SECP contests freshness of APG’s evaluation report

ISLAMABAD: Global financial system watchdog has not considered all the actions taken so far by Pakistan to curb money laundering and terrorist financing in its latest report as it factored in measures till October last year, the Securities and Exchange Commission of Pakistan (SECP) said on Wednesday.

More: Pakistan fares well on FATF conditions

“Pakistan’s Mutual Evaluation Report (MER) provides a summary of the AML / CFT (anti-money laundering / combating the financing of terrorism) measures in place in Pakistan as of October 2018,” the SECP said in a statement.

“A large component of the reforms were implemented after October 2018 and are not reflected in the MER published now by APG (Asia-Pacific Group of Money Laundering),” the commission said.

In August, APG – part of the Financial Action Task Force – adopted Pakistan’s MER in annual meeting in Australia. Under the evaluation, the country was noncompliant on four, fully-compliant on one, partially compliant on 26 and largely compliant on nine out of 40 recommendations of APG. The group is to announce its decision about whether or not to keep the country in grey list of countries lacking standards to control money laundering and terrorist financing.

The SECP said it has conducted 167 inspections focusing on AML / CFT compliance in the cases of 72 securities brokers, 27 nonbanking finance companies, 13 insurance companies and 55 high-risk nonprofit organisations over the last one year. Significant penalties have been imposed for non-compliances with the AML / CFT Regulations issued in June last year, the commission said.

“SECP’s continuous efforts have resulted in improvement in compliance level of the regulated entities and effective control measures are now implemented to combat money laundering and terrorist financing,” it said. “The SECP’s risk based approach for effective implementation of AML / CFT regulatory framework ensued significant improvement in filing of suspicious transactions reports (STR) with the financial monitoring unit (FMU).” The commission developed a single set of regulations namely SECP AML / CFT Regulations in June 2018 to align itself with FATF’s 40 recommendations.

“Since the promulgation of consolidated AML / CFT regulations, the financial institutions have generated a total of 219 STRs, as compared to only 13 in the last eight years,” it said. “Financial institutions have undertaken remedial measures to ensure effective compliance with the said regulations. Automated screening software has been deployed by many financial institutions to screen the proscribed persons. The regulated entities now also have access to GoAML system of the FMU for online filing of STR.”

The SECP undertook a national ML / TF risk assessment to assess ML / TF vulnerabilities that are inherent within the financial sector. “The NRA (national risk assessment) aimed to put in place actions and control measures to mitigate those risks. FMU led the task in collaboration with stakeholders including ministries, law enforcement agencies, SBP (State Bank of Pakistan) and SECP,” it said. “The risk assessment and understanding enabled SECP and the regulated entities to implement the much needed control mechanism to check potential abuse by money launderers and terrorist financiers.” The SECP said it further embarked on a comprehensive awareness raising program to develop the risk understanding and AML obligations of the regulated sectors and shared the NRA 2019 with its regulated sectors.