Presentation For Regional Directorates

CDD, TFS & RED FLAG FOR STR
REPORTING ISSUED BY FMU.
DECEMBER 13, 2020

PRESENTATION OUTLINES
 RECENT DEVELOPMENT IN AML-CFT LEGAL FRAME WORK
 PROCESS OF MONEY LAUNDERING
 KYC INTRODUCTION
 STR REPORTING
 RED FLAGS FOR STR REPORTING
 KYC FORM
2
RECENT DEVELOPMENT IN AML-CFT LEGAL
FRAME WORK
Act/Rule Key Point Hyper Links
 Under Section 6-A powers and functions of

Regulatory Authorities are defined (pg-10)
 Schedule-IV (1)(iv) specify National Savings
(AML and CFT) Supervisory Board for
AMLA ACT, 2010 National Savings Schemes as a regulator of AMLA Act, 2010
CDNS.(pg-46)
 Under Section 7(A-J) Reporting Entities
(CDNS) are required to perform Customer Due
Diligence (CCD) (pg-13)
 Rule 3 defines the composition of the

National Savings AML- Board
Powers and
CFT Supervisory  Rule 4 defines the Powers and functions of Functions
Board Powers and the Supervisory Board
Supervisory Board
Function Rules, 2020  Rule 5 defines the Repeal and saving of Notification
and Notification existing Rules
3
CONTINUED… .
Rule/Regulations Key Points Hyper Links
 Rule 3. Empowers Regulatory Authority to

AML/CFT Sanction sanction.
Click Here.
Rules 2020  Rules 4. Type of sanctions and penalty amounts.
 Rules 6. defines the range of Penalty amounts.
 Regulation 1 & 2. defines applicability terms and

 Regulation 3. deals with Risk assessment and
Mitigation
National Savings  Regulation 4. Customer and Beneficial Owner
(AML-CFT) Identification and Verification Click Here.
Regulations, 2020  Regulation 6,7,8 and 9 deals with Internal
controls, Targeted financial sanctions and
obligations, Reporting of STR and CTR, Record
keeping
4
PROCESS OF MONEY LAUNDERING
5
TYPICAL MONEY LAUNDERING SCHEME
6
WHAT KYC MEANS?
 Customer?
 One who maintains an account, establishes business relationship, on
who’s behalf account is maintained, beneficiary of accounts maintained
by intermediaries, and one who carries potential risk through one off
transaction
 Your? Who should know?
 Branch manager, audit officer, monitoring officials, PO
 Know? What you should know?
 True identity and beneficial ownership of the accounts
 Permanent address, registered & administrative address
7
WHAT KYC MEANS?
 Making reasonable efforts to determine the true identity and

beneficial ownership of accounts;
 Sources of funds
 Nature of customers’ business
 What constitutes reasonable account activity?
 Who your customer’s customer are?
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CORE ELEMENTS OF KYC
 Customer Acceptance Policy

 Customer Identification Procedure- Customer Profile
 Risk classification of accounts- risk based approach
 Risk Management
 Ongoing monitoring of account activity
 Reporting of cash and suspicious transactions
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CDD PROCESS FLOW
10
CONCEPT OF CDD
11
KYC ONBOARDING LIFE CYCLE
12
AML KYC ONBOARDING PROCESS FLOW
13
UNSC SECTIONS LISTS SCREENING
RELEVANT ORGANIZATIONS Hyperlinks
Ministry of Foreign Affairs

http://mofa.gov.pk/unsc-sanctions/
UNSC https://www.un.org/securitycouncil/
https://nacta.gov.pk/
NACTA Proscribed Persons
Proscribed-Organizations
14
SCANNING OF NACTA LIST AT NSC LEVEL
15
STR REPORTING
Hyper links
FMU DOCUMENTS
Red Flags For STR Reporting By Central

Directorate Of Red flags for STR Reporting
National Savings (Cdns)
Guidelines for Reporting Suspicious
Transaction Report (STRs) on
Cancellation /Blockage of CNICs / Guidelines for Reporting Suspicious Transaction Report
Passports & Registrations / Licenses by
the Authorities
Guidelines on Reporting of Suspicious
Transaction Reports (STRs) on
Designated /Proscribed Individuals / Guidelines on Reporting of STR on goAML
Entities and their Associates
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RED FLAGS FOR STR REPORTING
 The nominee is not a close relative or change in a nominee (for instance, to

include non-family members).
 A third-party check is provided for investment.
 Purchase of a long-term investment product followed shortly thereafter by a
request to liquidate the position to get back the invested amount.
 Overall investment quantum, account balance, or transactional activity is not in
line with the customer’s business, known means, or stated purpose of the product.
 The client is frequently purchasing savings certificates or prize bonds through
unusual payments in cash, which do not commensurate with his/her profile.
 When transactions are conducted without any apparent legitimate or economic
reason. 8. Where multiple deposits are made by unrelated individuals.
 Large cash is deposited followed by early withdrawal.
17
CONTINUED… .
 Where large deposits and withdrawals are made routinely, and the end of day balance is
very low or nil.
 When a customer insists to buy multiple savings certificates or prize bonds through
structured or broken cash transactions to avoid CTR reporting threshold (Rs 2.0 Million
and above).
 Two or more customers (Linked/associated with each other) working together to break
one cash transaction into two or more transactions to evade the CTR reporting
requirement.
 Purchase of higher denomination Prize Bonds against cash without providing any plausible
justification.
 Encashment of higher denomination Prize Bonds without any plausible justification.
 When a customer is frequently converting one product into another (especially in the
name of an unrelated third party) without any plausible justification.
 Numerous prizes are repeatedly/very frequently being claimed by the customer against
winning prize bonds during a short span of time. Immediate Actions to be taken by the
concerned officers. 18
KYC/CDD Form.
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CDD, TFS & RED FLAG FOR STR

REPORTING ISSUED BY FMU.

DECEMBER 13, 2020

 RECENT DEVELOPMENT IN AML-CFT LEGAL FRAME WORK

 PROCESS OF MONEY LAUNDERING

 RED FLAGS FOR STR REPORTING

 Under Section 6-A powers and functions of

 Rule 3 defines the composition of the

Rule/Regulations Key Points Hyper Links

 Rule 3. Empowers Regulatory Authority to

 Regulation 1 & 2. defines applicability terms and

 Making reasonable efforts to determine the true identity and

 Customer Acceptance Policy

RELEVANT ORGANIZATIONS Hyperlinks

Ministry of Foreign Affairs

NACTA Proscribed Persons

Red Flags For STR Reporting By Central

Entities and their Associates

 The nominee is not a close relative or change in a nominee (for instance, to

CLICK ON WORD DOC.

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