Circulars/Notifications - Exchange Policy Department  
 FE Circular No. 04 of 2019

October 14, 2019

The Presidents/Chief Executives of all
Authorized Dealers in Foreign Exchange

Dear Sir/Madam,

Framework for Managing Risks of Trade Based Money Laundering and Terrorist Financing

In order to strengthen trade related Anti Money Laundering/Combating Financing of Terrorism (AML/CFT) regime and restrict possible misuse of banking channel, a comprehensive framework on the subject has been developed and attached herewith. Accordingly, Authorized Dealers (ADs) are advised to upgrade their systems and controls and bring policies and procedures in line with the requirements of the framework to ensure meticulous compliance with the provisions thereof with immediate effect except as otherwise provided in the framework

2.       The provisions of this framework are in addition to and not a replacement of already issued instructions on the subject of ML/FT risks. Therefore, the compliance of the same shall not absolve ADs from their legal and regulatory obligations under prevailing AML/CFT laws/rules and regulations or any other relevant law in force.

3.       ADs are also advised to educate their clients about their obligation of ensuring (a) correct declaration of particulars on the prescribed forms, (b) utilization of foreign exchange for the exact purpose for which it is acquired by them and (c) repatriation of foreign exchange that represents the full export value of goods. In the event, it is found that material information required to be submitted on the prescribed forms has been omitted or suppressed, foreign exchange is misutilized by a client of an AD or export proceeds repatriated by a client does not represent the full export value of goods, SBP shall initiate penal action against such delinquent parties under relevant provisions of the Foreign Exchange Regulation Act, 1947 (FERA). Further, the matter shall also be reported to relevant stakeholders for necessary action under the laws being administered by them.

4.       Failure to comply with the instructions on the subject and the regulatory obligations of AML/CFT may attract action against ADs under the FERA and other relevant laws.

Encl: Framework for Managing Risks of Trade Based Money Laundering and Terrorist Financing


Yours truly,

(Arshad Mehmood Bhatti)
Director - EPD

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