New AML regulations for banks: no personal accounts for charity purposes: SBP

In order to restrict money-laundering and terrorist-financing activities, the State Bank of Pakistan on Monday, issuing new instructions, asked banks not to allow personal accounts for charity purposes. The SBP has also asked banks/DFIs to review all existing relationships of Non-Government Organisations (NGOs) and Not-for-Profit Organisations (NPOs) by June 30, 2012 to ensure that these organisations are not linked with any proscribed entities and persons.
According to BPRD Circular Letter No 04 of 2012 issued here on Monday, in order to protect Banks/DFIs from risks arising out of money-laundering and terrorist-financing activities, implementation and strict compliance of the directives needs to be ensured.
"Banks/DFIs should note that the subject regulations are binding instructions issued under Banking Companies Ordinance, 1962 and any non-compliance shall be dealt with appropriate action under the relevant law," the circular said. As per new instructions, banks/DFIs have been asked to conduct due diligence (including obtaining senior management approval) while establishing relationship with NGOs/NPOs and charities to ensure that these accounts are used for legitimate purposes and the transactions are commensurate.
"Account to be opened in the name of relevant NGO/NPO as per title given in its constituent documents and individuals who are authorised to operate these accounts and members of their governing body should also be subject to comprehensive Customer Due Diligence (CDD)," the SBP directed. Banks/DFIs have been asked to ensure that these persons are not affiliated with any proscribed entity, whether under the same name or a different name.
In case of advertisements through newspapers or any other medium, especially when bank account number is mentioned for donations, banks/DFIs will ensure that the title of account is the same as that of the entity soliciting donations, the SBP directed. It added, "In case of any difference, immediate caution should be marked on such accounts and the matter should be considered for filing Suspicious Transaction Report (STR)."
According to SBP''s new directives personal accounts will not be allowed to be used for charity purposes/collection of donations. Banks/DFIs have also been asked to review all existing relationships of NGOs/NPOs by June 30, 2012 to ensure that these organisations, their authorised signatories, members of their governing body and the beneficial owners are not linked with any proscribed entities and persons, whether under the same name or a different name. In case of any positive match, banks/DFIs should consider filing STR and/or take other actions as per law.
Certified copies of registration documents/certificate, by-laws/rules & regulations, resolution of the governing body/executive committee for opening of account and authorising the person(s) to operate the account, attested photocopies of valid CNICs of the authorised person(s) and members of governing body/executive committee and other documents will be required for opening the accounts of NGOs/NPOs, the circular said.
Banks may ask for any other documents as deemed necessary including its annual accounts/financial statements or disclosures in any form which may help ascertain the detail of its activities, sources and usage of funds in order to assess the risk profile of the prospective customer. The State Bank has also called for continuous training of banks'' staff especially relating to AML/CFT. In this regard, the progress made by banks/DFIs has also been encouraging, yet the relevant training combined with optimum use of technology is becoming inevitable due to ever changing nature of methods and trends in illicit activities, the SBP said.
It is also important to test the capability and knowledge of the relevant staff on periodic basis. The online trainings and AML/CFT tests of varying nature are available in the market, which offer an opportunity for banks/DFIs to equip their staff with relevant skills as per respective roles and responsibilities within the institution.
Such training programs and tests can either be purchased or developed by banks/DFIs themselves. As the periodic training of the front-end staff is crucial, which is the first point of contact with customers, banks/DFIs are advised to either purchase or internally develop comprehensive AML/CFT computer-based/online training programs and tests. "In this respect, a plan to acquire/develop such training program and tests along with clear timelines for implementation should be furnished to Director, BPRD latest by April 15, 2012," the SBP directed.