Financial Crime World

SBP REs to Implement Stringent AML/CTF/CPF Regulations

The State Bank of Pakistan has issued regulations requiring Specialized Banking Plazas (REs) to implement robust Anti-Money Laundering (AML), Combating the Financing of Terrorism (CFT), and Countering Proliferation Financing (CPF) policies.

IRAR Categorization Crucial

Under Regulation 1, REs are required to conduct an Internal Risk Assessment Report (IRAR) to categorize their business relationships, occasional transactions, or operating geographical locations. This report will serve as a basis for implementing AML/CFT/CPF regulations.

Enhanced Due Diligence Required

REs must conduct Enhanced Due Diligence (EDD) on customers and beneficial owners to ensure that they know who the beneficial owner is. This includes identifying the natural person(s) with ultimate effective control of a customer or legal arrangement.

Numbered Accounts Prohibited

Under Regulation 12, REs are prohibited from opening or maintaining numbered accounts and conducting transactions using fake identity documents.

Categorization of Customers

Based on the outcome of the IRAR report, REs must profile their business relationships, occasional transactions, or operating geographical locations. This may require implementation of Simplified Due Diligence (SDD) for certain customers or transactions.

Additional Requirements

REs are also required to:

  • Identify the beneficial owner(s) of legal persons and arrangements
  • Verify the identity of customers using reliable documents, data, or sources of information
  • Understand the nature of a customer’s business and its ownership and control structure
  • Comply with Section 7A of the Act for all types of customers, financial services offered, and geographical locations operated in

Non-Compliance

Failure to comply with these regulations may result in severe consequences, including fines, penalties, or even revocation of licenses.

The new regulations aim to strengthen AML/CFT/CPF measures in Pakistan’s banking sector, ensuring a safer and more secure financial environment for all stakeholders.