Tag: Financial Action Task Force

FBR issues AML/CFT guidelines for accountants to comply with FATF conditions

KARACHI: Federal Board of Revenue (FBR) has issued guidelines for accountants related to Anti-Money Laundering (AML)/Counter Financing of Terrorism (CFT) laws to comply with conditions of Financial Action Task Force (FATF).

The guidelines have been prepared jointly by Pakistan’s three designated AML/CFT supervisors of accountants in Pakistan, namely The Institute of Chartered Accountants of Pakistan (ICAP), the Institute of Cost and Management Accountant of Pakistan (ICMAP) and the FBR.

Accountants are only subject to AML / CFT measures if they provide the specified activities or services as defined in the Anti Money Laundering Act (AMLA) Sections 2 (xii) (c) (d).

All accountants, therefore, should review Section 4 in the Guidelines to determine whether they provide the specified services, and if so, what are the AML / CFT requirements, and how to implement the requirements.

These are further explained in Sections 5 to 12 of the Guidelines.

The Guidelines are focused on AML / CFT measures such as risk assessment, AML / CFT programme, CDD, beneficial ownership, politically exposed persons, targeted financial sanctions, Suspicious Transaction Report (STR), Currency Transaction Report (CTR) and record keeping. Those measures are further explained in the Guidelines.

The guidelines do not add new regulatory requirements upon accountants.

The guidelines do not address the broader criminal conduct associated with those who engaged in, or aid or abet those engaged in money laundering (ML) or terrorism financing (TF). Those criminal offences under the AMLA and other laws apply to all persons’ subject to Pakistan’s laws.

In addition to the AMLA, the three main regulations referred to in the Guidelines are:

The Anti-Money Laundering and Combating Financing of Terrorism Regulations for Cost and Management Accountants Reporting Firms (SRB AML / CFT Regulations for Reporting Firms)

The Anti-Money Laundering and Combating Financing of Terrorism Regulations for Chartered Accountants Reporting Firms (SRB AML / CFT Regulations for Reporting Firms)

The Federal Board of Revenue Anti-Money Laundering and Combating Financing of Terrorism Regulations for Designated Non-Financial Businesses and Professions (FBR AML / CFT Regulations for DNFBPs)

AML / CFT Sanction Rules 2020 SRO NO 950(I)/2020 (AML / CFT Sanction Rules)

Both the ICAP and ICMAP, as Self-Regulatory Bodies (SRBs), have been designated by Federal Government pursuant to AMLA (Section 6A) as AML / CFT regulatory authorities.

To avoid repetition and any perceived favouritism, and purely for the purposes of the Guidelines, the two professional bodies will be referred to as “SRBs” and their AML / CFT regulations collectively referred to as the “SRB AML / CFT Regulations for Reporting Firms”. Except for the name of the SRB, the two regulations are identical.

The FBR AML / CFT Regulations for DNFBPs are very similar to the SRB AML / CFT Regulations for Reporting Firms. However, they are not identical in terms of numbering and there are sector specific requirements covering other DNFBPs that are not applicable to accountants (accountants licensed by ICAP and ICMAP). For these reasons, they are referred separately in the Guidelines.

The FATF Recommendations of specific concerns to accountants are those covering DNFBPs. DNFBPs include the following:

 Casinos

 Real estate agents

 Dealers in precious metals and stones

 Trust and company service providers

 Lawyers, notaries, other independent legal professionals and accountants – when they prepare for or carry out transactions for their customer concerning the following activities:

— buying and selling of real estate;

— managing of customer money, securities or other assets;

— management of bank, savings or securities accounts;

— organization of contributions for the creation, operation or management of companies;

— creation, operation or management of legal persons or arrangements, and buying and selling of business entities.

FBR explains accountant as sole practitioners, partners or employed professionals within professional firms when they prepare for or carry out transactions for their client concerning the following activities:

Accountancy services – when carryout monetary transactions for their customers concerning the following activities:

(I) managing, operating, buying and selling of real estate, legal persons and legal arrangements and preparing documents therefore;

(II) managing of client money, securities or other assets;

(III) managing bank, savings or securities accounts; or

(IV) organizing contributions for the creation, operation or management of companies

Trust and company formation services – when they carry out monetary transactions or services for a client concerning the following activities:

(I) acting as a formation agent of legal persons;

(II) acting as or arranging for another person to act as a director or secretary of a company, a partner of a partnership, or a similar position in relation to other legal persons;

(III) providing a registered office, business address or accommodation, correspondence or administrative address for a company, a partnership or any other legal person or arrangement;

(IV) acting as or arranging for another person to act as a trustee of a trust or performing the equivalent function for another form of legal arrangement; or

(V) acting as or arranging for another person to act as a nominee shareholder for another person.

January 12, 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.

October 23, 2020
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.
(more…)

July 11, 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.

February 21, 2020
FATF APG issues evaluation report on Pakistan

KARACHI: Asia Pacific Group (APG) of Financial Action Task Force (FATF) on money laundering has released its mutual evaluation report on October 02, 2019, where the group has discussed measures in place in Pakistan during onsite visit conducted in October 2018.

Analysts at Topline Research said that according to recently released report by APG, out of 40 recommendations given to Pakistan, the country has shown compliance to one factor ‘Financial Institutions Secrecy Law’ and has shown non-compliance in four areas.

However, Pakistan is partially compliant on 26 and largely compliant on 9 recommendations.

The analysts believe the probability is high that Pakistan will remain on the “grey list” as the government needs minimum of 3 votes to avoid falling in black list. Support from China, Malaysia and Turkey for the said matter is likely.

International Monetary fund (IMF) has also kept FATF issue as a structural benchmark with timeline ending Oct 2019, whereby Pakistan’s AML/CFT was supposed to be strengthened.

In case of black-list the potential impact would be overall downgrade of the financial system of Pakistan and restrictions on its markets.

October 7, 2019