Daily Times

LAHORE: Speakers at a one-day workshop on Monday threw light on the importance of combating money laundering and terrorism financing to promote a clean and transparent economic growth in the country.

The event titled Implementation of Risk-Based Approach Within Financial Institutions was organised by the Securities & Exchange Commission of Pakistan (SECP) at a local hotel.

While addressing the ceremony, SECP Executive Director Khalida Habib apprised the attendees about the anti-money laundering/combating financing of terrorism legal framework for financial institutions in Pakistan, the monitoring process of the Financial Action Task Force (FATF) and Pakistan’s mutual evaluation by the Asia Pacific Group against FATF recommendations. She highlighted the measures taken by the SECP in the form of regulations and guidance and also discussed the way forward.

The executive director said in the light of the recommendations made by the FATF, the commission has intensified its efforts to combat terrorism financing and money laundering by asking all the companies to comply with the Anti-Money Laundering Act, 2010. She said the commission has adopted a risk-based approach to mitigate the money laundering, terrorism financing and other risks and abuses and develop and refine the best practices to address the vulnerabilities in this regard. She also explained the risk factors, terrorism financing processes, fundamental principles of good practice, red flags and the high-risk indicators.

She said the companies should encourage self-regulation to ensure that their legitimate and essential work does not suffer. She said the corporate sector needs to exercise more vigilance while dealing with the politically exposed persons, legal persons or legal arrangement and the cross-border correspondent relationships.

“The corporate sector should place ample focus on effective customer due diligence, know-your-customer policies, customer identification, customer profiling, risk assessment, enhanced due diligence for high risk customers, requirements relating to politically exposed persons and staff training/screening to ensure adherence to the best international practices in the business,” she said, adding that it will not only help improve Pakistan’s outlook through increased compliance with the anti-money laundering and combating terrorism financing standards set internationally but also complement the objective of creating a general culture of documentation in the country’s financial operations to promote transparency and disclosure.

SECP Joint Director Muhammad Ali said the new guidelines issued by the commission require the regulated sector and persons to shift from one-size-fits-all to a risk-based approach while adopting the anti-money laundering and combating terrorism financing risk assessment and compliance framework. The risk-based approach requires proper identification and assessment of money laundering and terrorism financing risks in relation to customers, country or geographic area, products, services and transactions and delivery channels, he added.

He stressed the need for the non-profit organisations to comply with the international standards of anti-money laundering and combating the financing of terrorism. Many instances locally and worldwide have revealed terrorist abuse of charitable organisations to raise and move funds, provide logistic support, encourage terrorist recruitment or otherwise cultivate support for terrorist organisations and operations, he said, adding that the terrorist elements try to exploit every system from where they can collect money and fund their terrorist activities, including the corporate sector.

Pakistan Stock Exchange Regional Head Sarmad Hussain appreciated the SECP’s contribution in the area of money laundering and terrorist financing and stressed the need for holding such seminars on a regular basis.

The workshop was attended by over 150 participants from sectors regulated by the SECP like securities market, commodities market, insurance/takaful sector and non-banking financial institutions. The objective of the workshop was to raise awareness among the financial institutions on SECP AML/CFT Regulations, 2018, and regulatory expectations. The workshop focused on sharing of the best global practices, legislative framework, technological enhancements and streamlining of procedures in order to apply national AML/CFT measures and develop an effective risk assessment and compliance framework.

The workshop was followed by an interactive session which provided the participants a platform for sharing of their experiences as well as feedback.

Published in Daily Times, October 16^th 2018.