SBP instructs banks to keep eye on forex accounts

Terror financing, money laundering

KARACHI: The central bank on Tuesday directed banks to maintain monthly transactions data of bank transfers by individuals and entities holding foreign currency accounts to cut chances of terror financing and money laundering.

The banks have been directed to maintain data of those personal foreign currency accounts maintained by individuals where aggregate amount exceeding $10,000 or equivalent in other foreign currencies is deposited in, withdrawn from or remitted out from the account during the month,” State Bank of Pakistan (SBP) said in a circular.

“The banks have also been directed to maintain data of entities in similar manner where aggregate amount exceeding $25,000 during the month.”

The circular said the SBP is “endeavoring to prevent the possible use of the banking sector for money laundering, terrorist financing and illegal transfer of funds.”

Under Anti-Money Laundering Act, 2010, reporting entities including authorized dealers are under obligation to conduct Customer Due Diligence (CDD) and maintain record of transactions, account files and documents obtained through such diligence in accordance with the regulations issued by the central bank.

“In this connection the central bank reiterated that authorized dealers must ensure strict observance of all applicable instructions including Regulations/Guidelines issued by SBP regarding Know Your Customer (KYC)/CDD while opening and maintaining foreign currency accounts,” it added.

“Further, ongoing CDD is an essential part of an effective Anti Money Laundering (AML) and Combating the Financing of Terrorism (CFT) regime and applies to all customers to whom the banks are offering any type of service(s),” the SBP said.

The bank said this includes monitoring and scrutiny of transactions undertaken throughout the course of business relationship between the bank and the customer to ensure that the transactions being conducted are consistent with the institution’s knowledge of the customer, purpose of account, business and risk profile, and the source of funds.

The SBP advised the banks to ensure that “consolidated data/record of transactions routed through foreign currency accounts of individuals/entities is maintained by them at their head offices on monthly basis, in addition to the data/record already being maintained.”

The SBP directed the banks the data required to be maintained may be demanded by the SBP at the time of on-site inspection/off-site monitoring and or when required.