SECP fines firms Rs42 million for AML/CFT breaches

ISLAMABAD: Securities and Exchange Commission of Pakistan (SECP) imposed over Rs42 million penalties on various companies for noncompliance with antimony laundering and combating the financing of terrorism (AML/CFT) regulations during the last fiscal year.

The SECP said it has intensified efforts to develop and maintain an AML/CFT regime that is robust, and can effectively respond to the constantly evolving threats and vulnerabilities.

“These efforts are aimed at protecting the integrity of the financial system and preventing its abuse for criminal and terrorism purposes,” the SECP said in a latest report.

During the fiscal year, inspections focusing on targeted financial sanction and transnational terrorist financing risk, beneficial ownership and compliance function of 125 securities brokers, 18 nonbanking financial companies and 21 insurance companies were conducted.

“These resulted in dissuasive penalties amounting to Rs42.3 million being imposed through 154 enforcement orders for AML/CFT breaches of SECP AML/CFT Regulations 2018,” said the SECP. The SECP said the effectiveness of the sanctioning regime of SECP has encouraged the adoption of remedial measures among its regulated universe. The regulated persons have enhanced their focus through up-gradation of risk-based controls, including strengthening of transaction monitoring systems and name screening solutions, data cleansing, increasing the number of ML/TF analysts and provision of additional training to improve understanding of ML/TF risks.

“These measures have enabled RPs to minimize chances of repetition/ recurrence of regulatory violations with respect to AML/CFT,” said the SECP. “The SECP is committed to implementing the measures set out in the FATF [Financial Action Task Force] standards to protect SECP regulated financial sector from being used by money launderers and terrorist financiers for illicit purposes.”

SECP is responsible for ensuring AML/CFT compliance by stockbrokers, commodities brokers, NBFCs and modarabas, insurers, corporates and non-profit organizations. FATF action plan and mutual evaluation of Pakistan Mutual Evaluation Report (MER) was adopted during October 2019, and Pakistan was placed on accelerated follow-up. “SECP has demonstrated significant progress towards fulfilling FATF obligations under the action plan, and is an active member of the working group constituted by FMU [Financial Monitoring Unit] for this purpose,” said the commission. “In addition, SECP using FATF’s assessment methodology has taken effective measures in addressing ML/TF deficiencies by ensuring technical compliance with the FATF Recommendations, as well as the “effectiveness” of the implemented AML/CFT regime.”

The SECP said it is focused on further improving its laws, regulations and directives in order to keep its AML/ CFT governance regime aligned with FATF standards. A comprehensive exercise is ongoing to remove deficiencies identified in the latest MER of Pakistan. “Significant progress been made with respect to amendments in SECP’s AML/CFT regulatory framework to align it with the FATF standards as well as implementation of international best practices for improving compliance by the regulated sector.”

The commission also conducted a series of workshops in Karachi, Islamabad and Lahore for its regulated sectors, namely securities and commodities market, insurance/Takaful companies, NBFCs and modaraba sector. A total of 23 awareness sessions attended by over 800 participants were organised. Compliance forum meetings were held with the respective industry associations of securities brokers, NBFCs and insurance.