KYC AML CFT Procedure Manual

KYC/ AML/ CFT PROCEDURE MANUAL COMPLIANCE

GROUP

KYC / AML / CFT PROCEDURE MANUAL

KYC/ AML/ CFT PROCEDURE MANUAL

TABLE OF CONTENTS

1. PREAMBLE ..................................................................................................................................... 3

2. INTRODUCTION ............................................................................................................................. 4

3. APPLICABLE LAWS AND REGULATIONS ......................................................................................... 6

3.1. Anti-Money Laundering Act, 2010 ................................................................................................ 6

3.1.1. Offence of Money Laundering (Section 3) ............................................................................ 6

3.1.2. Punishment for Money Laundering (Section 4) .................................................................... 6

3.1.3. Procedure and Manner of Furnishing Information by Financial Institutions (Section 7) ..... 6

3.1.4. Liability for Failure to File Suspicious Transaction Report and for Providing False

Information (Section 33) ....................................................................................................................... 7

3.1.5. Disclosure of Information (Section 34) [Tipping Off] ............................................................ 7

3.2. Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) Regulations for

Banks/DFIs Issued By State Bank of Pakistan (Revised and Issued on 13 September 2012) ................ 8

4. KNOW YOUR CUSTOMER .............................................................................................................. 9

5. KNOW YOUR CUSTOMER GUIDELINES........................................................................................ 10

5.1. Customer Profiling ...................................................................................................................... 10

5.2. Controls and Precautions ............................................................................................................ 10

5.2.1. Customer Acceptance and Identification ............................................................................ 10

5.2.1.1. Type of Customers NBP will not accept .......................................................................... 10

5.2.2. Risk Assessment .................................................................................................................. 11

5.2.2.1. Review of High Risk Accounts ......................................................................................... 16

5.2.2.2. General Principle ............................................................................................................. 17

5.2.2.3. Completion of Account Opening Requirements ............................................................. 17

5.2.2.4. Customer Identity Verification ........................................................................................ 31

5.2.2.5. Timing of Verification ...................................................................................................... 32

5.2.2.6. Discrepancies Uncovered During Identity Verification ................................................... 32

5.2.3. Ongoing Monitoring of Accounts ........................................................................................ 32

5.2.4. Record Keeping ................................................................................................................... 33

6. TRANSACTION MONITORING ...................................................................................................... 34

7. TRANSACTION REPORTING ......................................................................................................... 36

7.1. Suspicious Transactions Defined ................................................................................................. 36

KYC/ AML/ CFT PROCEDURE MANUAL

7.2. Maintenance of Suspicious Transactions Register ...................................................................... 36

7.3. Reporting Of Suspicious Transactions ......................................................................................... 37

7.4. Suspicious Transaction Report Flow ........................................................................................... 37

7.5. Liability for Failure to File Suspicious Transaction Report .......................................................... 38

7.6. Currency Transaction Reporting ................................................................................................. 38

7.7. Filing of Currency Transaction Report ........................................................................................ 38

7.8. Confidentiality of STR and CTR / Tipping Off .............................................................................. 38

7.9. Retention of Records Related to STR and CTR ............................................................................ 38

8. REMITTANCE TRANSACTIONS (INWARD/OUTWARD) ................................................................ 39

8.1. SWIFT Message Type for Handling Outward Remittances ......................................................... 40

8.2. SWIFT Message MT103 ............................................................................................................... 40

8.3. SWIFT Message for Cover Payments (MT 202 COV) ................................................................... 40

9. CORRESPONDENT BANKING ....................................................................................................... 42

9.1. Correspondent Banking Clients Domicile................................................................................... 43

9.2. Correspondent Banking Clients Business and Customer Base................................................... 43

10. FOREIGN BRANCHES AND SUBSIDIARIES .................................................................................... 45

11. STAFF TRAINING .......................................................................................................................... 45

12. EFFECTIVE DATE .......................................................................................................................... 46

ANNEXURES .................................................................................................................. 47

ANNEXURE-I ................................................................................................................. 48

ANNEXURE-II................................................................................................................. 52

ANNEXUREIII ................................................................................................................ 53

ANNEXURE-IV ................................................................................................................ 58

ANNEXURE-V ................................................................................................................ 61

ANNEXURE-VI ................................................................................................................ 65

ANNEXURE-VII ............................................................................................................... 66

ANNEXURE-VIII .............................................................................................................. 67

ANNEXURE-IX ................................................................................................................ 68

ANNEXURE-X ................................................................................................................ 70

1 KYC/ AML/ CFT PROCEDURE MANUAL

Compliance Group

This Manual shall be available on intranet and shall be forwarded to Regional Heads and

Compliance Officers to make sure its availability and thorough understanding at all the Branches.

In addition, this Manual is to be distributed to the following persons, groups/ divisions **;

**This is a Bank-wide procedure manual that is to be adopted and followed across the Bank

including Islamic Banking.

Version Control

Document owner Compliance Group

Version Number 03 Release Date 4th March 2010

Revised Version Number 04 Revision / Amendment Date

Availability Intranet and PDF copies

Next Review Date This Procedure Manual will be subject to review on need basis. If there is no

change in the KYC/AML/CFT procedure manual within one year, a note will be moved to renew the

manual with no change. Instruction Circulars concerning AML/KYC/CFT issued by the Bank or the

Regulatory Authorities from time to time shall become integral part of this manual.

Distribution List

S. No. Group / Division

1 President

2 All Group Chiefs/ Divisional Heads

3 All Regional Chief Executive and Country Heads

4 All Regional Heads & Regional Compliance Officer

5 All Branch Managers

6 All Country Compliance & Money Laundering Prevention Officer (CC & MLPO) and all

Principal staff colleges


ABBREVIATIONS

AOF Account Opening Form

ARC Alien Registration Card

BBO Branch Back Office

BCO Branch Compliance Officer

BM Branch Manager

CAOP Centralized Account Opening Portal

CDD Customer Due Diligence

CFT Combating the Financing of Terrorism

CIF Customer Information File

CNIC Computerized National Identity Card

CTR Cash Transaction Report

EBS Electronic Banking System

EDD Enhanced Due Diligence

EU European Union

E-HRMC Electronic Home Remittance Monitoring Cell

FATF Financial Action Task Force

FMU Financial Monitoring Unit

IBT Inter Branch Transactions

NADRA National Database and Registration Authority

NEC National Executive Committee

NICOP National Identity Card for Overseas Pakistanis

OFAC Office of the Foreign Assets Control

PEP Politically Exposed Persons

POC Pakistan Origin Card

RMA Relationship Management Application

SBP State Bank of Pakistan

SDD Simple Due Diligence

SNIC Smart National Identity Card

SSC Specimen Signature Card

STR Suspicious Transaction Report

SWIFT Society for Worldwide Interbank Financial Telecommunication

UN United Nations

UNSC United Nations Security Council


1. PREAMBLE

Pakistans Central Bank (State Bank of Pakistan) has issued Anti-Money Laundering and

Combating the Financing of Terrorism (AML/CFT) Regulations on September 13, 2012,

emphasizing upon:

Prevention of criminal use of banking channels for the purpose of Money Laundering and

other unlawful trades.

To ensure that a proper Procedure Manual framework on Know Your Customer and Anti-

Money Laundering Measures is put in place, and

To follow certain customer identification processes for opening of accounts and monitoring

transactions of suspicious nature, keeping in view the possibility of use of money through

these accounts for criminal and other unlawful purposes.

All the measures for Anti-Money Laundering and Combating the Financing of Terrorism are

governed by Anti Money Laundering Act 2010 which was enforced on March 27, 2010.


2. INTRODUCTION

Modern Banking is offering a chain of products and services to customers worldwide round the

clock. Globalized trade, state-of-the-art communication systems and computer technologies

have made it possible for business and trade to diversify activities to meet global competitive

edge feasibly and within predefined parameters and values.

The rising desire to become financially sound, cutting corners and avoiding legitimate means of

business and trade, created the urge for concealing funds and their movement. However, there

are certain customers who are taking advantage of sophistication in banking technology and are

carrying on unethical business i.e. Money Laundering.

Money Laundering involves taking criminal proceeds and disguising their illegal source in

anticipation of ultimately using the criminal proceeds to perform legal and illegal activities.

Simply put, money laundering is the process of making dirty money look clean. According to

The Financial Action Task Force (FATF), crimes such as illegal arms sales, narcotics trafficking,

smuggling and other activities of organized crime can generate huge amounts of proceeds.

Embezzlement, insider trading, bribery and computer fraud schemes can also produce large

profits, creating the incentive to legitimize the ill-gotten gains through money laundering.

The threat of trafficking in drugs, arms, refugees and the criminal activities of ransom,

kidnapping, terrorism, etc. has strengthened and therefore spread black money to the various

segments of society.

Catering to the increasing money laundering menace, efforts are being made by various bodies

to spread awareness of money laundering all around the globe. Regulatory institutions have

necessitated the implementation of anti money laundering campaigns by central banks and

financial institutions. The Governments all around the world have been involved in developing

and enforcing regulations to put this illicit trade to end.

Purpose of This Procedure Manual

This Procedure Manual aims to provide procedural guidelines about the measures and individual

legal obligations set out under The Financial Action Task Force (FATF) Recommendations, State

Bank of Pakistans Anti-Money Laundering/ Combating Financing of Terrorism Regulations as

well as Customer Due Diligence for Banks and Core Principles for Effective Banking

Supervision set out by Basel Committee on Banking Supervision while keeping intact the

compliance of Anti-Money Laundering Act, 2010. The Procedure Manual also aims to aid the

training of employees in spotting and reporting suspicious transactions.

Through this Manual we aim to:

1. Put in place and implement a robust KYC process.

2. Describe the main symptoms of money laundering.

3. Understand the sources & Channels of money laundering.

4. Suggest controls & remedies.


5. Specify the requirements of State Bank regulations,

6. Describe the steps taken by National Bank of Pakistan to counter Money Laundering and

Terrorist Financing.

Procedure Manual Objectives

To enable the bank to ensure that only legitimate and bonafide customers are accepted.

To aid the bank in verifying the identity of customers using reliable and independent

documentation.

To enable the bank to monitor customers financial dealings. This would help the bank to

mitigate the risk of its channels being used for Money Laundering.

To enable bank in implementing processes to effectively manage the risks posed by

customers trying to misuse facilities.

To prevent criminal elements from using the bank for money laundering and terrorist

financing activities.

To put in place appropriate controls for detection and reporting of suspicious activities in

accordance with applicable laws and regulations, and procedural guidelines.

To take necessary steps to ensure that the relevant staff are adequately trained in

KYC/AML/CFT procedures.

Penalties Due to Non Compliance

The Bank and its employees are expected to comply with legal requirements that also require

reporting of suspicious transactions. Failure to comply could have serious implications for both

the dealing officials and the Bank. This could include individual criminal penalties and

disciplinary action.

Role as a Prudent Banker

Our role is to make sure that we all know, and follow at all times, the procedures which apply

in each of the day-to-day operations we are involved in. These will include:

Identifying customers thoroughly when opening accounts.

Moving money around between accounts.

Recording transactions.

Reporting suspicious transactions.

Communications with Employees

There will be regular communication from the Compliance Head about AML/KYC issues to the

staff of the bank.


3. APPLICABLE LAWS AND REGULATIONS

The following laws and regulations deal with the issue of money laundering in Pakistan.

3.1. Anti-Money Laundering Act, 2010

Under the Anti-Money Laundering Act, 2010 the Government has established Financial

Monitoring Unit (FMU) to properly monitor suspicious transactions for checking money

laundering in Pakistan. The act of money laundering is a serious offence punishable under the

provisions of the AML Act. Some of the important provisions extracted from AML Act, 2010 are

mentioned below:

3.1.1. Offence of Money Laundering (Section 3)

A person shall be guilty of offence of money laundering, if the person:

a) Acquires, converts, possesses or transfers property, knowing or having reason to believe

that such property is proceeds of crime; or

b) Conceals or disguise the nature, origin, location, disposition, movement or ownership of

property, knowing or having reason to believe that such property is proceeds of crime.

c) Holds or possesses on behalf of any other person, any property knowing or having reason to

believe that such property is proceeds of crime; or

d) Participates in associates, conspires to commit attempts to commit aid, abets, facilitates

or counsels the commission of the acts.

3.1.2. Punishment for Money Laundering (Section 4)

Whoever commits the offence of money laundering shall be punishable with rigorous

imprisonment for a term which shall not be less than one year but may extend to ten years and

shall also be liable to fine which may extend to one million rupees and shall also be liable to

forfeiture of property involved in the money laundering, provided that the aforesaid fine may

extend to five million rupees. In case of a company, every director, officer or employee of the

company, found guilty under this section, shall also be punishable under this section.

3.1.3. Procedure and Manner of Furnishing Information by Financial Institutions (Section 7)

Every financial institution shall file with the Financial Monitoring Unit (FMU), to the extent and

in the manner prescribed by the FMU, Suspicious Transaction Report, conducted or attempted

by, at or through that financial institution if the financial institution knows, suspects, or has

reason to suspect that the transaction or a pattern of transaction of which it is a part:

a) Involves funds derived from illegal activities or is intended or conducted in order to hide or

disguise proceeds of crime;

b) Is designed to evade any requirements of this section; or

c) Has no apparent lawful purpose after examining the available facts, including the

background and possible purpose of the transaction or involves financing of terrorism.


Provided that Suspicious Transaction Report shall be filed by the financial institution or

reporting entity with the FMU immediately but, not later than seven working days after forming

that suspicion.

CTRs (Cash Transaction Report) on cash transactions exceeding Rs. 2.5 million shall be filed

with FMU immediately but not later than seven working days, after the respective currency

transaction.

Every reporting entity shall keep and maintain a record of all transaction related to Suspicious

Transactions Report and CTRs filed by it for a period of at least five years after the reporting

date of transaction.

3.1.4. Liability for Failure to File Suspicious Transaction Report and for Providing False

Information (Section 33)

a) Whoever willfully fails to comply with the suspicious transaction reporting requirement or

gives false information shall be liable for imprisonment for a term which may extend to

three years or with fine which may extend to one hundred thousand rupees or both.

b) In the case of conviction of a reporting entity, the concern regulatory authority may also

revoke its license or take such other administrative action, as it deems appropriate.

3.1.5. Disclosure of Information (Section 34) [Tipping Off]

a) The directors, officers, employees and agents of any reporting entity financial institution,

non-financial business or profession or intermediary which reports a suspicious transaction

or cash transaction pursuant to this law or any other authority, are prohibited from

disclosing directly or indirectly to any person involved in the transaction that the

transaction has been reported.

b) A violation of (a) is a criminal offence and shall be punishable by a maximum of three years

imprisonment or a fine which may extent to five hundred thousand or both.

c) Any confidential information furnished by a financial institution, non-financial business and

profession, intermediary or any other person under or pursuant to the provisions of this

AML Act, shall, as far as possible, be kept confidential by the Financial Management Unit

(FMU), investigation agency or officer as the case may be.


3.2. Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) Regulations

for Banks/DFIs Issued By State Bank of Pakistan (Revised and Issued on 13 September 2012)

State Bank of Pakistan has issued the following regulations on anti-money laundering and

combating the financing for terrorism.

R-1 Customer Due Diligence

R-2 - Correspondent Banking

R-3 Wire Transfers / Fund Transfers

R-4 Reporting of Transactions (STRs/CTRs)

R-5 Record Keeping

R-6 Internal Controls, Policies, Compliance, Audit and Training


4. KNOW YOUR CUSTOMER

The inadequacy or absence of KYC standards can subject banks to serious customer and

counterparty risks, especially reputational, operational, legal and concentration risks. It is

worth noting that all these risks are interrelated. However, any one of them can result in

significant financial cost to banks (e.g. through the withdrawal of funds by depositors, the

termination of inter-bank facilities, claims against the bank, investigation costs, asset seizures

and freezing of assets and loan losses), along with considerable management time and energy

to resolving problems that arise.

Effectively devised KYC policy is the most important defense against the money launderers.

While fulfilling legal requirements, the contents of regulatory requirements should be kept in

view before establishing a customer/account opening relationship.

Benefits of KYC

The knowledge of the banks customer base and business operations will also help the bank as

under:

a) Detect suspicious activity in a timely manner.

b) Enable deeper analysis of potential and current clients.

c) Promote compliance with all banking laws.

d) Promote safe and sound banking practices.

e) Minimize the risk of banks channels being used for illicit activities.

f) Protect the Banks reputation & image.

g) Bolster confidence among its customers, other banks, and bank regulators.

h) Protect bank against negative legal consequences related to cooperating with entities

supporting terrorism.


5. KNOW YOUR CUSTOMER GUIDELINES

5.1. Customer Profiling

Customer profiling is a way to create a portrait of our customers to help make decisions

concerning our service. Customers are broken down into groups of customers sharing similar

goals and characteristics. Factors such as customers background, country of origin, public or

high profile position, linked accounts, business activities or other risk indicators shall be

considered while profiling customers.

The main purpose of profiling is to understand our customer, particularly customers source of

wealth and the financial behavior in the account to highlight any unusual activities in his or her

account/conduct.

Every new customer shall be profiled in CAOP using judgment and information obtained through

Customer Due Diligence (CDD)/KYC process.

Change, if any, in customer profile (such as change of address, change in business, change in

phone number, etc.) and their sources of funds should be recorded to maintain an updated

knowledge about the customer and their businesses.

5.2. Controls and Precautions

NBP will exercise sound controls, precautions and vigilance on KYC measures adopted to

counter the money laundering menace.

The Bank will develop and maintain necessary controls and precautions in its Banking

Operations by different ways i.e.

1. Risk Assessment

2. Customer Acceptance and Identification.

3. On-Going Monitoring of Accounts.

4. Record Keeping.

5.2.1. Customer Acceptance and Identification

5.2.1.1. Type of Customers NBP will not accept

As a Policy, the Bank shall not deal / accept the following types of persons/entities as customer: The negative list shall include:

Shell banks/companies

Unregistered arms-related business

Bearer share company


Accounts where the customer is acting on behalf of another customer to open an account.

(The account shall be opened in the name of the person who is the beneficial owner of the

funds in the account and not the benami/accounts with fictitious names)/ Anonymous or

fictitious Accounts.

Entities/persons appearing in OFAC/EU/UN lists and any other list recommended in each

jurisdiction where NBP operates.

Entities/persons appearing in negative/sanctioned lists. Proscribed entities and persons or

those who are known for their association with such entities and persons, whether

under the proscribed name or with a different name.

Gamblers/Bookies

Un-registered money changers/exchange companies.

As per policy, bank will use the following sanction lists:

1. UN Sanctions list: List established and maintained by the Committee pursuant to resolutions 1267 (1999) and 1989 (2011) with respect to individuals, groups, undertakings and other entities associated with Al-Qaida.

http://www.un.org/sc/committees/list_compend.shtml

2. Office of Foreign Assets Control Specially Designated Nationals and Blocked Persons List

http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx

3. EU-list

http://ec.europa.eu/external_relations/cfsp/sanctions/list/version4/global/global.xml

http://eeas.europa.eu/cfsp/sanctions/consol-list_en.htm

4. Sanction lists issued by the Ministry/regulators of the respective country where NBP Operates.

5. Banks Internal List

5.2.2. Risk Assessment

NBP Centralized Account Opening Portal (CAOP) Risk Rating Criteria1

Keeping in view the inherent risks and in compliance with SBPs regulations, the Centralized

Account Opening Portal is updated and aligned with SBP recommendations for risk

categorization and ongoing monitoring. Accounts will be tagged as high-risk by CAOP on the

basis of following criteria:

1 Instruction Circular No. 98 of 2012 ( CDD Measures for Establishing Business Relationship Ranking of Accounts Opened on the basis of KYC Risk Based Approach)


High Risk Customer /Categorization

1. Politically Exposed Persons (PEPs)

PEP is an individual who has been entrusted with prominent public functions in the country,

such as:

Prominent public functions

Government ministers,

Senior civil servants,

Senior judicial & military officials,

Senior executives of state owned corporations,

Senior political party officials

Their close family members which include spouses, children, parents, siblings and may also

include other blood relatives and relatives by marriage.

Their closely associated persons which include close business colleagues, personal

advisors/consultants of the politically exposed person as well as persons who are expected

to benefit significantly by being close to such a person.

The term PEP does not extend to middle ranking individuals in the specified categories.

Risks Associated with PEPs

There is always a possibility, especially in countries where corruption is widespread, that such

persons abuse their public powers for their own illicit enrichment through the receipt of bribes,

embezzlement, etc.

Accepting and managing funds from corrupt PEPs will severely damage the banks own

reputation and can undermine public confidence in the ethical standards of an entire financial

center. Since such cases usually receive extensive media attention and strong political

reaction, even if the illegal origin of the assets is often difficult to prove. In addition, the bank

may be subject to costly information requests and seizure orders from law enforcement or

judicial authorities (including international mutual assistance procedures in criminal matters)

and could be liable to actions for damages by the state concerned or the victims of a regime.

Under certain circumstances, the bank and/or its officers and employees themselves can be

exposed to charges of money laundering, if they know or should have known that the funds

stemmed from corruption or other serious crimes.

Course of Action

1. All PEPs and their close associates or family members accounts will be treated as High Risk

Accounts and accordingly will need approval of Compliance Group Head office. Compliance

Group Head office will accord approval on the recommendations of Regional Head & Branch

Manager (Who must conduct the Enhanced due diligence of all high risk customers before

requesting for approval from head office). Furthermore, branch management must obtain

additional information on the customer (occupation, volume of assets); intended nature of


the business relationship; reasons for intended or performed transactions; additional

information on the sources of funds or sources of wealth of the customer;

All High Risk Accounts will be subject to enhanced monitoring of business relations with the

customer and annual reviews.

There is an exemption from marking as high risks based on PEPs fields for following nature of

accounts:

Financial Institution

UN and its affiliated agencies

Central/ Provincial /Local Government Accounts

Provident Fund-Government

Public Limited-Government

2. Threshold of transactions (for High Risk Categorization)

Nature of Accounts Threshold in Rs. (Per Month)

Housewife (1M)

Other-Non Govt 50m

partnership-Registered 50m

Private Ltd. 100m

Proprietor 50m

Salaried - Accounts. 5m

Self Employed (5M)

Student 500,000

Unemployed 500,000

partnership-Un Registered 50m

Minor (1M)

Joint Accounts (5M)

Retired person (1M)

Average No. of Cash Deposits (Monthly basis)

Up to 5 6 to 10

11 to 25 26 to 100

Over 100

No. of (non-cash transactions) Transfer Deposits/ Remittances (Monthly)

Up to 5 6 to 10

11 to 25 26 to 100

Over 100

3. Country of Origin/Residence/Business dealings

Whenever countries/Branches belonging to high risk list are selected from List of values

defined in the (CAOP) module, account will be marked as high risk each time the record is

committed.


High risk countries can be derived from:

FATF identified high risk & non cooperative jurisdictions. (this list will be subject to

change)

Customers with place of birth, nationality or doing business with the following FATF

identified High Risk & Non cooperative Jurisdictions will be marked as High Risk.(Minus

Pakistan)

Iran

Democratic Peoples Republic of

Korea (DPRK)

Ecuador

Ethiopia

Indonesia

Kenya

Myanmar

So Tom and Prncipe

Syria

Tanzania

Turkey

Vietnam

Yemen

High Risk Branches:

Following border area branches will be marked as high risk:

S. No REGION BRANCH BRANCH CODE

1 Mirpur AK

Takia Kohwan Goi Samahni Karela Majhan Lehri

1714 1682 1787 1781 1788

2 Muzaffarabad AK

Athmuqam Chinnari Leepa Valley Kahuta Kailler Khurshidabad Kundal Shahi Gogdar Abbaspur Hajira Dhani Bombian

2092 1679 1718 0961 1806 0693 1805 0818 0586 1750

3 Gilgit Sost 1705

4 Lahore East Main Branch Kasur 0348

5 Mardan Inayat Kaley Khar

2007 1595

6 Peshawar

Torkham Jamrud Bara Zargari Kacahi Shabqadar

2070 0912 0914 1561 1736 1435


However, following types of customers will be exempt:

Financial Institution

UN and its affiliated agencies

Internationally recognized NGO

Central/ Provincial /local Government Accounts

Provident Fund-Government

Public Limited-Government

Pensioners

Staff /Employee

Basic Banking Account holders

Salary Accounts

Accounts with intended turnover of less than 1M a month

4. Nature of Business

Account will be marked as High Risk when following fields are selected in Does your Customer

deal in field given in Business employment details tab Centralized Account Opening Portal

(CAOP).

High Risk accounts: For all High Risk accounts approval from Compliance Group Head office

will be required.

Compliance Group Head office will accord approval on the recommendations of Regional Head

& Branch Manager (Who must conduct the Enhanced due diligence of all high risk customers

before requesting for approval from head office).

Following entities/customers will be high risk customer.

FX(Exchange Company) Approved from SECP and SBP licensed only

Religious Organization

NGOs

NPO

Hospitals

Madrasas

Charitable organizations

Trust

Club

Society

Association

Political Parties Accounts

Embassies/Diplomat missions

7 D.I. Khan

Parachinar Wanna Miran Shah Sadda

0385 2000 0435 1914

8 Quetta Chaman 0005

9 Gawadar Taftan 1080


Politicians

PEPS (as defined in PEP definition)

Local /foreign Diplomat

Hotel /Restaurant

Cinema/Theater

Cash Based Business in high value items (Artifacts/Antiques, Diamonds, Art dealer,

Precious Metals/Stones)

Carpet Dealer

Unlisted Real Estate Company/ Property dealers/ Real Estate Agents

Travel Agent

Transporters/Automobile dealer

Jewelers

Art Gallery

5. Age of Business

In case the age of business is less than the six months, the following nature of accounts will be

marked as high risk each time the record is updated:

Self Employed

Proprietor

Partnership-Unregistered or Registered

5.2.2.1. Review of High Risk Accounts

Frequency of updating CIF to update customer data is one (1) year for accounts marked as

"High Risk" whereas it is three (3) years for accounts marked as "Low Risk".2

Branch Manager shall obtain the list of high risk accounts on bi-annual basis. Customer shall be

contacted on telephone by relevant Branch Managers to reaffirm information uploaded in the

CAOP CIF. In case, customer is not contactable on the numbers available, letter shall be

written to the customer asking for any change in his/her contact information. In case of

Return Mail, the account shall be debit blocked, under advice of Compliance Group.

(Responsibility Branch Management)

The review shall be completed within 30 days from the date it falls due. The review shall be

entered in the relevant section in the CAOP CIF/KYC. Comments shall be mentioned giving

brief details of changes made and reasons for the change, as appropriate.

During the review exercise, account activity of the customer will also be reviewed by the

Branch Manager. The Branch Manager will take a printout of the account activity and review

transactions and match the same with the details as given in the CAOP-KYC/CIF. If the

transactions do not match with KYC profile of the customer (for instance turnover of

transactions is far more than given in transaction profile in KYC or customer is receiving

money from countries not mentioned by him in the KYC), an explanation will be solicited from

2 Instruction Circular No. 36 of 2013 (EBS Based Account Opening Data Migration to CAOP After Required Data Cleansing Exercise)


the customer. If the explanation is not satisfactory, transaction / transactions in question will

be escalated to Compliance on Suspicious Transaction Report. However, if the Branch

Manager decides that the explanation given by the customer is plausible; customer profile

shall be updated and authorized by Branch manager for the changes. Reason for changes shall

be mentioned.

The statement of account with any comments/annotations shall also be kept on record as

audit evidence of the monitoring activity.

Approval of High Risk Accounts:

Approval of High Risk Accounts will be accorded by the Compliance Group Head Office on the

recommendations of the Branch Manager and Regional Head/ (Business head in case of Islamic

Banking Branches). Approval should be sought through email communication to improve the

turnaround time and to keep the Question Answer record intact in the mail.

For getting approval from Head Office, email should be sent to: [email protected] and

[email protected]

5.2.2.2. General Principle

Bank will not open anonymous accounts or accounts in obviously fictitious names. It is the

requirement of laws, regulations, agreements between supervisory authorities and bank or by

self-regulatory agreements among other banks to identify, on the basis of an official or other

reliable document, and record the identity of clients, either occasional or usual, when

establishing business relations or conducting transactions.

5.2.2.3. Completion of Account Opening Requirements3

Opening of a Bank Account is the first steps towards establishment of a Banker-Customer

relationship with a prospective client. In the backdrop of rising concerns over the issue of

financial institutions vulnerability against the menace of money laundering and terrorism

financing, the process of opening of an account has become a highly sensitive activity where

the Bank has to ensure for minimizing operational and reputational risks exposure due to

failure of detecting true identity and ownership of the account, source of income / funds,

tracking of transactions of suspicious nature and possible / potential linkage of accounts /

transactions to individuals/entities which are either in the UNSC sanctions list or proscribed

under Countrys own law such as Anti-Money Laundering Act.

Account Opening Process will stay the same as mentioned in Instruction Circular No. 106 of 2011 - Centralized Account Opening Portal (CAOP).

1. The BCO will review the account against the documents gathered by Account Opening

Officer. Further he will also ensure that the Names / Title of Account / Names of

3 Instruction Circular No. 106 of 2011 - Centralized Account Opening Portal (CAOP)


Directors / Partners; Shareholders holding more than 10% of holding, trustees, signatories

have been scanned against the Negative/Sanctioned entities.

2. In case of matching the name and profile (Date of Birth, profession, place of birth)

matching respective officials should forward the case to Compliance Group Head office at

[email protected] for further instructions.

If any name is matched, the CAOP Operator /Branch Management is required to send these names as per following format to Head Office Compliance Group at [email protected] for clearance. AML Team at Head Office will make query from Acuity Check and respond within 2-3 hours at max.

S.No Name Date of Birth

Place of Birth

Profession

Nationality/ Country of

Origin/Country of residence

CNIC Number

Remarks

3. If the account is approved by the Manager, AOF will be printed and signatures of the

customer will be obtained and all relevant documents will be attached with the AOF and

placed on Branch record.

4. A copy of the approved Account Opening Form shall be delivered to the Account holder

under acknowledgement and retained on branch record.

5. Initial deposit will be accepted by the branch on approval of account from Branch

Manager.

6. Letter of thanks generated through EBS/BBO will continue to be sent vide as prescribed in

Para 89, 94 and 95 of chapter II of Revised Standard Procedure Manual (SPM).(If the Letter

of thanks is returned back undelivered, account will be debit blocked)

7. No Account will be opened in the System before signing off the Account Opening Form by

the Branch Manager/ designated Officer.

8. The Branch Compliance Officer will only review that all KYC/AML formalities required at

the time of opening of account and all fields are filled in as per the documents. As he will

not interview the customer, he will not be held responsible for any misreporting in

Customer Profile/KYC details (excluding details mentioned in minimum documents

required under SBP AML/CFT Regulations and attached documents) as these were

gathered by Account Opening Officer at the time of interviewing the customer. He will

also check and review that all mandatory required documents for account opening are in

place. This must be noted that all original documents must be retained by the Branch as

the Branch is the custodian of these documents.

9. The Branch Account Opening Officer and Branch Manager will be held liable in case

account is opened without removing discrepancies pointed out by Branch Compliance

Officer as the final print out of the system offered Account Opening Form is not required

to be reviewed by the Branch Compliance Officer.


Management has Zero Tolerance for non-compliance of Regulatory requirements including

AML/CFT regulations and the Account Opening procedures mentioned above. Therefore, all

concerned Account Opening Officers, Branch Managers, Operation Managers and Compliance

Officers shall ensure the fulfillment of all the requisite information including verification of

CNIC/SNIC through Verisys and completion of all formalities of CDD and KYC requirements.4

The User IDs and passwords to each authorized user of this portal will be assigned by IT

Division Head Office Karachi through their respective Regional Data Centers.

To ascertain the bona fide of the new account opener, a letter of thanks should be sent on his

address and no cheque book should normally be issued to a new account holder until

confirmation of letter of thanks is received, except where Branch Manager is personally

satisfied about the credentials of the new account holder and in which case he shall sign an

undertaking which is attached as Annexure VII to this manual.

There are instances where intending account holders, at the time of account opening, sign on

the AOF differently than the one appearing on their CNICs. Therefore, while opening accounts

of such account holders, as part of Enhanced Due Diligence exercise, the Account Opening

Officer/Branch Manager should also ensure that they have obtained an acknowledgement of

the given fact by the intending account holder on the Undertaking attached to the Manual

as Annexure-VI, and should be kept with all other documents required to be obtained from

the intending account holder.

Branch Managers/Operation Managers and all those officials involved in the process of account

opening should ensure that accounts opened on the basis of NADRA Receipt/Token are

effectively monitored for obtaining of copies of renewed CNICs and also to assure that existing

accounts with expired CNICs are also regularized through approaching and establishing contact

with these account holders.5

SNICs offered by intending account holders should also be verified through NADRA Verisys

service prior to account opening.6

I. At The Time of Account Opening MINIMUM DOCUMENTS TO BE OBTAINED UNDER AML/CFT

REGULATIONS

Every customer shall be identified for establishing business relationship. For this purpose,

following documents shall be obtained as a minimum for different types of customers:

4 Instruction Circular No. 42 of 2012 5 Instruction Circular No. 95 of 2011 (Opening of Accounts on the basis of NADRA Receipt/Token in case of Expired CNICs). 6 Instruction Circular No. 112 of 2012 (Mandatory NADRA Verisys test for CNICs and SNICs offered for Account Opening).


MINIMUM DOCUMENTS TO BE OBTAINED UNDER AML/CFT REGULATIONS

1. INDIVIDUALS

A photocopy of any one of the following valid identity documents;

i. Computerized National Identity Card (CNIC)/ Smart Card issued by NADRA.

ii. National Identity Card for Overseas Pakistani (NICOP) issued by NADRA.

iii. Pakistan Origin Card (POC) issued by NADRA.

iv. Alien Registration Card (ARC) issued by National Aliens Registration Authority (NARA),

Ministry of Interior (local currency account only).

v. Passport; having valid visa on it or any other proof of legal stay along with passport

(foreign national individuals only).

vi. Nadra Verysis

vii. Copy of utility Bill (Gas, Water, WAPDA/KESC) in the name of the person intending to

open the account. (Utility Bill must not be more than 3 months old) or copy of the

Credit Card/Bank statement showing the name and address of the customer. If any of

these documents are not available then Visit report of any of Branch staff that

confirms his address and neighborhood or Branch Managements note of satisfactions

about the customers whereabouts will suffice.

viii. In case of a salaried person, in addition to CNIC, an attested copy of his/her service

card, or any other acceptable evidence of service, including, but not limited to a

certificate from the employer will be obtained

ix. Beneficial ownership letter in case of (House wife/Student/unemployed)

x. In case the CNIC does not contain a photograph, Branch is allowed to process opening

of account subject to following conditions:

a. A duly attested copy of either driving license, service card, Nikkah Nama, Birth

Certificate, Educational Degree/Certificate, Pension Book, Insurance Certificate.

b. A photograph duly attested by gazette officer/Nazim/Administrator/bank officer.

c. A copy of CNIC without photograph duly attested by the same person who

attested the photograph.

2. Housewife and Student Accounts

Housewife means a female individual without a paid employment.

In relation to housewife and student accounts,(Because of their financial dependence) the

bank shall:

Obtain a self-declaration from the potential account holder for source and beneficial

ownership of funds. The declaration format required to be completed is attached as

Annexure VIII to this manual.

i. Update details of funds providers, if any along with customers profile; and

ii. Identify and verify funds providers if monthly credit turnover exceeds the decided

threshold.(CAOP automatically asks for details of the funds provider)


General:

The photocopies of identity documents shall invariably be attested by an authorized officer of

bank after originally seen and signed thereof.

If there is variation in signatures on the AOF of a potential account holder and his CNIC, the

Account Opening Officer/Branch Manager should ensure that they have obtained an

acknowledgement of the given fact by the intending account holder on the Undertaking

attached to the Manual as Annexure-VI, and should be kept with other documents that are

required to be taken from the intending account holder.

In case of House wife/Student/unemployed persons accounts the CIF & KYC of the fund providers (Father/husband/guardian) will also be obtained. Also, details of average intended number of cash based and non-cash based transactions will also be obtained.

3. SOLE PROPRIETORS

i. Photocopy of identity document as per Sr. No. 1 above of the proprietor.

ii. Registration certificate for registered concerns.

iii. Sales Tax Registration or National Tax Number (NTN), wherever applicable.

iv. Certificate or proof of membership of trade bodies etc., wherever applicable.

v. Declaration of sole proprietorship on business letter head.

vi. Account opening requisition on business letter head.

vii. Visit Report

General:


bank after originally seen and signed thereof.

If there is difference in signatures on the AOF than the one appearing on their CNICs. Then

Account Opening Officer/Branch Manager should also ensure that they have obtained an




4. PARTNERSHIP

i. Photocopies of identity documents as per Sr. No. 1 above of all the partners and

authorized signatories.

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 shall be clearly mentioned on the Account

Opening Form.

iv. Authority letter from all partners, in original, authorizing the person(s) to operate

firms account.

v. Visit report


General:


bank after originally seen and signing thereof.

If there is difference in signatures on the AOF than the one appearing on their CNICs. Then

Account Opening Officer/Branch Manager should also ensure that they have obtained an




5. LIMITED COMPANIES/CORPORATIONS

Certified copies of:

(a) Resolution of Board of Directors for opening of account specifying the person(s)

authorized to open and operate the account;

(b) Memorandum and Articles of Association;

(c) Certificate of Incorporation;

(d) Certificate of Commencement of Business, wherever applicable;

(e) List of Directors on Form-A/Form-B issued under Companies Ordinance 1984, as

applicable; and

(f) Form-29, wherever applicable.

(ii) Photocopies of identity documents as per Sr. No. 1 above of all the directors and

persons authorized to open and operate the account;

(iii) For individual (natural person) shareholders holding 10% and above in an entity,

identification and verification of such natural persons; and

S.No Name of

person/entity

Share holding

(All shareholders holding 10% and above

shareholding)

1

2

3

CIF of all Signatories, individual (natural person) shareholders holding 10% and above

in an entity, identification and verification of such natural persons; and

(iv) For legal persons holding shares equal to 20% or above in an entity, identification

and verification of individual (natural person) shareholders holding shares equal to 20%

or above of that legal person will be created.

Their Names will also be checked from the negative lists and PEP verification will also

be made.


6. BRANCH OFFICE OR LIAISON OFFICE OF FOREIGN COMPANIES

i. A copy of permission letter from relevant authority i-e Board of Investment.

ii. Photocopies of valid passports of all the signatories of account.

iii. List of directors on company letter head or prescribed format under relevant

laws/regulations.

iv. A Letter from Principal Office of the entity authorizing the person(s) to open and

operate the account.

7. AGENTS ACCOUNTS

i. Certified copy of Power of Attorney or Agency Agreement.

ii. Photocopy of identity document as per Sr. No. 1 above of the agent and principal.

iii. The relevant documents/papers from Sr. No. 2 to 7, if agent or the principal is not a

natural person.

8. EXECUTORS AND ADMINISTRATORS

i. Photocopy of identity document as per Sr. No. 1 above of the

Executor/Administrator.

ii. A certified copy of Letter of Administration or Probate.

9. MINOR ACCOUNTS

i. Form-B, Birth Certificate or Student ID card (as appropriate) shall be obtained from

minor.

ii. Photocopy of identity document as per Sr. No. 1 above of the guardian of the minor.

10. LANDLORDS

Following documents shall be obtained:

In case of Agricultural Property:

Attested copy of Passbook of Landholding Records In case of Non-Agricultural Property:

Attested copy of Rent Agreement of building / office / house etc.

11. NGOs, NPOs, CHARITIES, TRUSTS, CLUBS, SOCIETIES AND ASSOCIATIONS etc.

Certified copies of (a) Certificate of Registration documents/Instrument of trust certificate (b) By-laws/Rules & Regulations (ii) Resolution of the Governing Body/Board of Trustees/Executive Committee, if it is ultimate

governing body, for opening of account authorizing the person(s) to operate the account.


(iii) Photocopy of identity document as per Sr. No. 1 above of the authorized person(s) and of the members of Governing Body/Board of Trustees /Executive Committee, if it is ultimate governing body. (iv) Any other documents as deemed necessary including its annual accounts/ financial statements or disclosures in any form which may help to ascertain the detail of its activities, sources and usage of funds in order to assess the risk profile of the prospective customer.

CIF of all the authorized person(s) and of the members of Governing Body/Board of Trustees /Executive Committee, if it is ultimate governing body will be created. Their Names will also be scanned from the sanctioned lists. If any match is found the same will be immediately communicated to Compliance Group for lodging of SAR with FMU.

S.No Name of person/entity/Authorized persons/ members of Governing Body/Board of Trustees /Executive Committee, if it is ultimate governing body.

1

2

3

Caution in Obtainment of Required Documents7

i. In case of an individual with shaky/immature signatures:

a. Obtain two recent passport size photographs, in addition to copy of CNIC and its NADRA

Verisys, of the new account holder besides taking his right and left thumb impression

on the Specimen Signature Card (SSC).

b. Paste one of the photographs on AOF and the other on the SSC duly attested by the

Account Opening Authorized Officer of the Branch in such a manner that his

attestation/signatures appear partly on the photograph and partly on relative

form/card.

c. Advise account holder that at the time of each withdrawal he would be required to

apply both thumb impressions on the cheque, in the presence of the passing

officer/head cashier, who will verify him personally (through photograph and thumbs

impression) before making any payment.

Accounts of individuals who have shaky/immature signatures possess high risk.

Therefore, to mitigate the associated risk, their account should be opened only after

fulfillment of these conditions.

7Instruction Circular No. 102 of 2012 (CDD Measures for Establishing Business Relationship)


ii. In case of expired CNIC, account may be opened on the basis of attested NADRA

receipt/token and expired CNIC subject to condition that the Branch shall obtain copy of

renewed CNIC of such customer within 03 months of the opening of account. Besides,

taking an undertaking from customer in writing that a copy of CNIC will be submitted

immediately upon issuance of CNIC as evidenced by the receipt, Branch shall continue to

take reasonable measures to immediately obtain copies of renewed CNICs from existing

customers/account holders, whenever expired.

iii. Branch shall obtain copies of CNICs of all the members of Governing and Executive Bodies

of DHA or ask for delegation of power to Administrator under section (7) & (8) of the

Pakistan Defense Housing Authority Order, 1980 and accept copy of CNIC of Administrator

as well as authorized signatories for the purpose of opening accounts of DHA or similar

other authorities subject to compliance of other requirements.

iv. The condition of obtaining Board Resolution is not necessary for foreign companies/entities

belonging to countries where said requirements are not enforced under their laws and

regulations. However, such foreign companies will have to furnish Power of Attorney from

the competent authority for opening bank accounts to the satisfaction of their banks.

CDD measures on all of the joint account holders shall be performed as if each of them were

individual customers of the bank.

Compliance Groups approval in case of High Risk Account should be kept along with print out

of Account Opening Form and its supporting documents for any post-audit /compliance review.

II. Occasional Customers/ Walk-In Customers

Occasional customer or walk-in-customer means the person conducting occasional transactions

and is not a customer; having relationship with the bank.

Being in line with the measures recommended in AML/CFT Regulations issued by State Bank of

Pakistan, the staff shall:

(a) in case of occasional customers/walk-in-customers;

(i) obtain copy of CNIC while conducting cash transactions above rupees 0.5 million; and

(ii) obtain copy of CNIC while issuing remittance instruments e.g. POs, DDs and MTs etc.

(b) obtain copy of CNIC (regardless of threshold) while conducting online transactions by

occasional customers/walk-in- customers8 (except deposits through Cash Deposit Machines

or cash collection/management services). If transaction exceeds Rs. 100,000 the name and

CNIC No. shall be captured in system and made accessible along with transaction details at

beneficiarys branch.

8 Instruction Circular No. 093 of 2012 (Occasional Customer or Walk-in Customer (AML/CFT) Regulations)


III. Wire Transfer/Fund Transfer

Wire Transfer/Funds Transfer means any transaction carried out by financial institution on

behalf of originator person by way of electronic means or otherwise to make an amount of

money available to beneficiary person at another beneficiary institution, irrespective of

whether the originator and the beneficiary are the same person.

NBP will ensure that funds transfers which are out of character/ inconsistent with the history,

pattern, source of earnings and purpose, shall be viewed with suspicion and properly

investigated for appropriate action, as per law. Special attention should be paid to

geographical factors/locations for movement funds.

Steps have been taken by NBP to comply with SBPs AML/CFT Regulations. During the

procedure, It should be ensured that following fields containing in Remittance/Fund Transfer

Application (F-117-Revised) have been properly filled-in by the applicant;

Beneficiary Details Name

Address

Contact No.

Applicants Details Name

Address

CNIC/Passport No.

Line of Business/Occupation Source of

Funds

Purpose of Remittance

Relationship with Beneficiary

In the cases of cash deposit and fund transfer, another window would pop-in reflecting

additional fields which are required to be filled on the basis of information / documents

offered by the originator. Once all fields, have been filled, the transaction will be executed

with generation of computerized generated receipt (showing Reference/IBT-FT Number besides

other information). The Reference / IBT-FT Number should also be recorded on IBT Pay in Slip

Form (IBT-02) and kept in records along with IBT Pay-in-Slip Form (IBT-02) and copies of

identification documents offered by the cash depositor or originator of fund transfer

transactions.

In case the originator information is incomplete, it may be considered as a factor in assessing

whether the transaction is suspicious and whether it merits reporting to FMU or termination

thereof is necessary. The bank shall remain cautious when entering into relationship or

transactions with institutions which do not comply with the standard requirements set out for

wire transfers by limiting or even terminating business relationship.

This development will assure that information about the originator remains available

throughout the payment chain ending at beneficiary's (responding) branch end - as per

regulatory framework. The Responding Branch of cash deposit and fund transfer transaction


will have the option to print every transaction executed with Reference/IBT-FT Number, for

any future reference.

All information fed into the system has a link with CNIC number offered and becomes

retrievable for any subsequent transactions executed by same originator i.e., the system

operator is not required to enter data next time but has the option to update/overwrite

information field such as name, address, phone numbers and email ID's, if so required.9

IV. Proprietors Individual Accounts

Branch shall not allow personal accounts to be used as business purposes except

proprietorships. Where business transactions in personal accounts of proprietors exceeds

monthly credit turnover of Rs. 5 million, a separate account for business related transactions

should be opened with proper title of the business.10

Main responsibility to ensure that personal account is not being used for business purpose will

be of the Branch Manager and relationship Manager.

Compliance Officer while reviewing the high value transactions will also review that personal

accounts are not being used for business purposes and will send an Alert to Branch Management

to persuade such customers to open separate business accounts for such purposes.

Compliance will also generate a report of personal accounts showing Monthly turnover of 5

million and above that will be used to analyze that personal accounts are not being used for

business purpose.

In order to verify the physical existence of business or self-employment status, NBP will

conduct physical verification within 05 working days of the opening of account and document

the results thereof on account opening form. In case of unsatisfactory verification, the bank

may consider reporting it to FMU and/or may change risk profile, as appropriate.

For physical verification, a format for Physical Verification of Business /Visitor Report is

included in the Manual as Annexure X.

V. Accounts Operated by Third Parties

All accounts operated by third party need to be handled very carefully. Customer shall be

interviewed and reasons for such delegation of authority, full particulars of the attorney /

agent and their relationship shall be conclusively established as fair and legally defendable, to

the satisfaction of the bank. All the information / reasons for delegation shall be updated in

the customers profile in CAOP.

9 Instruction Circular No.33 of 2013 - Prudential Regulations Module (PRM) on Cash Deposits and Fund Transfer Under Inter Branch Transaction Module (I.B.T.M) 10 Instruction Circular No. 102 of 2012 (CDD Measures for Establishing Business Relationship)


Attorney / third party information shall be scanned through negative lists. In case of a positive

match matter shall be referred to Compliance Group immediately.

VI. Prize Bonds

Cash transactions involving sale or encashment (purchase) of prize bonds exceeding Rs

2,500,000 shall be reported to FMU as per AML Act 2010. Therefore, the dealing Branch is

required to obtain personal information of the prize bond holder (seller) or purchaser (buyer)

on the format given hereunder and retain the same for reporting purposes.

Concerned personnel shall ensure that application form duly filled-in by the purchaser/seller of

Prize Bonds involving a cash sum of Rs. 2,500,000 has been obtained along with copy of CNIC

and report the transaction to Respective Regional Compliance Officer, for onward reporting to

FMU as Currency Transaction Report (CTR).11

VII. Dormant Accounts

Generally, Dormant Accounts means the account in which no transaction has been taken place

from last one year. However, if Current Account remains non operative for the period of six

months and PLS Account remains so for one year then NBP would treat these as dormant

accounts.12

For customers whose accounts are either dormant as per banks Procedure Manual or an

attested copy of account holders CNIC is not available in banks records, the bank may allow

credit entries in such accounts. Debit transactions/withdrawals shall not be allowed until the

account holder produces an attested copy of his/her CNIC if already not available and fulfills

all other formalities for activation of the account. However, transactions e.g. debit under the

recovery of loans and markup etc., any permissible bank charges, government duties or levies

and instructions issued under any law or from the court will not be subject to debit or

withdrawal restriction. All inoperative/dormant accounts will be made operative after

completion of customer profile in CAOP.

Bank Managers/Operation Managers shall ensure that all of their non-compliant

customers/clients who have not yet offered copy of CNICs have been served with the Final

Notice as stipulated under Instruction Circular No. 169 of 2009 dated December 31, 2009 and

with the exception of exempted category of accounts, Debit Block option has been exercised

after expiry of period of Final Notice. This restriction should remain enforced against non-

compliant accounts, until subject regulatory requirement is fulfilled by the account holder.13

Special Convertible Rupee Accounts (SCRAs) (BPRD Circular Letter No. 07 of 2014 Dated 12 Feb 2014)

11 Instruction Circular No. 15 of 2013 (Amendment in Prize Bonds Rules, 1999) 12 Instruction Circular No. 122 of 2007 (Dormant and Inoperative Deposit Accounts) 13 Instruction Circular No. 175 of 2010 (Prudential Regulation M1 Customer Due Diligence)


With a view to facilitate timely settlement of transactions by Foreign Portfolio Investors (FPIs),

in their Special Convertible Rupee Accounts (SCRAs), NBP will reactivate dormant SCRAs upon

receipt of authenticated instructions from the concerned FPI/account holder.

VIII. Non-Resident Accounts

While dealing in Non-Resident accounts i.e. Accounts of customers residing in foreign countries,

bank should carry out the scrutiny of non-resident accounts travel documents (i.e. entry / exit

details on passport / visa) shall be conducted thoroughly to ensure that they are valid.

Nationality of these customers shall be checked / verified by obtaining the required documents

as mentioned in Customer Due Diligence heading of the Manual.

IX. Government Accounts

Government accounts shall not be opened in the personal names of the government official(s).

Government account which is to be operated by an officer of the Federal/Provincial/Local

Government in his/her official capacity, shall be opened only on production of a special

resolution/authority from the concerned administrative department duly endorsed by the

Ministry of Finance or Finance Department of the concerned Government.

However, in case of autonomous entities and Armed Forces including their allied offices, NBP

may open bank accounts on the basis of special resolution/authority from the concerned

administrative department or highest executive committee of that entity duly endorsed by

their respective unit of finance. The bank shall also take into account any rules, regulations or

procedures prescribed in the governing laws of such entities relating to opening and

maintaining of their bank accounts.

X. NGOs/NPOs/Trusts/Madrassas/Charities Accounts

All accounts of any NGO / NPO / Trust / Politically Exposed Person (PEP) / Madrassa / Charity /

Hospital / Welfare Association are high Risk accounts and can only be opened with the prior

approval of Compliance Group Head office. Compliance Group Head office will consider the

case on the recommendations of the Regional Head and Branch Manager) (Business Head in case

of Islamic Banking Branches). (Written approval can be sought through letter, official email ID

and/or on the AOF printout)14

Following minimum documents are required to be obtained from NGOs/NPOs/Charities/Trust/

Clubs/Societies/Associations etc. Under AML/CFT Regulations issued by SBP:

14 Instruction Circular No. 25 of 2012


i. Certified copies of:

a. Registration documents/certificate (In case of NGOs, NPOs and Charities)

b. Certificate of Registration/Instrument of Trust (In case of Trust, Clubs, Societies

and Associations etc.)

c. By-laws/Rules & Regulations

ii. Resolution of the Governing Body/Board of Trustees/Executive Committee, if it is

ultimate governing body, for opening of account authorizing the person(s) to operate

the account.

iii. Photocopy of identity document as per (i) above of the authorized person(s) and of the

members of Governing Body/Board of Trustees /Executive Committee, if it is ultimate

governing body.

iv. Any other documents as deemed necessary including its annual accounts/ financial

statements or disclosures in any form which may help to ascertain the detail of its

activities, sources and usage of funds in order to assess the risk profile of the

prospective customer.

Account opening of NGOs/NPOs/Trusts/PEPs/Madrassas/Charities/Hospitals/Welfare

Associations/Accounts for collection of donations will be subject to enhanced due diligence by

scrutinizing thoroughly all the supporting documents. Enhanced Due Diligence (EDD) of the

entity, its signatories and members of the governing body will also be conducted. Additionally,

under enhanced due diligence, all associates/members will also be subject to scrutiny through

negative lists linked with CAOP to assure that these persons are not affiliated with any

proscribed entity/entities.

As recommended by AML/CFT Regulations, to exercise Enhanced Due Diligence in relation to

these customers, NBP shall:

1. Obtain a declaration from Governing Body/Board of Trustees/Executive

Committee/sponsors on ultimate control, purpose and source of funds etc;

2. Obtain an undertaking from Governing Body/Board of Trustees/Executive Committee

/sponsors to inform the Bank about any change of control or ownership during operation of

the account; and

3. Obtain a fresh Resolution of the Governing Body/Executive Committee of the entity in case

of change in person(s) authorized to operate the account.

Format for the declaration and undertaking is attached to the Manual as Annexure IX

Field functionaries shall remain vigilant about the usage of accounts of their customers and

make sure that the personal accounts are not being used for collections of donations/charity.


If they find any personal account being used for collection of donation/charity purpose,

Suspicious Transaction Report (STR) must be raised to Compliance Group immediately.

If any branch finds that any advertisement in print/electronic media has been made for

collection of donations, the Branch Manager should have a close review of the same to satisfy

that Branch Name and Account number appearing therein are unerringly referred to and in

instances where any difference/mismatch is noticed, the matter needs to be reported to

Branch Compliance Officer/Regional Compliance Officer besides immediate caution mark on

such account. The Branch Compliance Officer/Regional Compliance Officer will have a close

look for filing Suspicious Transaction Report (STR) to Group Chief, Compliance Group; for

onward reporting to FMU.15

5.2.2.4. Customer Identity Verification

FATF Recommendations make it clear that financial institutions should verify the identity of

the customer and beneficial owner before or during the course of establishing a business

relationship or conducting transactions for occasional customers. Also, AML/CFT Regulations

issued by SBP give customer identity verification the utmost importance.

The Bank/ DFI shall verify identities of the customers (natural persons) and in case of legal

persons, identities of their natural persons from relevant authorities or where necessary using

other reliable, independent sources and retain on record copies of all reference documents

used for identification and verification. The verification includes CNIC verification from

NADRA, for which no cost is to be passed on to intending account holders.16

1. Identification and Verification of Natural Persons Acting on Customers Behalf

Where one or more natural persons are acting on behalf of a customer or where customer is

legal person, Branch shall identify the natural persons who act on behalf of the customer and

verify the identity of such persons.

Authority of such person to act on behalf of the customer needs to be verified through

documentary evidence including specimen signature of the persons so authorized.

2. Identification and Verification of Identity of Beneficial Owners

In case of beneficial owner(s) in relation to a customer, reasonable measures are to be taken to

obtain information to identify and verify the identities of beneficial owner(s).

Where the customer is not a natural person, Branch need to (i) take reasonable measures to

understand the ownership and control structure of the customer for obtaining information

required and (ii) determine that the natural persons who ultimately own or control the

customer.

15 Instruction Circular No. 25 of 2012 16 Instruction Circular No. 102 of 2012 (CDD Measures for Establishing Business Relationship)


3. Information on the Purpose and Intended Nature of Business Relations

Branch needs to obtain from customers information as to purpose and intended nature of

business relations.

5.2.2.5. Timing of Verification

Verification of the identity of the customers and beneficial owners should be completed

before business relations are established including verification of CNIC/NICOP/POC from

NADRA.

5.2.2.6. Discrepancies Uncovered During Identity Verification

Discrepancies (such as issuance of more than one CNIC to one individual, mismatch between

particulars in the NADRA database and customer provided CNIC) uncovered by bank official

during CNIC verification should be reported to NADRA17.

In case the person is detected as suspect by NADRA because of holding more than one identity

card, his account should not be opened unless letter of clearance from NADRA is obtained.

Branches are allowed to use alternate sources for confirmation of bonafide customers whose

verification sheet prompts the remarks like requires further verification where there are

reasons to believe that true identity of customer cannot be determined through verification

process. Such customer account should only be opened after Branch officials have satisfied

that the customer is genuine CNIC card holder and customer account has been opened after

his meeting of KYC/CDD and AML/CTF requirements18.

5.2.3. Ongoing Monitoring of Accounts

All business relations with customers shall be monitored on an ongoing basis to ensure that the

transactions are consistent with the banks knowledge of the customer, its business and risk

profile and where appropriate, the sources of funds. Special attention shall be paid on cash

based transactions considering examples of Red Alerts given in Annexure-III to the Manual.

Bank shall obtain information and examine, as far as possible the background and purpose of

all complex, unusual large transactions, and all unusual patterns of transactions, which have

no apparent economic or visible lawful purpose. The background and purpose of these

transactions shall be inquired and findings shall be documented with a view to making this

information available to the relevant competent authorities when required.

17

Instruction Circular No. 105/2007 dated October 10, 2007. 18

Instruction Circular No. 48/2007 dated May 31, 2007.


Bank shall periodically review the adequacy of customer information obtained in respect of customers and beneficial owners and ensure that the information is kept up to date, particularly for higher risk categories of customers. Customers profiles should be revised keeping in view the spirit of KYC/CDD and basis of revision shall be documented and customers may be consulted, if necessary. All High Risk Accounts must be reviewed on annual basis and other accounts on three year basis.

All existing and future relationships/ Accounts of NGOs / NPOs / Trusts / PEPs / Madrassas /

Charities / Hospitals / Welfare Associations / Accounts for collection of donations (High Risk

Category accounts) must be reviewed and monitored to ensure that these organizations, their

authorized signatories, members of their governing body and the beneficial owners are not

linked with any proscribed entities and persons, whether under the same name or a different

name. In case of any positive match, Branch will immediately refer the case to Compliance to

take action as per law.

Instructions Circular No.113/2013 Dated October 14, 2013 will be read as part of this Manual.

5.2.4. Record Keeping

To be compliant with AML/CFT Regulations issued by SBP,NBP shall maintain all necessary

records on transactions, both domestic and international, including the results of any analysis

undertaken (e.g. inquiries to establish the background and purpose of complex, unusual large

transactions) for a minimum period of ten years from completion of the transaction.

The records shall be sufficient to permit reconstruction of individual transactions including the

nature and date of the transaction, the type and amount of currency involved and the type

and identifying number of any account involved in the transactions so as to provide, when

necessary, evidence for prosecution of criminal activity. The transactions records may be

maintained in paper or electronic form or on microfilm, provided it is admissible as evidence

in a court of law.

The records of identification data obtained through CDD process like copies of identification

documents, account opening forms, CIF, verification documents and other documents along

with records of account files and business correspondence, shall be maintained for a minimum

period of ten years after the business relationship is ended. The identification records may be

maintained in document as originals or copies subject to banks attestation.

The bank shall, however, retain those records for longer period where transactions, customers

or accounts involve litigation or it is required by court or other competent authority. It must be

ensured that NBP shall always be in a position to satisfy, on timely basis, any enquiry or order

from the relevant competent authorities including law enforcement agencies and FMU for

supply of information and records as per law.


6. TRANSACTION MONITORING

Branches should pay special attention to all complex, unusually large transactions and all

unusual patterns, which have no apparent economic or visible lawful purpose. The branches

should pay particular attention to the transactions which exceed prescribed threshold limits for

a particular category of account. Transactions that involve large amount of cash inconsistent

with the normal and expected activity of the customer or very high account turnover

inconsistent with the size of the balance maintained should particularly attract the attention of

the bank. High risk accounts have to be subjected to intensified monitoring and bank should set

key indicators for such accounts, keeping in view the background of the customer, country of

origin, sources of funds and types of transactions involved.

The Manuals objective of such procedures shall be to enable the bank to predict with relative

certainty the types of transactions in which a customer is likely to be engaged.

Till the TMS (transactions Monitoring system is not in place, the following process will be

adopted to review the transaction from AML perspective:

1. Review of Large Transactions

It is obligatory for Incharge Deposits / Branch Operations Manager / Branch Manager to;

a) review transactions involving an amount of Rs. 500,000/- or more

b) scrutinize them in order to screen out suspicious ones / unusual movements in the

customer accounts

c) report suspicious transactions directly or through Branch Compliance Officer (where

available) or to Regional Compliance Officer.

For the purpose, the Incharge Deposits / Head Cashier on daily basis, will list down transactions

involving an amount of Rs. 500,000/- or more in Large Transactions Activity Report, to be

prepared as per following format:-

LARGE TRANSACTIONS ACTIVITY REPORT

For Rs. 500,000/- & Above

Branch _________

Date __________

A/c# Title Amount DR./CR.

Remarks

C Cleared

S Suspicious

__________ _______________

Prepared by: Reviewed by:

Incharge Deposits/Head Cashier Branch Manager (Category-I)

Operations Manager (Category-II)

Compliance Officer (Category-III)


The Reviewing Officer is responsible to scrutinize large transactions of the day vis--vis nature

of business of the account holder and movements in the account. If nothing suspicious is found

he will record Cleared in the Remarks column and put his initials. Where he is not satisfied

he will record Suspicious in the Remarks column and will then enter details of such

transactions in Suspicious Transactions Register for the purpose of carrying out further

probe, investigations and to seek clarification from the account holders concerned, before

reporting of transaction t