ISLAMABAD: The Security and Exchange Commission of Pakistan (SECP) has taken effective measures to undertake assessment of the “technical” compliance with the FATF Recommendations and the “effectiveness” of the implemented AML/CFT regime, based on the FATF’s assessment methodology.
According to SECP annual report, the SECP is committed to implement the measures set out in the FATF standards on AML/CFT within the SECP’s regulated financial sector inter-alia the stockbrokers, commodities brokers, NBFCs and Modarabas, the Insurers/Takaful operators and corporate NPO’s, to safeguard them from being used by money launderers and terrorist financiers for illicit purposes.
At present, Pakistan is undergoing two parallel FATF monitoring processes, the Pakistan’s mutual evaluation by Asia Pacific Group (APG) against FATF 40 recommendations and FATF Action Plan comprising of 27 Actions, by the International Co-operation Review Group of the APG.
Work with national stakeholder’s inter-alia FMU, SBP etc. and international assessors Asia Pacific Group for mutual peer review and evaluation of SECP’s regulated financial sector, the report said.
Moreover, the SECP was part of the team led by NACTA that carried out National Terrorism Financing Risk Assessment and assessed TF risk for its regulated Securities Market, NBFCs, Modarabas, Insurance and NPO sector.
Following the promulgation of the SECP AML/CFT Regulations 2018, the SECP issued comprehensive guidelines for regulated financial institutions on AML/CFT obligations in September 2018 to help regulated persons in developing an effective AML/CFT risk assessment and compliance framework.
The SECP also issued guidelines for not-profit organizations (NPOs) on ML/TF vulnerabilities, risks and best practices to counter TF.
SECP has implemented the Targeted Financial Sanctions under United Nations Security Council Resolution on its regulated sectors requiring identification, freezing, and confiscation of terrorist assets.
In order to further strengthen the AML/CFT Regime Circular No.16 of 2018 was issued, requiring all the companies to maintain up-to-date information relating to their ultimate beneficial owners. Moreover, SRO.245 (I)/2019 was notified establishing the reporting obligations on regulated persons.
Capacity building and outreach is a regular feature wherein extensive awareness sessions have been conducted in Karachi, Lahore and Islamabad for regulated persons on AML/CFT obligations and implementation of the AML/CFT Regime. Frequently Asked Questions have been placed on the website that further explain the general requirements of the legislation to help regulated persons in applying national AML/CFT measures.
Investor awareness in the area of AML/CFT has been enhanced through updating the JamaPunji portal with AML/CFT content. Standees on KYC/CDD have been set up at IAP, PSX, PMEX, CDC, NCCPL and MUFAP to impart awareness amongst investors on their KYC/CDD obligations.
The SECP has adopted a risk based approach to supervision and monitoring in the area of AML/CFT. During last year, inspections focusing on AML/CFT and TFS - UNSCRs compliance under SECP AML/CFT Regulations, 2018 were conducted in case of 72 Securities Brokers, 27 NBFC, 13 Insurance Companies and 55 High Risk NPOs, and remedial actions/ sanctions were imposed accordingly.
The objective of the AML/CFT sanction regime is to encourage compliance and promote change in behavior. Significant improvement in filing of Suspicious Transactions Reports with FMU has been reported in past one year since the regulations were promulgated.
SECP endeavors to enforce world’s best practices, legislative framework and apply robust AML/CFT regime within its regulated sectors.