Overview:
CAF 04: Business Laws
Chapter 12: Anti-Money Laundering & Electronic Payments
Secret Sheet for Quick Revision
(For students of Muhammad Asif, FCA)
LO 1: Introduction
Financial Institutions: Role of Financial Institutions:
Persons doing activities of:
1. Deposits, and Lending.
2. Leasing.
3. Insurance.
4. Money Transfers.
5. Managing means of payments.
6. Business trading in Forex, Mutual
funds, Money market instruments etc.
This chapter discusses :
Money Laundering: Offence and Punishment Premium Content
Designated Payment System (DPS): Arrangements and Revocation (For Spring 2022)
Definition of Electronic Money and Electronic Fund Transfer.
Part 1: Anti-Money Laundering
LO 2: Offence and Evidence LO 3: Punishment
When is a person guilty of offence of money laundering: Evidence of offence of money laundering: For Individuals: (i.e. natural person) For Legal Persons: (i.e. company)
To monitor customers’ transactions If he knows that a property is proceeds of crime and still: Knowledge inferred from factual circumstances. Imprisonment 1 to 10 Years Fine upto Rs. 100 million.
To report large transactions. 1. Acquire, converts, possess, use or transfer such property. Fine upto Rs. 25 million. Individual liability for director,
2. Conceals the true nature, origin, location, ownership, movement of such property. Forfeiture of property officer or employees involved.
3. Holds or possess such property on behalf of any other person.
4. Aids, or counsels to commit above acts.
Part 2: Electronic Payments
LO 4: Designated Payment System (DPS) LO 5: Electronic Fund Transfer (EFT)
Payment System: Electronic Fund Transfer:
System used to settle financial transactions through transfer of money. Transfer of funds, other than by paper instrument (without direct
intervention of bank staff).
Designation of Payment System:
State Bank designates, after inspection of premises, equipment etc. “Electronic Fund” or “Electronic Money”:
Financial Institution, who is authorized to operate a DPS is called “Operator”. Money transferred through electronic device.
Money stored in an electronic device or payment instrument.
Operational Arrangements:
Operate shall make:
1. Criteria.
2. Rights and liabilities of Operator and Participant.
3. Measures to ensure operational reliability and contingency arrangements.
4. Procedures for management of credit, liquidity and settlement risk.
Revocation of Designated Payment System (DPS):
State Bank may revoke if:
1. DPS ceases to operate effectively.
2. Operator submitted false information to SBP.
3. Operator is in winding up.
4. violation of T&C.
5. It is in public interest.
Designation can be suspended (without notice), or revoked (with notice).