and terrorist financing risks.

    Ms. Xiohang Yang, Country Director ADB, and Mr. Mohsin Ali Nathani, President & CEO HABIBMETRO Bank also spoke on the occasion. Ms. Yang stated that ‘AML/CFT is a critical issue for trade finance, which is why ADB’s Trade Finance Program is playing an increasing role in this space. She stated that ADB has a strong commitment to work with Pakistan’s banking sector and the SBP on this issue.

    Ms. Yang further stated that the FATF has identified enhanced capacity building/training in AML/CFT as an immediate priority requirement and they are pleased to partner with the SBP and thankful to HABIBMETRO Bank for organizing the same.

    Mohsin Ali Nathani, President & CEO HABIBMETRO Bank while addressing the conference added, ‘Enhancement of AML & CFT efforts through increased awareness and strengthened systems, controls and processes is imperative for our country and the banking sector. HABIBMETRO Bank is pleased to organize this conference and bring together relevant stakeholders from the region, regulator and banking sector to re-affirm our collective commitment to mitigating the risks of Money Laundering and Terrorism Financing.’

    During the conference several prominent speakers and panelists discussed the requisites and obligations with regard to AML and CFT, including Terrorism Financing Risk Assessments, Transnational Risks in Trade Based Money Laundering (TBML), risks posed by DNFBPs & NPOs and Ultimate Beneficial Ownership.

    The conference also included a detailed discussion on the impact of Trade Based Money Laundering and the repercussions of the same for the banking sector especially in the context of grey listing.

    The conference was organized by HABIBMETRO Bank and attended by the Deputy Governor State Bank of Pakistan, Country Head Asian Development Bank and international experts in the field of AML/ CFT and trade from the United States, Australia and UAE.

    Participants included CEOs and senior management of Banks, DFIs, Microfinance Banks and Exchange Companies and representatives from the SBP, Financial Monitoring Unit (FMU) and Securities & Exchange Commission of Pakistan (SECP).