Pkrevenue.com

Tag: terror financing

  • SBP warns public against dealing with illegal forex operators

    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.

  • 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.

  • Law drafted to examine national saving schemes investments for money laundering, terror financing

    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.

  • CDNS decides screening all customers of national saving schemes

    CDNS decides screening all customers of national saving schemes

    The Central Directorate of National Savings (CDNS) has decided to screen all customers of national savings schemes.

    (more…)
  • Jewelers, real estate agents to maintain register, report suspicious transactions: draft rules issued

    Jewelers, real estate agents to maintain register, report suspicious transactions: draft rules issued

    ISLAMABAD: Federal Board of Revenue (FBR) has proposed to make mandatory for jewelers and real estate agents to report suspicious transactions. In this regard the FBR issued draft rules through SRO 1320(I)/2019 to make amendments in Income Tax Rules, 2002.

    As per the draft rules, the designated persons as jewelers and real estate agents should maintain documents and records, where the value of transaction exceeds Rs2 million in case of immovable properties and Rs one million in other cases.

    The FBR said that the designated persons would require to obtain and maintain the following relating to its buyers and sellers, namely:

    In case of an individual any of the following documents should be obtained by jewelers and real estate agents:

    i. copy of computerized National Identity Card (CNIC) issued by National Database and Registration Authority (NADRA).

    ii. copy of National Identity Card for Overseas Pakistanis (NICOP) issued by NADRA.

    iii. copy of Pakistan Origin Card (POC) issued by NADRA.

    iv. copy of Alien Registration Card (ARC) issued by NADRA, and

    v. copy of passport, having valid visa on it or any other proof of legal stay along with the passport (foreign nationals only).

    The jewelers and real estate agents also required to keep a list of all such customers where the business transaction was refused or needed to be closed either on account of failure of the customer to provide the relevant documents or the original documents for viewing as required.

    Regarding furnishing of information, according to the draft rules, the sale and purchase register for the immediately preceding calendar month shall be uploaded by the designated persons on the IRIS online system within 15 days of the end of the preceding calendar month for transactions.

    The draft rules said that the designated persons would mark a transaction as suspicious in the IRIS online system if the person has reason to believe that the transaction or a pattern of transactions of which the transaction is a part:

    (a) involves funds derived otherwise than from the business activity or assets declared to the income tax authorities;

    (b) is designed to evade any requirement of the Income Tax Ordinance, 2001 or to conceal the beneficial owner or his activity.

    (c) has no apparent economic or lawful purpose after examining the available facts, including the background and possible purpose of the transaction; or

    (d) involves financing of terrorism, including fund collected, provided, used or meant for, or otherwise linked or related to, terrorism, terrorist acts or organization and individual concerned with terrorism.

    According to the draft rules, the designated persons have also been asked to mark as suspicious transaction if the buyer or seller –

    (a) frequently changes bank accounts;

    (b) uses a bank account other than an account maintained in the name of beneficial owner;

    (c) makes or receives payment in cash or primarily in cash; or

    (d) maintains a creditor or debtor account with the designated person and instructs the designated person to adjust the balance of his account against a creditor debtor account of another buyer or seller.

  • 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).

  • FATF gives Pakistan four months to comply with action plan

    FATF gives Pakistan four months to comply with action plan

    ISLAMABAD: Financial Action Task Force (FATF) on Friday set a deadline of four months for Pakistan to improve action plan against laundering and terror financing.

    At a press conference in Paris, France the officials of FATF expressed concerns over implementation of action plan by the Pakistani authorities.

    FATF strongly urged Pakistan to swiftly complete its full action plan by February 2020. Otherwise, should significant and sustainable progress not be made across the full range of its action plan by the next Plenary.

    It has been observed that action taken by Pakistan was not sufficient to address its Terror Financing risks. These include remaining deficiencies in demonstrating a sufficient understanding of Pakistan’s transnational Terror Financing risks.

    Pakistan’s failure to complete its action plan in line with the agreed timelines and in light of the terror financing risks emanating from the jurisdiction.

    To date, Pakistan has only largely addressed five of 27 action items, with varying levels of progress made on the rest of the action plan.

    In a statement, the ministry of finance said that the FATF Plenary meeting was held in Paris from 13-18 October 2019. The Pakistan delegation was led by Muhammad Hammad Azhar, Minister for Economic Affairs Division.

    The FATF meeting considered Pakistan’s progress report on the FATF Action Plan and Pakistan’s APG Mutual Evaluation report (MER).

    Pakistan’s delegation reaffirmed its political commitment to fully implement the Action Plan.

    The Plenary meeting decided to maintain status quo on the FATF Action Plan and allow the usual 12 months observation period for the APG MER.

    The delegation also held sideline meetings with various delegations and briefed them about the progress made by Pakistan on the FATF Action Plan and steps taken for strengthening its AML/CFT framework.

    A session on technical assistance and training needs of Pakistan was also organized in collaboration with UNODC and APG Secretariat which was attended by a number of interested countries and multilateral agencies including China, USA, UK, Canada, Japan, EU, World Bank, IMF, ADB, and UNODC.

  • SBP issues framework for controlling trade based money laundering, terror financing

    SBP issues framework for controlling trade based money laundering, terror financing

    KARACHI: The State Bank of Pakistan (SBP) on Tuesday issued framework for controlling trade based money laundering and terror financing.

    In order to strengthen trade related Anti Money Laundering/Combating Financing of Terrorism (AML/CFT) regime and restrict possible misuse of banking channel, a comprehensive framework on the subject has been developed and attached herewith.

    Accordingly, Authorized Dealers (ADs) are advised to upgrade their systems and controls and bring policies and procedures in line with the requirements of the framework to ensure meticulous compliance with the provisions thereof with immediate effect except as otherwise provided in the framework

    The provisions of this framework are in addition to and not a replacement of already issued instructions on the subject of ML/FT risks. Therefore, the compliance of the same shall not absolve ADs from their legal and regulatory obligations under prevailing AML/CFT laws/rules and regulations or any other relevant law in force.

    ADs are also advised to educate their clients about their obligation of ensuring (a) correct declaration of particulars on the prescribed forms, (b) utilization of foreign exchange for the exact purpose for which it is acquired by them and (c) repatriation of foreign exchange that represents the full export value of goods.

    In the event, it is found that material information required to be submitted on the prescribed forms has been omitted or suppressed, foreign exchange is misutilized by a client of an AD or export proceeds repatriated by a client does not represent the full export value of goods, SBP shall initiate penal action against such delinquent parties under relevant provisions of the Foreign Exchange Regulation Act, 1947 (FERA).

    Further, the matter shall also be reported to relevant stakeholders for necessary action under the laws being administered by them.

    Failure to comply with the instructions on the subject and the regulatory obligations of AML/CFT may attract action against ADs under the FERA and other relevant laws.

  • Banks may verifying goods for manual import payment

    Banks may verifying goods for manual import payment

    KARACHI: Banks shall be required to verify valuation of goods before approving electronic or manual import payment in order to prevent incidents of money laundering and terror financing.

    According to draft “Framework for Managing Risks of Trade Based Money Laundering, Terrorist Financing and Proliferation Financing” issued by State Bank of Pakistan (SBP) banks shall make a reasonable effort to verify the prices of underlying contracts as declared on EIF/MIF, EFE/MFE from reliable sources i.e. local business circles, daily newspaper, Internet, historic appraisements, Customs valuation rulings etc. and shall satisfy themselves that the prices declared by their client represent the fair market value of goods before approving an EIF/MIF, EFE/MFE.

    In the draft framework, the SBP said that transferring value through legitimate trade transactions has become increasingly attractive avenue for money launderers, terrorist financiers and proliferation financiers, as they are able to easily obscure their transactions in significant volumes of international trade and escape detection.

    “The main methods by which such people transfer value through legitimate trade transactions are under invoicing, over invoicing, short/over shipment, obfuscation of type of goods/services etc.” it said.

    As the international trade is becoming highly vulnerable to ML/TF/PF risks, effective regulatory framework is required to mitigate the misuse of trade transactions.

    The SBP said that the document contains instructions that shall help banks in effectively managing ML/TF/PF risks.

    However, it may not be construed as exhaustive list of measures for curbing TBML.

    Further, the compliance of the provisions of this framework does not absolve ADs from their legal and regulatory obligations under prevailing AML/CFT/CPF laws/rules and regulations or any other relevant law for the time being in force.

    The prime objective of this framework is to strengthen the trade related AML/CFT/CPF regime and conserve foreign exchange.

    This framework applies to all banks authorized by SBP to deal in foreign exchange.

    Bank’s AML/CFT/CPF Policies

    i. ADs shall emphasize on the overall trade related risks in their AML/CFT/CPF and relevant trade business guidelines, policies and procedures.

    Such policies and procedures should, inter alia, specify:

    a) Screening procedure of customers for trade transactions

    b) Procedure for identification and monitoring of trade transactions with related party.

    c) Procedure for complete risk profiling of customers involved in or intending to be involved in trade.

    d) Procedure for verification of prices of underlying contracts related to import/export of services.

    e) Procedure for handling descriptions, which are unclear, coded or worded in a language other than English.

    f) Screening procedure of goods being traded as per relevant Trade Policy

    g) Procedure for Identification of dual use of goods such as:

    Price related Due Diligence

    i. Banks shall define clear policies and procedures for price verification, including defining the level of acceptable price variance, escalation procedures and suspicious transaction reporting mechanism when significant differences in prices are identified.

    ii. Banks shall make a reasonable effort to verify the prices of underlying contracts as declared on EIF/MIF, EFE/MFE from reliable sources i.e. local business circles, daily newspaper, Internet, historic appraisements, Customs valuation rulings etc. and shall satisfy themselves that the prices declared by their client represent the fair market value of goods before approving an EIF/MIF, EFE/MFE.

    iii. In case of advance payment export, Banks shall satisfy themselves, before disbursing the amount to the exporter, that price declared on Advance Payment Voucher represents the fair market value of goods or services. In this respect, banks shall require the exporter to submit a copy of underlying sale contract alongwith revised Appendix V-14.

    iv. The procedure of price verification shall be documented by banks for later review /audit/inspection.

    v. In order to enhance the effectiveness, this function shall be performed by the department other than the front office/centralized trade-processing unit where transaction is taking place.

    vi. The significant variance between prices declared on EIF/MIF, EFE/MFE, Advance Payment Voucher and fair market value of goods declared therein shall serve as one of the prime red flag indicators and all such transactions shall be escalated to the higher management which shall review the same and consider the option of filing STR with FMU etc. This procedure shall be documented by banks for later review /audit/inspection.

    vii. Further, banks shall develop the detailed scenarios of other trade related red flag indicators. A non-exhaustive list of common red flag indicators is also provided for guidance.