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Legal kyc policy with Trade12

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All clients are required to provide up-to-date identification details and apprise the company in any changes or modification. The Client must hand over current the following identification information, complete name, current residence, a document or proof of previous, history of online transaction and e-mail address.

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 Know Your Customer – KYC enables banks to
know/understand their customers and their
financial dealings to be able to serve them better
and prudently manage the risks of Money
Laundering and Financing of Terrorism.
KYC/Customer due diligence is an on-going process for prudent banking
practices, therefore the banks are encouraged to:-
 Set up a compliance unit with a full time Head.
 Put in place a system to monitor the accounts and transactions on a regular
basis.
 Update customer information and records at reasonable intervals.
 Chalk out plan of imparting suitable training to the staff of bank periodically.
 Maintain proper records of customer identifications and clearly indicate, in
writing.
 Monitor and check unusually large cash transactions, especially those
which are out of character/ inconsistent with the history.
 To establish the identity of the client. This means identifying the
customer and verifying his/her identity by using reliable,
independent source documents, data or information.
 To ensure that sufficient information is obtained on the nature of
employment/business that the customer does/expects to undertake
and the purpose of the account.
 To prevent banks from being used, intentionally or unintentionally,
by criminal elements for money laundering activities.
KYC will be carried out at the following stages:
o Opening a new account.
o Opening a subsequent account where documents as per current
KYC standards have not been submitted while opening the initial
account.
o Opening a Locker facility where these documents are not available
with the bank for all the Locker facility holders.
o When the bank feels it necessary to obtain additional information
from existing customers based on conduct of the account.
o When there are changes to signatories, mandate holders,
beneficial owners etc.
 No ! KYC requirements have always been in place and Banks have
been taking KYC documents in accordance with the guidelines issued by
SBP from time to time. SBP has revisited the KYC guidelines in the
context of the recommendations made by the Financial Action Task
Force (FATF) on Anti Money Laundering Measures and Combating
Financing of Terrorism and enhanced the KYC Standards in line with
International benchmarks.
The Financial Action Task Force (FATF) was established in July
1989 by a Group of Seven (G-7) Summit in Paris, initially to
examine and develop measures to combat money laundering.

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Legal kyc policy with Trade12

  • 2.  Know Your Customer – KYC enables banks to know/understand their customers and their financial dealings to be able to serve them better and prudently manage the risks of Money Laundering and Financing of Terrorism.
  • 3. KYC/Customer due diligence is an on-going process for prudent banking practices, therefore the banks are encouraged to:-  Set up a compliance unit with a full time Head.  Put in place a system to monitor the accounts and transactions on a regular basis.  Update customer information and records at reasonable intervals.  Chalk out plan of imparting suitable training to the staff of bank periodically.  Maintain proper records of customer identifications and clearly indicate, in writing.  Monitor and check unusually large cash transactions, especially those which are out of character/ inconsistent with the history.
  • 4.  To establish the identity of the client. This means identifying the customer and verifying his/her identity by using reliable, independent source documents, data or information.  To ensure that sufficient information is obtained on the nature of employment/business that the customer does/expects to undertake and the purpose of the account.  To prevent banks from being used, intentionally or unintentionally, by criminal elements for money laundering activities.
  • 5. KYC will be carried out at the following stages: o Opening a new account. o Opening a subsequent account where documents as per current KYC standards have not been submitted while opening the initial account. o Opening a Locker facility where these documents are not available with the bank for all the Locker facility holders. o When the bank feels it necessary to obtain additional information from existing customers based on conduct of the account. o When there are changes to signatories, mandate holders, beneficial owners etc.
  • 6.  No ! KYC requirements have always been in place and Banks have been taking KYC documents in accordance with the guidelines issued by SBP from time to time. SBP has revisited the KYC guidelines in the context of the recommendations made by the Financial Action Task Force (FATF) on Anti Money Laundering Measures and Combating Financing of Terrorism and enhanced the KYC Standards in line with International benchmarks. The Financial Action Task Force (FATF) was established in July 1989 by a Group of Seven (G-7) Summit in Paris, initially to examine and develop measures to combat money laundering.
  • 7.  PRUDENTIAL REGULATION XI: KNOW YOUR CUSTOMER (KYC) • Banks/DFIs are advised to fully comply with the requirements of Prudential Regulation No. XI • Non-compliance of instructions will attract penal provision under the Banking Companies Ordinance, 1962.
  • 8. Definition of Customer: o A customer or entity that maintains an account and/or has a business relationship with the bank; o One on whose behalf the account is maintained (i.e. the beneficial owner)
  • 9. • The Bank/branch shall obtain satisfactory evidence duly verified/authenticated by the branch manager and shall be placed on record in respect of  (i) the true identity of the beneficial owners of all accounts opened by a person, entity etc, (ii) the real party in interest or controlling person/entity of the account(s) in case of nominee or minors account. • The Banks shall obtain “Introduction” on the new account to assess the prospective customer’s/account holder’s integrity, respectability and the nature of business etc. ( Introducer is an existing account holder of the same branch )
  • 10. • The Banks are also advised that KYC/customer due diligence is not a one time exercise to be conducted at the time of entering into a formal relationship with customer/account holder. • Each Bank shall formulate and keep in place, in writing, a comprehensive Know-Your-Customer policy duly approved by their Board of Directors and in case of branches of foreign banks, approved by their head office. • State Bank of Pakistan, during the course of inspection, 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.
  • 11. Training & Education: Employee Training • Banks should take steps to provide proper training to its employees on the statutory/ regulatory requirements and the internal policy & procedures so that the risks are well understood and managed. • Employees should also be educated on the need for proper handling of customer queries. Customer Education • Distribution of pamphlets etc. .may be considered
  • 12. REGULATION-XI • OPENING OF ACCOUNTS Banks shall make all reasonable efforts to determine the true identity of every would be account holder. Towards this end, banks shall institute effective procedure and methods for obtaining proper identification from the new customers.
  • 13. All reasonable efforts shall be made to determine true identity of every prospective customer. The following minimum set of documents must be obtained from various types of customers/ account holder(s).   Individuals: (i)   Attested photocopy of national identity card or passport of the individual. (ii)  In case the NIC does not contain a photograph, the bank should also obtain, in addition to NIC, any other document such as driver’s license etc that contains a photograph.  (iii)  In case of a salaried person, attested copy of his service card, or any other acceptable evidence of service, including, but not limited to a certificate from the employer. (iv)  In case of illiterate person, a passport size photograph of the new account holder besides taking his right and left thumb impression on the specimen signature card.
  • 14. Partnership: (i)  Attested photocopies of identity cards of all partners. (ii)  Attested copy of “Partnership Deed” duly signed by all partners of the firm. (iii) Attested copy of Registration Certificate with Registrar of Firms. In case the partnership is unregistered, this fact should be clearly mentioned on the Account Opening form. (iv) Authority letter, in original, in favor of the person authorized to operate on the account of the firm.
  • 15. Joint Stock companies: Certified copies of: (i)   Resolution of Board of Directors for opening of account specifying the person(s) authorized to operate the company account. (ii)    Memorandum and Article of Association (iii)   Certificate of Incorporation. (iv)   Certificate of Commencement of Business. (v)   Attested photocopies of identity cards of all the directors.
  • 16. Clubs, Societies and Associations: (i)  Certified copies of Certificate of Registration. By-laws/Rules & Regulations. (ii)    Resolution of the Governing Body/Executive Committee for opening of account authorizing the person(s) to operate the account and attested copy of the identity card of the authorized person(s). (iii)   An undertaking signed by all the authorized persons on behalf of the institution mentioning that when any change takes place in the persons authorized to operate on the account, the banker will be informed immediately.
  • 17. Agents Accounts: (i)  Certified copy of “Power of Attorney”. (ii)  Attested photocopy of identity card of the agent. Trust Account: (i)   Attested copy of Certificate of Registration. (ii)  Attested copies of NIC of all the trustees. (iii)  Certified copies of  Instrument of Trust.
  • 18. I. Know your customer standards II. Customer Acceptance Policy III. Customer Identification Procedure IV. Monitoring of Transactions V. Risk Management VI. Customer education VII. KYC for existing accounts VIII. Appointment of principal officer
  • 19. o Money laundering is the process by which large amounts of illegally obtained money (from drug trafficking, terrorist activity or other serious crimes) is given the appearance of having originated from a legitimate source.
  • 20.  Kidnapping  Drug Trafficking  Bribery/corruption  Tax Evasion  Robbery and Fraud  Gambling  Organized crime • Extortion • Prostitution • Smuggling (arms, people, goods)
  • 21.  In 2010, the State Bank of Pakistan (SBP) passed the Anti-Money Laundering Act.  Since 1990’s regulators, National Accountability Bureau (NAB), Anti- Narcotics Force (ANF) and Federal Investigation Agency (FIA) are putting its efforts to combat against these crimes and put a pause to money laundering completely.
  • 22. PRUDENTIAL REGULATION-XII • PREVENTION OF CRIMINAL USE OF BANKING Banks shall follow the following guidelines to safeguard themselves against their involvement in money-laundering activities, and other unlawful trades. a) banks shall make reasonable efforts to determine the true identity of customer. b) Banks shall ensure that banking business is conducted in conformity with high ethical standards and that banking laws and regulations are adhered to. c) Specific procedures be established for ascertaining customer’s status and his source of earnings, for monitoring of accounts on a regular basis. d) Banks may make arrangements for setting up an Internal Audit System in order to establish an effective means of testing /checking.
  • 23. 1. Placement Induction of illegal money into the financial system 1. Layering Multiple transactions to confuse the audit trail and distance the original source of funds (e.g. successive transactions, international transfers). 1. Integration than integrating funds back into the real economy as “clean and Respectable money
  • 25. Risks to banks? (I) Reputational risk (ii) Legal risk (iii) Operational risk All risks are inter-related and together have the potential of causing serious threat to the survival of the bank
  • 26. o High Risk Customers (CDD – Every Transaction) i) non-resident customers ii) private banking customers iii) legal persons o Medium risk customers ( CDD – Only on High amount) i) documentary businesses o Low risk customers ( CDD – Yearly )
  • 27. • CTR- Currency Transaction Report For all cash transaction above Rs. 2.5 million. • STR- Suspicious Transaction Report e.g. Transactions which do not make economic sense. Transactions inconsistent with the customer's business. Transactions involving large amounts of cash. Transactions involving transfers to and from abroad. • FMU is the only designated agency in Pakistan to which suspicious transaction reports (STRs) and currency transaction reports (CTRs) shall be made.