As you are aware,  increasing efforts are being made across the globe to ensure that the banks are not used as a mean to facilitate  money laundering and other unlawful activities. In this regard, the central banks the world over are stressing more on the preventive techniques like “Know Your Customer” (KYC) and enhanced due diligence by the banks so that the banks are aware of the source and capacity of their customers with reference to the activity and turn over in the accounts.

2.         The State Bank of Pakistan has also been actively engaged in supporting the global efforts and necessary guidelines have already been put in place through Prudential Regulations No. XI and XII to safeguard banking sector from the menace of money laundering and other unlawful activities. The success of these measures require that the banks have put in place appropriate procedures to ensure all branches of the banks strictly follow the requirements of “Know Your Customer”(KYC), as proper implementation of KYC system is the first line of defense in the fight against money laundering and other unlawful activities. SBP, during the course of its inspections, would particularly check the efficacy of the KYC system put in place by the banks and its compliance by all the branches and the staff.  Stern action will be taken against the banks and the relevant staff member for non-compliance and/or negligence in this area.

3.         Please have the contents of this circular cascaded down the line for compliance.  It must be ensured that suitable training in this area is provided by the banks for its employees.

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