SECP announces new curbs on money laundering

KARACHI (February 25 2003) : The Securities and Exchange Commission of Pakistan (SECP) has taken further measures for strengthening regulatory framework against minimising the possibility of money laundering in the non-bank financial sector.

Based on the recommendations made by the Anti-Money Laundering (AML) Unit of the SECP, its Specialised Companies Division has issued directive pertaining to (i) customer identification, (ii) compliance officers, and (iii) payments and deposits.

The directives were issued on February 21, 2003 to all non-bank financial institutions and Modaraba companies.

According to these directives, all non-bank financial institutions and Modaraba companies shall accept deposits from an investor only after ensuring that an account has been opened in the investor's name using an account opening form that is to be developed by the respective industry/associations in consultation with the SECP.

The non-bank financial institutions and the Modaraba companies are also required to receive or make payments exceeding Rs 50,000 through crossed cheque effective from July 1, 2003.

In addition to the above, the SECP is in the process of drafting Terms of Reference for designating 'compliance officers' within the Division.

The responsibilities of these officers will be to ensure that the measures against money laundering are being implemented and followed as per the directions of the Commission and the proposed guidelines/regulations/legislation.

As part of its continued efforts towards bringing more transparency in the financial market, the SECP with World Bank assistance set up an Anti Money Laundering (AML) Unit in January 2003.

The Commission's primary concern is to represent Pakistan as a country fully cognisant and responsible to its international obligations, and to develop the market on international standards.

While keeping in touch with all stakeholders, the AML Unit at the SECP is focusing on the following areas:

(1) Conduct assessment of financial sector and take steps towards meeting international standards set by IOSCO, FATF, APG and UN, etc, (2) Printing of a regular brief series on selected AML issues, (3) Publication of an electronic newsletter, (4) Capacity building of the AML Unit, (5) Conduct focused research studies, (6) Create awareness among key stakeholders, such as creditors and institutional investors about money laundering laws and issues, and (7) Establish linkages with other regulatory/research authorities.

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