ISLAMABAD - The Securities and Exchange Commission of Pakistan (SECP) and National Counter Terrorism Authority (NACTA) on Tuesday joined hands to undertake all necessary efforts for collaboration to combat money laundering and terrorism financing (CTF).

In this regard, a memorandum of understanding (MoU) was signed at the NACTA head office between SECP and NACTA wherein Shaukat Hussain, the SECP chairman, and Dr Muhammad Sulaman Khan, National Coordinator NACTA, the signatories from both sides graced the occasion.

The MoU will enable both institutions to collaborate, cooperate and coordinate to effectively carry out their respective statutory responsibilities for implementation on Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) regime and maintain the highest level of oversight quality, while minimizing duplication of efforts. Furthermore, the both institutions will establish a framework for collaboration, coordination, awareness raising and sharing of information in areas of common regulatory and supervisory interest for furtherance of objectives of SECP and NACTA.

Earlier, the SECP had notified Anti-Money Laundering and Countering Financing of Terrorism Regulations, 2018 on June 14. The regulations consolidate AML/CFT regime for financial institutions regulated by the SECP, namely, securities brokers, insurance companies, non-banking finance companies and modarabas. These regulations are fully compliant with Financial Action Task Force (FATF) recommendations and Pakistan being a member of the Asia Pacific Group on money laundering is under obligation to adopt the same. There are certain changes and additional provisions in the regulations that make it substantially better equipped in serving its purpose than the previous regime. The focus has been enhanced towards high-risk areas and taking a risk based approach towards combating money laundering and financing of terrorism. The introduction of simplified due diligence for low risk customers shall allow such customers to avail services of financial institutions with relative ease, whereas it will enable financial institutions to focus their resources on high risk customers, which are subject to enhanced due diligence. Low risk customers include customers dealing in pension schemes, limited services financial products and insurance products with annual premium of Rs 100,000 or a single premium of Rs250,000, while high-risk categories inter alia include politically-exposed persons, legal persons and legal arrangements with complex ownership structures and not for profit organizations. In order to ensure that criminals are not able to hide their identity through use of complex ownership structure of companies, partnerships, trusts or other similar forms, the financial institutions are required to identify the ultimate beneficial owner, who is a natural person, of all legal persons and legal arrangements before offering their services to them.

Speaking on the occasion, Shaukat Hussain highlighted the significance of sensitizing financial institutions and associations with charitable and not for profit objects regarding best practices to be adopted on AML/CFT framework. He stressed the importance of consultative group for sharing of knowledge and experiences on AML/CFT and compliance of FATF recommendations.

Furthermore, the SECP chairman also shed light on the shared regulatory objectives and supervisory responsibilities of the SECP and NACTA on AML/CFT. He highlighted that through the JamaPunji programme, SECP has been able to reach large audiences and create awareness and sensitization with respect to AML/CFT obligations. The SECP chairman also accentuated the fact that the SECP was fully cognizant of its responsibilities under the FATAF action plan and APG mutual evaluation and was committed to taking necessary steps for proper implementation on this plan

NACTA’s National Coordinator Dr Muhammad Sulaman Khan expressed his satisfaction over NACTA’s collaboration with SECP to achieve the broader national mandate of implementation on AML/CFT regime. Moreover, he also applauded the SECP’s efforts for its newly-introduced measures of combating AML/CTF.