Jan 19, 2021: The Security and Exchange Commission of Pakistan (SECP) vowed to implement the measures for regulating the financial sector from being used by money launderers and illegal financiers for illicit purposes.
The SECP is committed to follow the measures set out in the Financial Action Task Force (FATF) standards to protect SECP regulation for the financial sector, according to the annual report 2020 released by the SECP.
The SECP is responsible for ensuring AML/CFT compliance by stockbrokers, commodities brokers, NBFCs and Modarabas, Insurers, corporates, and NPO’s.
According to a report, Pakistan Mutual Evaluation Report (MER) was adopted by APG in October 2019, and Pakistan was placed on accelerated follow-up.
SECP has demonstrated significant progress towards fulfilling FATF obligations under the Action Plan and is an active member of the working group constituted by FMU for this purpose.
In addition, SECP using FATF’s assessment methodology has taken effective measures in addressing ML/TF deficiencies by ensuring “technical” compliance with the FATF Recommendations, as well as the “effectiveness” of the implemented AML/CFT regime, the report said.
The SECP is focused on further improving its laws, regulations, and directives in order to keep its AML/CFT governance regime aligned with FATF standards. In this regard, a comprehensive exercise is ongoing to remove deficiencies identified in the latest MER of Pakistan.
Significant progress has been made with respect to amendments in SECP’s AML/CFT regulatory framework to align it with the FATF standards as well as the implementation of international best practices for improving compliance by the regulated sector, SECP informed.
Enhancing laws and mechanisms to address Beneficial Ownership disclosure requirements through amendments in Companies Act 2017, Limited Liability Partnership Act 2017, Companies (Incorporation) Regulations 2017, Companies (General Provisions and Forms) Regulations 2018, Foreign Companies Regulations 2018, and Limited Liability Partnership Regulations 2018.
Amendments in SECP AML/CFT Regulations 2018, Revision to AML/CFT Guidelines for NPOs 2018 Dissemination to regulates of updated SECP Guidelines on Anti-Money Laundering, Countering Financing of Terrorism and Proliferation Financing.
Automated notification of Directives for compliance with targeted financial sanctions issued by the Ministry of Foreign Affairs on UNSCRS, and by NACTA/Ministry of Interior for updates in list of proscribed persons under the Anti-Terrorism Act, 1997.
Contributed to the development of National Risk Assessment 2019, and developed policy framework for Designated Non-Financial Business and Professions (DNFBPs) by leading the working group formed by the Ministry of Finance.
Integrated SECP’s database with GoAML System of FMU.
Guidance on Risk-Based Approach to AML/CFT during COVID-19 pandemic.
Issuance of an enforcement strategy for identification of and action against UNSC designated and locally proscribed persons and entities.
According to the report, SECP conducted a series of workshops in Karachi, Islamabad, and Lahore for its regulated sectors, namely Securities and Commodities market, Insurance/Takaful companies, Non-Banking Finance Companies, and Modaraba sector. A total of 23 awareness sessions attended by over 800 participants from SECP regulated sectors were jointly organized with UNODC. In addition, compliance forum meetings were held with the respective industry associations of Securities Brokers, NBFCs, and Insurance.
SECP also participated in outreach activities for DNFBPs and NPOs in collaboration with UNODC and NACTA, respectively.
NPOs were sensitized based on an extensive risk assessment of the sector undertaken jointly by SECP, FBR, MOI, NACTA, etc. Moreover, Frequently Asked Questions and pictorial guidelines on Online AML report filings were are also issued and placed on the SECP website.
The effectiveness of the sanctioning regime of SECP has encouraged the adoption of remedial measures among its regulated universe. The Regulated Persons (RPs) have enhanced their focus through up-gradation of risk-based controls, including strengthening of transaction monitoring systems and name screening solutions, data cleansing, increasing the number of ML/TF analysts, and provision of additional training to improve understanding of ML/TF risks.
These measures have enabled RPs to minimize chances of repetition/ recurrence of regulatory violations with respect to AML/CFT.