Circulars/Notifications - Banking Policy & Regulations Department

BPRD Circular Letter No. 18 of 2018 October 19, 2018

The Presidents/Chief Executives

All Banks/DFIs

Dear Sirs/Madams,

Compliance of AML/CFT Regime by Banks/DFIs

State Bank of Pakistan (SBP) with the objective to preserve the integrity, soundness and safety of the financial system, has been
endeavoring to prevent the possible use of the banking sector for money laundering, terrorist financing and other illicit activities.
Towards this end, SBP has issued various instructions/ guidelines to the banks/DFIs from time to time.

2. Attention of all banks/DFIs is invited towards Regulation-1 (Customer Due Diligence - CDD) of AML/CFT Regulations, which
requires banks/DFIs, on on-going basis, to perform such CDD measures as may be appropriate to its existing customers having
regard to their own assessment of materiality and risk but without compromise on identity and verification requirements. Thus,
ongoing CDD is an essential part of an effective AML/CFT regime.

3. In this context, it is reiterated that banks/DFIs must ensure strict observance of all applicable instructions including
identification and verification of customers and their beneficial owner(s) and obtain information on the purpose and intended
nature of business relationship. The monitoring mechanism in place at banks/DFIs should be adequately resourced and
strengthened to ensure that the transactions being conducted in the accounts are consistent with the banks/ DFIs’ knowledge of
their customer, business, risk profile and the source of funds. With the objective to know the ultimate beneficial ownership of
accounts/ transactions, the banks/DFIs shall enhance their efforts to obtain relevant information and examine background and
purpose of all complex, unusual large transactions and unusual patterns of transactions, which do not commensurate with
customer profile or have no apparent economic or visible lawful purpose.

4. Banks/DFIs are also advised to refer to the SECP Circular No. 16 of 2018 dated August 29, 2018
(https://www.secp.gov.pk/laws/circulars/) through which the Commission has directed all companies to enhance their efforts to
obtain and maintain up-to-date information relating to their ultimate beneficial owners, i.e. natural persons or individuals who
ultimately own or control the company. The banks/ DFIs may seek such ultimate beneficial ownership information from their
relevant customers during CDD process.

5. Moreover, with the view to further strengthen the measures already in place and mitigate the money laundering and terrorist
financing risks, banks/DFIs are advised to immediately take following steps:

a) Ensure optimal utilization of biometric technology and carry out biometric verification of the existing customers (if already not
done) as per following timelines and thresholds:

Category of
Priority Threshold Timeline
Customers
High Priority Account turnover exceeding PKR 1,000 million for any 30th November
Listed /Public Limited
of the calendar year 2016, 2017 or for a period since 2018
Companies
January 1, 2018 to September 30, 2018.
Private Limited. Account turnover exceeding PKR 500 million for any
Companies of the calendar year 2016, 2017 or for a period since
January 1, 2018 to September 30, 2018.
All customers except Account turnover exceeding PKR 250 million for any
Public/Private Limited of the calendar year 2016, 2017 or for a period since
Companies January 1, 2018 to September 30, 2018.
Medium Listed /Public Limited Account turnover from PKR 500 million to PKR 1000 January 31, 2019
Priority Companies million for any of the calendar year 2016, 2017 or for
a period since January 1, 2018 to September 30,
2018.
Private Limited. Account turnover from PKR 250 million to PKR 500
Companies million for any of the calendar year 2016, 2017 or for
a period since January 1, 2018 to September 30,
2018.
All customers except Account turnover from PKR 100 million to PKR 250
Public/Private Limited million for any of the calendar year 2016, 2017 or for
Companies a period since January 1, 2018 to September 30,
2018.
Normal All other accounts not covered in the above categories 30th June 2019

Note
i. Biometric verification of persons authorized to open and operate the account of legal entities or legal arrangements shall be
conducted.
ii. In case of customers whose eligible identity documents are other than biometrically verifiable documents, re-validation/
verification of identity shall be done based on documents, data or information obtained from customer and/or from reliable and
independent sources having regard to bank/DFI’s own assessment of materiality and risk.

b) Confirm compliance status of their internal risk review of remaining legacy portfolio of customers, as required vide BPRD
Circular Letter No. 20 dated June 14, 2017 latest by October 31, 2018.

6. SBP during the course of inspection will particularly assess the compliance of above requirements and non-compliance will
attract appropriate enforcement action in accordance with relevant laws.
 7. Please acknowledge receipt.
Yours truly,

Sd/-

(Muhammad Saleem)
Additional Director

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