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February 28, 2020

SECP for ‘continued’ effortsto check money laundering

Business

February 28, 2020

ISLAMABAD: Securities and Exchange of Pakistan (SECP) on Thursday underscored a need of continued efforts to combat money laundering and terrorist financing as the global financial system watchdog gave the country a four-month breather to improve its compliance for exit from the grey list.

SECP Commissioner Farrukh Sabzwari said Pakistan has demonstrated significant progress towards fulfilling the Financial Action Task Force (FATF) obligations under the action plan. “Nonetheless, it must continue its efforts in combating money laundering and terror financing by accomplishing the remaining actionable items under the International Co-operation Review Group action plan and addressing deficiencies identified in Pakistan’s mutual evaluation report,” Sabzwari said, addressing the anti-money laundering / combating the financing of terrorism (AML/CFT) compliance forum.

Pakistan has to comply with an FATF’s action plan till June this year after timeline for improving compliance was extended last week. The June meeting would determine the country’s position whether to keep with its status in the grey list of countries with AML/CFT deficiencies or manage an exit. The forum was hosted to deliberate on progress on FATF action plan, deficiencies identified in the country’s FATF/Asia Pacific Group mutual evaluation, supervisory findings and issues in implementation of AML/CFT regulations.

More than 45 chief executive officers from securities and commodities markets, insurance/takaful companies, non-banking finance companies and modaraba sector participated in the forum.

The SECP commissioner reiterated the SECP’s graduated approach to enforcement actions related to violations.

“While the penalty regime began with caution letters and warnings and graduated to financial penalties, the regulatees need to be aware that these penalties were on a lower level,” he said. “Repeat offences and TFS (targeted financial sanctions) gaps will be dealt with a lot more severity, in future.”

The commission revised the penalty scale for violations of AML/CFT requirements, including TFS, making the penalty scale proportionate to the non-compliance and risk sensitiveness. It also stressed significance of immediate screening and freezing actions by the industry in case of United Nations Security Council-designated individuals and entities.

The commissioner said SECP also encouraged financial institutions to make use of technological solutions for effective screening of designated and proscribed individuals, ongoing monitoring of transactions and reporting of suspicious transactions. SECP also offered its support to the industry to adopt such technological solutions.