Securities and Exchange Commission of Pakistan (SECP) has directed financial institutions to implement appropriate internal risk management systems, policies, procedures and controls to determine if any of their customers is a politically exposed person (PEP) under anti-money laundering regime.
On the recommendations of Financial Monitoring Unit (FMU) of State Bank of Pakistan (SBP), Securities and Exchange Commission of Pakistan has framed regulations for the reporting entities in the context of combating money laundering and financing of terrorism, including customer due diligence and ancillary record keeping that fall within the regulatory ambit of SECP.
The SECP has issued draft Securities and Exchange Commission Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Regulations, 2018 here on Monday.
According to the SECP regulations, politically exposed persons or PEPs shall have the following meaning: Foreign PEPs mean individuals who are or have been entrusted with prominent public functions by a foreign country, for example heads of state or of government, senior politicians, senior government, judicial or military officials, senior executives of state owned corporations, important political party officials. Domestic PEPs mean individuals who are or have been entrusted domestically with prominent public functions; for example heads of state or of government, senior politicians, senior government, judicial or military officials, senior executives of state owned corporations, important political party officials.
Persons who are or have been entrusted with a prominent function by an international organization mean members of senior management ie directors, deputy directors and members of the board or equivalent functions. The definition of PEPs is not intended to cover middle ranking or more junior individuals in the foregoing categories, the SESP said.
In relations to foreign and domestic PEPs, financial institutions shall implement appropriate internal risk management systems, policies, procedures and controls to determine if any customer or a beneficial owner is PEP.
In case of foreign PEPs, financial institutions shall perform enhanced due diligence in accordance with regulation in addition to other requirements of these regulations.
In case of domestic PEPs, where business relationship poses higher risk, financial institutions shall carry out enhanced due diligence in accordance with regulation in addition to other requirements of these regulations.
The requirements of regulation are also applicable on family members and close associates of foreign and domestic PEPs, the SECP added.
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