The Presidents / Chief Executives
All Banks / DFIs

Dear Sirs / Madam,

PRUDENTIAL REGULATIONS - ANTI MONEY LAUNDERING MEASURES

In order to ensure compliance with Financial Action Task Force recommendations on anti-money laundering, safeguard the interest of depositors from risks arising out of money laundering and to reinforce the measures being taken by the banks / DFIs for proper management of their institutions, the following amendments/ additions are made, in public interest, in the Prudential Regulations for Corporate / Commercial Banking with immediate effect:

1. REGULATION M-1
KNOW YOUR CUSTOMER (KYC)

(i) The following addition may be made in para (3) ibid:

“While opening bank account of “proprietorships”, the requirements laid down for individuals at serial No.(1) of the Annexure to this regulation shall apply except the requirement mentioned at No.(3) of the Annexure. Banks / DFIs should exercise extra care in view of the fact that constituent documents are not available in such cases to confirm existence or otherwise of the proprietorships.”

(ii) The following new para (4) may be inserted and existing para (4) may be renumbered as (5) and so on.

“4. Copies of CNIC wherever required in annexure to this regulation shall invariably be verified, before opening the account, from NADRA through utilizing on-line facility or where the banks/ DFIs or their branches do not have such facility through arrangement with regional offices of NADRA.”

2. REGULATION M-2
ANTI-MONEY LAUNDERING MEASURES
A new para (c) may be inserted and existing para (c) may be renumbered as (d) as follows:

“(c) Banks/ DFIs are required to include accurate and meaningful originator information (name, address and account number) on funds transfers including wire transfers and related messages that are sent, and the information should remain with the transfer or related message throughout the payment chain. However, banks/ DFIs may, if satisfied, substitute the requirement of mentioning address with CNIC, Passport, Driving license or similar identification number for this purpose.”
Cont’d.... P/2

3. REGULATION M-5
SUSPICIOUS TRANSACTIONS

Para (2) has been substituted as following:

“2. If the bank / DFI suspects, or has reasonable grounds to suspect, that funds are the proceeds of a criminal activity or terrorist financing, it should report promptly, its suspicions, through Compliance Officer of the bank / DFI to Banking Policy Department of the State Bank of Pakistan. The report should contain, at a minimum, the following information:
(a) Title, type and number of the accounts.
(b) Amounts involved.
(c) Detail of the transactions.
(d) Reasons for suspicion.

State Bank has been encouraging Banks / DFIs to make use of technology and upgrade their systems and procedures in accordance with the changing profile of various risks. Accordingly, all banks / DFIs are advised to implement systems which could flag out of pattern transactions for reporting suspicious transactions.

The existing list of examples of suspicious transactions as Annexure-IX is supplemented with the enclosed list of characteristics of financial transactions that may be a cause for increased scrutiny as Annexure-X.”

4. All other instructions on the subject will, however, remain unchanged.

5. Please acknowledge receipt.

Annexure