Karachi, November 30 – The Federal Investigation Agency (FIA) has issued a notice branding Chairman Meinhardt Shahzad Naseem and CEO Omar Shahzad, the owners of the Singapore-based construction company Meinhardt, as absconders.
(more…)Tag: money laundering
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Pakistan Customs Uncovers Rs 69.5 Billion in Money Laundering Cases Over Five Years
Islamabad, October 4, 2023 – Pakistan’s customs authorities have revealed that they detected money laundering activities worth a staggering Rs 69.5 billion over the past five years.
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SBP warns public against dealing with illegal forex operators
KARACHI: State Bank of Pakistan (SBP) has warned general public against sale and purchase through illegal operators and transfer of foreign currency through Hawala and Hundi.
The SBP informed the general public that a person may unknowingly become part of money laundering and terrorism financing offence by dealing with illegal foreign exchange operators.
The money laundering and terrorism financing offences are punishable under Anti Money Laundering (AML) Act 2010 and Anti Terrorism Act (ATA), 1997.
“It is advised in your self-interest to carry foreign currency sale, purchase and remittance transaction with only SBP authorized banks and exchange companies.”
The SBP also advised that do not forget to collect system generated official receipt of transactions. If a person come across any illegal foreign exchange sale/purchase and Hawala/Hundi Operators should report the Federal Investigation Agency.
The SBP said that the business of foreign exchange in Pakistan is regulated under Foreign Exchange Regulation Act 9FERA) 1947.
State Bank of Pakistan issues authorization to banks and exchange companies to conduct foreign exchange business. Any person (individual or entity) other than those authorized by the SBP are doing illegal foreign exchange business which is punishable offence under FERA 1947 and AMLA 2010.
All such operators are informed in their own interest not to indulge in illegal foreign exchange sale/purchase and hawala/hundi business.
“Extensive action against illegal currency exchange and hawala/hundi operators is being carried out by relevant law enforcement agencies,” the SBP said.
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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.
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FBR launches action against suspicious transactions to comply FATF requirement
ISLAMABAD: Federal Board of Revenue (FBR) has launched action against suspicious transactions to curb money laundering in order to meet the requirement of Financial Action Task Force (FATF).
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SECP proposes amendments to prevent corporate money laundering
ISLAMABAD: Securities and Exchange Commission of Pakistan (SECP) has proposed amendments laws to prevent money laundering through corporate entities.
A statement issued on Tuesday said that the SECP has issued a set of notifications, soliciting public consultation on drafts of amendments to the Companies (Incorporation) Regulations, 2017, Companies (General Provisions and Forms) Regulations, 2018, Foreign Companies Regulations, 2018, and Limited Liability Partnership Regulations, 2018.
The proposed amendments collectively make disclosures regarding the ownership and control structure of the companies and limited liability partnerships more transparent.
These amendments, issued in line with the recommendations on transparency of legal persons issued by the Financial Action Task Force, will help in identifying the real owners of such entities.
The amendments also propose to explicitly prohibit the issuance or transfer of equity and debt securities of a bearer nature as well as to increase the period for retention of records of dissolved companies.
The amendments will address the deficiencies highlighted in the country’s mutual evaluation report published by the Asia Pacific Group on Money Laundering in October 2019.
With the effect of propose amendments, Companies and LLPs would have to provide additional information to SECP, if the ownership and control structure of such entities is obscured through a chain of multiple entities, whether registered in Pakistan or abroad.
The draft Regulations define an ultimate beneficial owner as a person who exercises ownership or control rights over a company or LLP indirectly through multiple layers of corporate entities or other legal persons or any other arrangements.
Amendments suggested specifying a threshold of a minimum of 25 percent of ownership or control rights of the ultimate beneficial owner in the reporting entity, which would be owned through multiple layers of intermediate corporate entities.
In order to give effect to the proposed amendments, the Commission has also publicized the substantive provisions being added to the enabling laws, i.e. the Companies Act, 2017 and the Limited Liability Partnership Act, 2017.
The proposed amendments are placed on SECP’s website for public consultation.
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National Saving Scheme AML, CFT Rules: Supervisory board constituted for monitoring
ISLAMABAD: The ministry of finance has constituted supervisory board to provide independent oversight of implementation of National Savings Schemes (AML and CFT) Rules, 2019.
The advisory board has been comprised of:
01. Additional Finance Secretary (Budget): Chairman
02. Syed Jahangir Shah, Director, State Bank of Pakistan: Member
03. Ms. Tanzila Nisar Mirza, Additional Director, Securities and Exchange Commission of Pakistan: Member
04. Adnan Imran, Director, Financial Monitoring Unit: Member
05. Joint Secretary (B-1), Ministry of Finance: Member/Secretary
As per the rules, the Supervisory Board shall provide independent oversight of implementation of these rules and take necessary enforcement actions against violations thereof.
The Finance Division shall provide all secretarial and administrative support to the Board for effective discharge of its responsibilities.
The Board shall, within two months of the commencement of these rules, devise its SOPs for supervision of CDNS to ensure compliance with AML and CFT requirements.
The Board shall have powers to issue appropriate standard operating procedures(SOPs), demand receipt of appropriate management information system on periodical basis, direct CDNS to take such actions as may be required to address deficiencies pointed out during such assessments and advise such enforcement actions as it may deem necessary.
The Board shall have powers to direct CDNS to take all reasonable measures to ensure compliance with provisions of the AML Act, 2010 and these rules.
The Board shall have powers to compel production of any information or record it may require for the discharge of its responsibilities and CDNS shall provide the information and record in such format and within such timelines as may be specified by the Board.
The Board shall have powers to engage chartered accountant firms from SBP’s approved panel of auditors to conduct onsite examinations, assess ML and TF risks posed, assess corresponding controls and determine compliance with the AML Act, 2010 and these rules and regulations issued from time to time.
If any provision of these rules, is contravened, or if any default is made in complying with any requirement of these rules or orders or SOPs issued there under, by any officer or official of CDNS, the person who contravened shall be punishable in accordance with the law for the time being in force.
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Taxpayers’ declarations to be checked for money laundering
ISLAMABAD: Financial Monitoring Unit (FMU) has been allowed to obtain information of taxpayers from tax authorities to check income tax returns and other declarations for money laundering and terror financing.
The FMU has been granted access to taxpayers’ data through amendment introduced to Section 216 of the Income Tax Ordinance, 2001. The amendment has been brought through Tax Laws (Second Amendment) Ordinance, 2001.
Under Section 216 of the Income Tax Ordinance, 2001, public servants are barred from disclosing any information relating to income tax filings, evidences or proceedings of any taxpayer.
Certain exceptions to this general prohibition are also contained in the said section whereby information may be disclosed to specified persons, organizations or authorities.
By way of an amendment made through the Second Amendment Ordinance, Financial Monitoring Unit (FMU) established under the Anti-Money Laundering Act, 2010 has been included in the list of such exceptions which do not fall within the ambit of confidentiality clause contained in Section 216, tax experts at PwC A F Ferguson Chartered Accountants said.
This amendment is intended to enable FMU to better implement anti-money laundering procedures by directly obtaining necessary information from public servants.
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SBP directs MFBs to ensure verification of customers
KARACHI: State Bank of Pakistan (SBP) on Tuesday issued orders to microfinance banks (MFBs) to ensure verification of customers in order to mitigate various risks arising from money laundering and financing terrorism.
A circular issued by the central bank referred it previous instructions issued through Circular No. 02 dated October 05, 2018 to mitigate various risks arising from money laundering and financing of terrorism.
As stipulated under Regulation M-1, ongoing Customer Due Diligence (CDD) is an essential aspect of effective KYC/CDD procedures and applies to all customers to whom the MFB is offering any type of service(s).
Accordingly, it is reiterated that MFBs must ensure strict observance of all applicable instructions including identification and verification of customers and their beneficial owner(s) and obtain information on the purpose and intended nature of business relationship.
The monitoring mechanism in place at MFBs should be adequately resourced and strengthened to ensure that the transactions being conducted in the accounts are consistent with the MFB’s knowledge of their customer, business, risk profile and the source of funds.
With the objective to know the ultimate beneficial ownership of accounts/ transactions, the MFBs shall enhance their efforts to obtain relevant information and examine background and purpose of all complex, unusual large transactions and unusual patterns of transactions, which do not commensurate with customer profile or have no apparent economic or visible lawful purpose.
MFBs are also advised to refer to the SECP Circular No. 16 of 2018 dated August 29, 2018 (https://www.secp.gov.pk/laws/circulars/) through which the Commission has directed all companies to enhance their efforts to obtain and maintain up-to-date information relating to their ultimate beneficial owners, i.e. natural persons or individuals who ultimately own or control the company.
Therefore, MFBs may also seek such ultimate beneficial ownership information from their relevant customers during the CDD process.
Moreover, with the view to further strengthen the measures already in place and mitigate the money laundering and terrorist financing risks, MFBs are advised to immediately take following steps:
- a) Ensure optimal utilization of biometric technology and carry out biometric verification of the existing customers (if already not done) as per following timelines and thresholds:
Priority Category of Customers Threshold Timeline High Priority Listed /Public Limited Companies Account turnover exceeding PKR 1,000 million for any of the calendar year 2017, 2018 or for a period since January 1, 2019 to September 30, 2019. 31st January, 2020 Private Limited Companies Account turnover exceeding PKR 500 million for any of the calendar year 2017, 2018 or for a period since January 1, 2019 to September 30, 2019. All customers except Public/Private Limited Companies Account turnover exceeding PKR 250 million for any of the calendar year 2017, 2018 or for a period since January 1, 2019 to September 30, 2019. Medium Priority Listed /Public Limited Companies Account turnover from PKR 500 million to PKR 1000 million for any of the calendar year 2017, 2018 or for a period since January 1, 2019 to September 30, 2019. 31st March, 2020 Private Limited Companies Account turnover from PKR 250 million to PKR 500 million for any of the calendar year 2017, 2018 or for a period since January 1, 2019 to September 30, 2019. All customers except Public/Private Limited Companies Account turnover from PKR 100 million to PKR 250 million for any of the calendar year 2017, 2018 or for a period since January 1, 2019 to September 30, 2019. Normal All other accounts not covered in the above categories 30th June, 2020 Note
Biometric verification of persons authorized to open and operate the account of legal entities or legal arrangements shall be conducted.
In case of customers whose eligible identity documents are other than biometrically verifiable documents, re-validation/ verification of identity shall be done based on documents, data or information obtained from customer and/or from reliable and independent sources having regard to MFB’s own assessment of materiality and risk.
Submit compliance status in respect of biometric verification of their existing/legacy portfolio of customers within 15 days of aforesaid timelines.
Furthermore, MFBs are advised to adhere to the following instructions regarding biometric verification of existing customers presently outside Pakistan:
Type of Customer Treatment a) Non-resident Pakistanis (NRPs) As defined in Income Tax Ordinance, 2001 – Chapter 5, Division II, Section 82
For customers who fall under the definition of NRP, the MFB may obtain a signed undertaking from the customer invariably containing the following: • Customer’s NRP status along with proof (i.e. copy of valid passport, visa, exit stamp, resident permit, etc.).
• Copy of valid identity document.
• Account number(s) of the customer’s account(s) maintained with the bank as per customer record.
• Undertaking by the customer to inform the bank of any change in residency status.
The MFB, after verification of the customer’s signature from its record, shall accordingly update/ reflect the NRP status in the customer profile.
For such customers, as an alternative to biometric verification, the MFB may conduct fresh NADRA Verisys using the information provided by the customer.
b) Resident Pakistanis temporarily outside Pakistan For customers who do not qualify under the definition of NRP, but are currently/ temporarily outside Pakistan for any reason, the MFB may obtain reasonable evidence/ proof from the customer regarding his/ her absence from the country (i.e. copy of valid passport, visa, exit stamp, resident permit, etc.) and the expected date of return. For such customers, as an alternate to biometric verification, the MFB may conduct fresh NADRA Verisys using the information provided by the customer.
The MFB may retain the NADRA Verisys in place of biometric verification until the customer returns, subject to reasonable time limit (not more than six months) to be defined by MFB. Biometric verification of such customers shall be done immediately upon the customer’s return to the country.
c) Joint Accounts
where one account holder is outside Pakistan (NRP/ temporarily)For joint account holders, treatment of biometric verification should be done according to the status of respective individual. Biometric verification should be conducted for the joint account holder who is resident Pakistani, while for other joint account holders, the relevant procedure described at (a) and (b) above should be adopted. Moreover, MFBs may operate accounts on the basis of NADRA Verisys in genuine cases, in line with Frequently Asked Questions (FAQ No. 8, Annexure – I) on Use of Biometric Technology, provided MFBs are satisfied and proper reason/ proof is recorded/ retained by them.
For such cases in line with Para-7 above, in the absence of biometric verification, MFB may ensure that requisite identification document has been obtained, marked as ‘original seen’ by their staff and verified through NADRA Verisys.
Moreover an undertaking should be obtained from the customer declaring that the particulars provided to the MFB are correct and that their staff has verified the same. The declaration should be endorsed by the Branch Manager and should be available in the bank’s centralized record.
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Law drafted to examine national saving schemes investments for money laundering, terror financing
ISLAMABAD: The government has draft law to examine involvement of money laundering and terror financing in investment made in national saving schemes.
The ministry of finance on Thursday issued draft rules namely National Saving Schemes (AML and CFT) Rules, 2019.
Under the draft rules, the Central Directorate of National Savings (CDNS) would conduct customers due diligence (CDD) of all the customers / investors.
“Every customer, whether permanent or occasional and whether natural or legal person or legal arrangement, shall be identified for establishing business relationship and for the purpose following information shall be obtained, verified using reliable, independent source documents, data or information and recorded namely: –
(a) full name as per identity or registration documents;
(b) national identity card, passport, national identity card for overseas pakistanis, Pakistan origin card or alien registration card number, etc.
(c) registration or incorporation number of business, if applicable;(d) residential address, telephone numbers and e-mail, if available;
(e) business address, telephone numbers and e-mail, if available;
(f) date of birth;
(g) date and place of registration or incorporation of business, if applicable;
(h) nationality
(i) place of birth;
(j) national tax number (NTN), if applicable;
(k) nature of business and location, if applicable;
(l) sources of earnings;
(m) customer’s net worth in respect of legal persons, legal arrangements and high risk customers; and
(n) annual income
The minimum set of documents to be obtained by the office of issue or third party in case of each category of customers shall be as follows:-
(a) In respect of individuals, a photocopy of any one of the following valid identity documents namely:-
(i) computerized national identity card (CNIC) issued by NADRA; or
(ii) national identity card for overseas Pakistani (NICOP) issued by NADRA; or
(iii) Pakistan origin card (POC) issued by NADRA; or
(iv) alien registration card (ARC) issued by NADRA; or
(v) passport having valid visa on it or any other proof of legal stay along with passport in respect of foreign national individuals only.
(b) In respect of limited corporations and companies.-
(i) certified copies of-
(A) 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);
(B) memorandum of association;
(C) articles of association, wherever applicable;
(D) certificate of incorporation;
(E) Securities and Exchange Commission of Pakistan (SECP) registered declaration for commencement of business as required under the Companies Act, 2017 (XIX of 2017); and(F) list of directors required to be filed under the Companies Act, 2017 (XIX of 2017), as applicable;
(ii). photocopies of identity documents as per sub-clause (b) of all the ` directors and persons authorized to open and operate the account;
(c) In respect of trust clubs, societies and associations, etc.-
(i) Certified copies of-
(A) certificate of registration or instrument of trust; and
(B) by-laws, rules and regulations;
(ii) resolution of the governing body, board of trustees or executive committee, if it is ultimate governing body, for opening of account authorizing the person to operate the account;
(iii). photocopy of identity document as per sub-clause (i) of clause (c) of the following:
(A) authorized persons;
(B) members of governing body, board of trustees or executive committee, if it is ultimate governing body; and
(C) settlor, the trustees, the protector if any, the beneficiaries or class of beneficiaries
(d) In respect of NGOs, NPOs and charities,-
(i) certified copies of –
(A) registration documents and certificates; and
(B) by-laws, rules and regulations;
(ii) resolution of the governing body, board of trustees or executive committee, if it is ultimate governing body, for opening of account authorizing the persons to operate the account;
(iii) photocopy of identity document as per sub clause (i) of clause (d) above of the authorized persons and of the members of governing body, board of trustees or executive committee, if it is ultimate governing body; and
(iv) 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;
(e) In respect of minor accounts,-
(i) photocopy of Form-B or birth certificate of the minor; and
(ii) photocopy of identity document as per sub-clause (i) above of the guardian of the minor;
(f) In respect of government institutions and entities not covered herein above.-
(i) CNICs of the authorized persons; and
(ii) letter of authorization from the concerned authority.
the office of issue or third party shall verify identity documents of the customers from relevant authorities and bodies, including through NADRA’s verification system or biometric identification system and, where necessary, use other reliable, independent sources and retain copies of all reference documents used for identification and verification.
The office of issue or third party shall be responsible for verification of the identity documents and the customer shall neither be obligated nor the cost of verification be charged to the customer.Where the customer is represented by an authorized agent or representative, or where customer is a legal person, the Office of issue or third party shall identify the natural persons who act on behalf of the customer and verify the identity of such persons and the authority of such natural persons shall be verified through documentary evidence, including specimen signature of the persons so authorized.
Where beneficial owner is different from the customer, the office of issue or third party shall identify and take reasonable measures to verify identity of the beneficial owners using relevant information or data obtained from a reliable source, to the satisfaction of the office of issue.
The verification of the identity of customers and beneficial owners, if any, shall be completed before business relations are established.
The office of issue shall conduct ongoing due diligence on the business relationship, including;-
(a) scrutinizing transactions undertaken throughout the course of that relationship to ensure that the transactions being conducted are consistent with the office of issue’s knowledge of the customer, their business and risk profile, including where necessary, the source of funds; and
(b) ensuring that documents, data or information collected under the CDD process is kept up-to-date and relevant, by undertaking reviews of existing records, particularly for higher risk categories of customers.
The office of issue or third party shall maintain a list of all such customers and accounts where the business relationship needed to be closed on account of negative verification that includes all type of customer identity verification such as NADRA, UNSCR or any other document or information etc.