Investigations/inquiries: SECP bound to assist foreign regulatory authorities

The Securities and Exchange Commission of Pakistan (SECP) is bound to assist foreign regulatory authorities in carrying out investigations /inquiries by providing information about matters of regulatory issues including financial/supervisory information, anti-money laundering and public or non-public data including license holders, companies (private/public) and beneficial owners of companies and banking, brokerage or other records.

The SECP has issued guidelines for cooperation and assistance to foreign regulatory authorities or foreign counterpart authorities providing a framework for international cooperation and to stipulate formal mechanisms for sharing information and assistance under the Act or any administered legislation.

The said guidelines are issued in exercise of powers conferred under Section 40B of the SECP Act, 1997.

The SECP can provide and obtain enforcement-related international cooperation and assistance on a multilateral, bilateral, and ad hoc basis. Multilateral and bilateral information sharing arrangements operate on the basis of memoranda of understanding (MoU) between the financial services regulatory authorities.

Such MoUs delineate the terms of information sharing between and among MoU signatories and create a framework for regular and predictable cooperation in the law enforcement. Multilateral and bilateral MoUs detail the scope and terms of information sharing among regulators.

The SECP can provide assistance not only in investigations but also in other types of inquiry, as part of a compliance program for preventing illicit activities. It can also exchange general information about matters of regulatory concern, including financial and other supervisory information, technical expertise, surveillance and enforcement techniques, anti-money laundering (AML), countering for financing of terrorism (CFT) information and investor education. The assistance may include obtaining public or non-public information or document, for example, about a license holder, company (private/public), management, directors, shareholder, record that identify the beneficial owner or a person exercising control over a license holder or a company; obtaining banking, brokerage or other records; obtaining voluntary cooperation from those who may have information about the subject of an inquiry; providing information on the regulatory processes, or in obtaining court orders, for example, urgent injunctions and providing and obtaining unsolicited information, on voluntary basis, SECP said.

The SECP has the ability to provide non-public information or document filed with or provided to the Commission, or obtained by the Commission from any person, to the foreign regulatory authorities, upon showing that such information is needed by the foreign regulatory authority.

The authority requesting information must establish and maintain such safeguards as are necessary and appropriate to protect the confidentiality of information, and provide assurances of confidentiality to the Commission.

The SECP by practice does not place unreasonable restrictive conditions on the provision of exchange of information with its foreign counterpart authorities. Specifically, Section 42D (7) provides that any assistance provided to any foreign regulatory authorities or international organizations may be refused by the Commission on the grounds of national security and public interest.

The provision of exchange of information or assistance should not be refused on the grounds that: a) the request is also considered to involve fiscal matters; b) laws require financial institutions to maintain secrecy or confidentiality; c) there is an inquiry, investigation or proceeding underway, unless the assistance would impede that inquiry, investigation or proceeding; and/or d) the nature or status (civil, administrative, law enforcement, etc.) of the requesting counterpart authority is different, the SECP added.