SBP updates guidelines to comply with UNSC resolutions

KARACHI: The central bank issued updated guidelines on Friday to comply with the rules issued by the Ministry of Foreign Affairs under the United Nations Security Council (UNSC) resolutions and sanctions against the individuals and entities subject to assets freeze, travel ban and arms embargo.

The UNSC’s successor resolutions oversee sanction measures to counter proliferation financing.

Banks were required to issue a notice of freezing or seizure of the property to the concerned designated entity/individual and any other person affected by the freezing or seizure of the property, as set out in the UNSC (Freezing and Seizure) Order, 2019, the SBP guidelines said.

“All banks, development finance institutions and microfinance banks are advised to regularly access the consolidated lists to ensure compliance with measures in line with the UNSC resolutions,” it said.

“SBP during the course of inspection would check the availability of these updated lists in banks/DFIs/MFBs and action taken there on,” it added.

Banks should not provide any banking services to proscribed/designated entities and persons or their associated persons as required under Anti Money Laundering and Combating the Financing of Terrorism (AML/CFT) regulations. For this purpose, necessary measures should be taken including but not limited to the certain controls.

The central bank said in case of entity accounts, it should be ensured that their beneficial owners, directors, members, trustees and authorised signatories were not linked with any proscribed/designated entities and persons, whether under the same name or with a different name.

While opening new accounts or extending services to customers, any similarity between the identifying information of the customer and that of proscribed/designated entities and persons including national identification number, address, etc should be viewed with suspicion and properly investigated for necessary action as per requirements.

The SBP advised banks to monitor their relationships on a continuous basis and ensure that no such relationship exists. If any such relationship was found, immediate action should be taken as per law, including reporting to the Financial Monitoring Unit (FMU).

“Banks shall also ensure compliance of subject sanctions regimes with regards to their vendors, employees (permanent, contractual or hired through outsourcing), board of directors/members, sponsors/shareholders etc.” Banks/DFIs/MFBs should deploy adequate systems for real time screening and allocate sufficient/trained resources to ensure meticulous compliance of the subject sanctions regimes.

Further, the government has already prescribed penalty up to Rs10 million for non-compliance of sanctions regime under the UN (Security Council) Act, 1948 and the Anti-Terrorism Act, 1997.

The Financial Action Task Force typologies report on proliferation financing provides a starting point to the public and private sectors in understanding the threats and situations where customers, transactions and other account activities might be involved in proliferation financing.

The national authorities and academic institutions have identified a number of situations, which could indicate possible proliferation financing activities. However, proliferation financing and proliferation financing activities might share similar traits with money laundering (especially trade based money laundering) and terrorist financing activities.