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Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) Regulations in Pakistan

Enhanced Customer Due Diligence Measures for High-Risk Business Relationships

It appears that you have provided a comprehensive document on AML and CFT regulations in Pakistan. However, I’ll provide a summary of the key points related to enhanced customer due diligence (CDD) measures for high-risk business relationships.

High-Risk Business Relationships

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Politically Exposed Persons (PEPs)

  • PEPs are defined as heads of state, ministers, influential public officials, judges, and military commanders, including their family members and close associates.
  • RPs must ascertain whether their customers are PEPs and consider factors such as prominent public functions, business interests that can cause conflict of interests, media related to illicit financial behavior, and country of origin.

Non-Profit Organizations (NPOs)

  • NPOs are classified as a High-Risk Sector for Terrorist Financing in Pakistan’s National Risk Assessment.
  • RPs must ensure that NPOs are not misused by terrorist organizations to pose as legitimate entities or exploit legitimate entities as conduits for terrorist financing.

Enhanced CDD Measures

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Obtaining Additional Information

  • Obtain additional information on customers, including occupation, intended nature of business, volume of assets, and source of funds or wealth.
  • Verify information using publicly disclosed sources if available.

Updating Identification Data

  • Update identification data more regularly for applicants/customers and beneficial owners.

Approval from Senior Management

  • Obtain approval from senior management to commence or continue a business relationship with high-risk customers.

Source of Funds and Wealth

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  • Establish that the transaction is within the financial means of the customer.
  • Understand where the client’s net worth came from (e.g., inheritance, employment, business, investment).
  • Verify information using publicly disclosed sources if available.

Special Cases of Higher Risk & Enhanced Due Diligence

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PEP Red Flags

  • Inconsistent information provided by the PEP with other publicly available information.
  • Family members of a PEP without financial means transacting with RPs without declaring their relationship.
  • Complex legal structures commonly used to hide Beneficial Ownership.
  • Repeatedly moving funds to and from countries with no apparent ties.
  • Using multiple bank accounts for no commercial or other reason.
  • Originating from a country that prohibits or restricts certain citizens from holding accounts or owning property in a foreign country.

Ongoing Monitoring

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  • Take a risk-based approach in determining whether to continue considering a customer as a PEP who is no longer a PEP.
  • Be vigilant in relation to domestic PEPs and PEPs from other jurisdictions seeking to establish business relationships.