Countering-terror financing risks: Brokers, insurers and NBFCs told to set transaction limits

The Securities and Exchange Commission of Pakistan (SECP) has allowed securities brokers, commodities brokers, insurers, Takaful operators, Non-Banking Finance Companies (NBFCs) and Modarabas (regulated persons) to set transaction limitations (ie, limited deposits/withdrawals, until verification requirements are completed), and account monitoring, for effectively managing money laundering/terrorist financing risks during the COVID-19 pandemic.

According to the SECP guidelines issued by the SECP to the RPs (regulated persons) Wednesday, as an interim measure, the RPs can use responsible digital customer on-boarding in response to social distancing measures needed for the protection of their staff and customers alike, while also mitigating ML/TF risks by using the full range of tools at their disposal.

In the absence of face-to-face customer on-boarding and difficulties in carrying out Customer Due Diligence (CDD) the following risk-based approach may be used: One, the scanned copies of documents may be accepted for now, to be followed by obtaining the originals at a reasonable later time, when the situation has settled down.

Two, the reporting entities can accept recently expired government-issued identification until further notice in order to verify the identity of an individual (although still required to determine the authenticity of the identification).

Where customer's identity cannot be verified face-to-face, delayed verification of identity for establishing new business relationships may be adopted under Section 6(5) of the SECP AML/CFT Regulation, 2018 dealing with the CDD.

Three, the reporting entities can accept digital copies of documents as an interim measure, with the originals to be sighted in due course

Considering the application of delayed verification provisions for new business relationships in line with the FATF standards (eg, by implementing transaction limits).

Hence, RPs should consider adopting appropriate risk-management procedures for effectively managing money laundering/terrorist financing risks by setting transaction limitations (ie, limited deposits or withdrawals, until verification requirements are completed) and account monitoring or other appropriate risk management procedures.