2013

Anti-Money Laundering & Combating

the Financing of Terrorism Policy

KASB Bank's AML / eFT Policy - 2013

Under the Guidelines on "Policy Framework in Bank/DFls" issued by the State Bank of Pakistan vide BSD Circular
NO.3 of 2007 dated April 04, 2007, Banks are required to formulate

policies for different

areas of their Operations

and ensure their regular updates.

Pursuant to the directives issued vide BPRD Circular NO.2 of 2012, we have aligned our existing AML/KYC Policy
with SBP's AML/CFT Regulations which was approved in BOD meeting held on August 27, 2013. In the meanwhile,
SBP vide BPRD Circular Letter No. 22 dated August 19, 2013 has made amendments

in AML/CFT Regulations for

updation in bank's AML/CFT Policy till September 30, 2013. Accordingly, desired amendments

are made in KASB

AM L/CFT Policy - 2013 on pages NO.8, 14, 15, 16, 18, 20, 27, 28, 29, 34 and 36.
Submitted for review by the Audit Committee of the BOD and then necessary approval from BOD.

aqar Ahmed Khan

Group Executive - Operations & GTS

?:,-~

Sumair Wahid Abro

Head - Human Resource.

vsalma~

Group Head - Branch Banking

Approved By:

Bilal Mustafa
President & CEO

KASB Banks AML / CFT Policy 2013

Contents
Introduction
Preface
Purpose of Policy and Scope
Money Laundering
General Methods and Stages of Money Laundering
Vulnerability of Financial Institutions to Money Laundering
Compliance Obligation
Risk Aversion Measures and Awareness
Financial Action Task Force (FATF) on ML
Asia / Pacific Group
Office of Foreign Assets Control (OFAC)
United Nation (Security Council) Resolution
Legal and Regulatory framework in Pakistan

2
3
3
3
4
4
5
5
5
5
6
6

Customer Due Diligence

New Customer Acquisition Policy
Customer Due Diligence
Guiding Principles
Beneficial Owner
Reduced Customer Due Diligence
Enhanced Customer Due Diligence
Customer Risk Based Approach
Risk Assessment
Prohibited Customer Types
Ongoing Monitoring
Prohibition of Personal Accounts for Business Purpose

8
8
9
10
11
13
14
15
15
16
16

Suspicious Transactions
Suspicious Transactions
Examples
Suspicious and Currency Transactions Monitoring
Management of Alerts
Monitoring at source
Screening names against OFAC / UN Security Council / NAB /
and other list
Reporting Agencies
E-Banking
Correspondent Banking
Suspicious Transaction Reporting
Currency Transaction Reporting

18
18
18
18
19
19
19
20
20
21
21
i

Freezing of property by DG, FMU

Disclosure and provisioning of reported information & Immunity
to Bank Officials

22
22

Customer Relationship
Customer Transaction Profile and Relationship review
Process to relate Customer Transaction Profile
General requirement applicable on all relationships
Customer Identification and Transaction Profiling Procedure
Process of identification of customer source of earning and
status of customer
CDD Measures for Occasional Customers/ Walk-in Customers
and Online Transactions)
Wire / Funds Transfers
Home Remittance Products
Where CDD Measures are Not Completed
Dormant Account
Verification & Authenticity of Identity Document
Documentation Requirement
Misys Support

24
24
25
25
26
27
27
28
28
28
29
29
29

Allied Issues
Review of Products and Services
Record Retention
Training and Awareness
Certification

31
31
31
31

Appendices
Appendix - A: Documents to be obtained from various types of
customers / Account Holders
Appendix - B: Examples of Suspicious Transactions
Appendix - C: Customer Due Diligence (Individual / Salaried)
Appendix - D: Customer Due Diligence (Corporate Retail)
Appendix - E: Customer Risk Profiling (CRP) Form
Appendix - F: Enhanced Due Diligence
Appendix - G: Customer Transaction Profile
Appendix - H: Reporting Format of Suspicious Transaction
Appendix - I: Reporting Format of Currency Transaction
Appendix - J: Customer Level Information
Appendix - K: Acronyms
Appendix - L: Details of Walk-in / Online Cash Depositors
Appendix - M: Common Type of Typologies
Appendix - N: List of High Risk Jurisdictions

33
39
46
47
49
51
53
54
58
61
65
66
67
70

ii

Introduction

P a g e |1

Preface
As a part of SBP ongoing efforts to promote the culture of awareness relating to Anti Money Laundering and AntiTerrorist Financing legal and regulatory framework, the State Bank of Pakistan revised the regulations M-1 to M-5 of
Prudential Regulations on Corporate/ Commercial Banking with AML/CFT Regulations, w.e.f. October 31, 2012 which
are further amended vide BPRD Circular Letter No. 22 of 2013 dated August 19, 2013 and implementation deadline was
extended till September 30, 2013 for review of banks internal Policies/Procedures & Compliance Programs. Revised
Regulations inter alia call for special vigilance on various types of accounts including Politically Exposed Persons. Access
to beneficial ownership of natural and legal person would be clearly established. Movement of funds to high risk countries
would be closely monitored. Risk assessment of every customer by adopting risk based approach has been stressed upon.
Adoption of effective Know Your Customer Standards and Anti Money Laundering Measures is an essential part of risk
management practices. The KASB Bank demonstrates its full commitment and support to high standards of Compliance
with the Anti-Money Laundering/Combating Financing on Terrorism requirements by implementing robust and
comprehensive policy, procedures and systems for the prevention and detection of Money Laundering / Terrorist
Financing activities and maintain the highest possible standards of due diligence and AML procedures.
It is therefore, obligatory for each associate to desist from accepting assets that they know, or are expected to know, are
proceeds of criminal activities. The proceeds of criminal activities may include any asset obtained through corruption,
embezzlement of public funds, abuse of an official function, or dishonest dealings by a public officer. Likewise,
inward/outward remittances making economic sense and having bona fide remitter/ beneficiary are to pass through the
bank.
SBP policy focus is on stringent transactional monitoring with zero tolerance for any suspicious transaction. Strict
monitoring is to be exercised at the very outset of undertaking customer relationship and executing any business
transaction at branches and segments. CDD / EDD will constitute foundation of the risk identification process.
Key measures undertaken in AML / CFT Regulations include having in place the following:

Customer Due Diligence measures which encompasses the importance of ascertaining new customer acceptance
policy, Customer Identity, ongoing monitoring and establishing the ultimate economic beneficiary.
Exceptions to use personal accounts for business purpose.
Ongoing monitoring of transactions through virtual monitoring system to detect suspicious transaction.
FMU guidelines to identify and report suspicious transaction.
Timely submission of Currency transaction report
Classification of Accounts as High / Medium / Low Risk categories by adopting risk based approach.
Further strengthen the process to relate transaction with customer transaction profile, identification of customer
source of earning and status of customer.
List of Jurisdictions stated by FATF as High Risk.
Monitoring of wire transfers / fund transfers
Record Retention guidelines
Regular AML / CFT communication and training program through various channels to raise staff awareness at all
levels within Bank.

Revised AML / CFT booklet attempts to offer comprehensive commentary on each related area including the procedures
and safe guards to be adopted at source. Examples of potential transactions that pose suspicion have been cited for
guidance of branches/segments.
Hope that the revised version of AML/ CFT Booklet will help branches and respective segments to conduct business
activities smoothly with strict adherence to regulatory and other mandatory requirements relating to AML/CFT/ KYC.

Bilal Mustafa
President/CEO
September 20, 2013

P a g e |2

Purpose and Scope

This Policy based on the provisions of Anti Money Laundering (AML) Act, 2010; Anti Money Laundering (AML)
Regulations, 2008 and revised AML/CFT Regulations vide BPRD Circular No. 02 of 2012, shall apply to monitor
each transaction individually and in the overall perspective of Customer Transactions Profile (CTP) by all branches/
sub branches and segments like Consumer, corporate and WSB etc. Compliance at source will be mandatory by all
employees of KASB Bank Limited. CTP will be monitored by the Branches as an ongoing process to ensure that
transactional behavior is in accordance with KYC disclosures at the time of account opening and subsequent update.
Relationships shall be discontinued with customers or counterparties including banks whose conduct pose concern
of involvement with illegal activities. Such termination of relationship shall immediately be reported through STR to
Compliance Division for further action as per prescribed procedure.
This Policy and the related laws/regulations shall be complied with comprehensively by all employees of KASB
Bank Limited as a job requirement whether at a Branch/sub branch and segment. All accounts of Politically Exposed
Persons (PEP) will be opened with the prior permission of the senior management. No waiver, modification or
exception of any requirement or provision of this Policy shall be permitted.
The Chief of Compliance at Principal Office; Karachi shall be responsible to keep the Policy update and
aligned with any change occurring in the local as well as international laws, regulations, guidelines and policies.

Money Laundering (ML)

ML, loosely defined, is the transactional processing or moving of illicitly gained funds (such as currency, cheques,
electronic transfers or similar equivalents) towards disguising its source, nature, ownership or intended destination
and/or beneficiaries. The desired outcome of this process is clean money that can be legally accessed or
distributed via legitimate financial channels and credible institutions.
ML scams abound, yet they all have a single goal in common i.e. to create the illusion that illicitly generated funds
have a legal source. As such, the challenge for Anti Money Laundering (AML) legislation is to cover loopholes as
quickly and effectively as possible.

General Methods and Stages of ML

ML methods and techniques continue to vary from country to country and time to time. The ML process aims to
camouflage illegal funds or financial assets which can range from purchase and resale of a high value or luxury
items by passing it through multiple accounts and shell companies towards either totally obscuring the original
source, or towards associating the funds or assets with a source that looks legal. If the ML process is successful, the
launderer gains funds that look legitimate, and can be moved around with ease. The proceeds usually take the form
of cash which needs to enter the financial system by some means.
Despite the variety of methods employed, the laundering process is accomplished in three stages that may comprise
numerous transactions.
The three stages can be summarized as follows:

Placement: physical disposal of cash proceeds derived from illegal activity; The aims is to remove the cash
from the location of acquisition so as to avoid detection from the authorities and to then transform it into other
asset forms; for example: travelers cheques, postal orders, etc.

P a g e |3

Layering: separating illicit proceeds from their source for concealment or disguise of the source of the ownership of
the funds by creating by creating complex layers of financial transactions designed to disguise the audit trail and
provide anonymity; and

Integration: attempt to legitimize wealth derived from illegal or criminal activity. It is this stage at which the
money is integrated into the legitimate economic and financial system and is assimilated with all other assets in
the system. Integration of the "cleaned" money into the economy is accomplished by the launderer making it
appear to have been legally earned. By this stage, it is exceedingly difficult to distinguish legal and illegal
wealth. If the layering process succeeds, integration schemes place the laundered proceeds back into the
economy in such a way that they re-enter the financial system appearing abnormal business funds.

The three stages discussed above may occur separate and distinct or simultaneously or may overlap each other.
How the stages are used depend on the available laundering mechanisms and the requirement of the money
launderers.

Vulnerability of Financial Institutions to Money Laundering

Certain points of vulnerability have been identified in the laundering process which the money launderers find
difficult to avoid and the activities are more susceptible to being recognized, namely:

Entry of cash into the financial system

Cross-border flow of cash

Transfers within and from the financial system

Efforts to combat ML largely focus on those points in the process where the launderer's activities are more
susceptible to recognition and have, therefore, to a large extent concentrated on the deposit taking procedures of
financial institutions i.e. the placement stage. Equally, however, it is emphasized that there are also many crimes
where cash is not involved.
The most common form of ML that financial institutions encounter on a day to day basis, in respect of their
mainstream business, takes the form of cash transactions, which is deposited in the financial system or exchanged
for value. Electronic funds transfer systems increase the vulnerability by enabling the cash deposits to be switched
rapidly between accounts in different names and different jurisdictions. Additionally, financial institutions are
vulnerable to being used in the layering and integration stages as loan and finance facilities may be used as a part of
the process to create layers of transactions.

Compliance Obligation
The compliance of AML rules, regulations and regulatory framework is obligatory in the context of the following
three vital perspectives:
Legal and Regulatory:
Comply with the laws and regulations to avoid any legal consequence and imposition of penalties.
Reputation:
Saving the reputation, prestige and honor of the bank, in-case any involvement is revealed in recycling the proceeds
of crime that would call into question reputation, integrity and if fraud is involved, solvency of the bank.
Ethical:
Preserve ethical values, standards, code of the Bank /group by taking part in the fight against crime to discourage the
criminals.
Financial:
Any fake or fraudulent transaction may cause financial loss to Bank.

P a g e |4

Risk Aversion Measures and Awareness

CDD/KYC requires special attention and concrete implementation to mitigate/forestall AML and TF Risks. It is
mandatory for KASB Bank to create awareness that it is binding on each associate because:
It is an offence to assist anyone whom you know or suspect to be laundering money generated by any crime or
illegal activity. This may inter alia include support for opening a bank account, accepting deposits, making
transfers/payments, advancing loan/finance, issuing/accepting letters of credit/bank guarantees etc.; without
determining bona fide of account holder or transactional activity.
If one knows or suspects that a transaction or instruction is related to any crime, he/she must refer it to his
immediate line manager for scrutiny and reporting Compliance Division.
If CTP mismatch with KYC or a suspicion of money laundering is sensed, it is mandatory to bring it to light
even if the concerned associate is not handling the transaction or instruction or funds in question. Any
negligence on this account will constitute committing connivance in commission of a criminal offence.
Financial Action Task Force (FATF) on Money Laundering
The FATF is an inter-governmental body whose purpose is to set standards and promote effective implementation of
legal, regulatory and operational measures for combating money laundering, terrorist financing and other related
threats to the integrity of the national and international financial system. The FATF is therefore a 'policy-making
body' created in 1989 that works to generate the necessary political will to bring about legislative and regulatory
reforms in these areas.
FATF is a multi-disciplinary body that brings together the policy-making power of legal, financial and law
enforcement experts from its member states. It monitors members progress in implementing AML measures;
reviews and reports on laundering trends, techniques and counter-measures; and promotes the adoption and
implementation of AML standards globally. FATF has issued 40 + 9 recommendations that are recognized as the
international standard for combating of money laundering and the financing of terrorism and proliferation of
weapons of mass destruction these recommendations are already incorporated in this policy. For further details visit
www.fatf-gafi.org
Asia/Pacific Group (APG)
The Asia Pacific Group on Money Laundering (APG) is an international organization consisting of 41 member
countries/jurisdictions and a number of international and regional observers including the United Nations, IMF and
World Bank. The APG is closely affiliated with the FATF. All APG members including Pakistan have committed
to effectively implement the FATF's international standards for AML and combating TF referred to as the 40+9
Recommendations. Part of this commitment includes implementing measures against terrorists listed by the United
Nations in the "1267 Committee Consolidated List":
APG Key Role

Assess APG members' compliance with the global AML/CFT standards through a robust mutual evaluations;
Coordinate technical assistance and training with donor agencies and APG jurisdictions to improve compliance
with the AML/CFT standards;
Co-operate with the international AML/CFT network;
Conduct research into ML and TF methods, trends, risks and vulnerabilities to update APG members of
systemic and other associated risks and vulnerabilities
Contribute to the global AML/CFT policy development by active Associate Membership of FATF. For further
details refer to www.Apgml.org

Office of Foreign Assets Control (OFAC)

OFAC is an agency of USA department of treasury. OFAC administers and enforces economic and trade sanctions
based on U.S. foreign policy and national security goals against targeted foreign states, organizations and
individuals. Specially Designated Nationals (SDN) List is a publication of OFAC which lists individuals and

P a g e |5

organizations with which US citizens and permanent residents are prohibited from doing business for further
knowledge refer to www.treas.gov/ofac
United Nations (Security Council) Resolutions
As empowered under United Nations (Security Council) Act, 1948; United Nation established the Al- Qaida and
Taliban Sanctions Committee to apply travel restrictions, arms embargo and to freeze the funds and other financial
resources of certain individuals and entities. Such sanctions are notified by the Ministry of Foreign Affairs, GOP
through Gazette notifications and conveyed to financial institutions through SBP to identify report and freeze such
accounts. Branches provide information to submit compliance report to SBP as directed from time to time.
Legal and Regulatory framework in Pakistan
Legal and Regulatory framework in Pakistan comprises of the following:
Federal Investigation Agency ACT 1974
Anti-Narcotic Act 1997
Control of Narcotics Substances Act 1997
Anti-Terrorism Act -1997
NAB Ordinance, 1999
AML Ordinance, 2007
AML Regulations, 2008
AML Act, 2010
AML / CFT Regulations SBP, 2012
Prevention and Control of Human Trafficking Ord. 2002
Foreign Exchange Regulations
SBP directives issued from time to time

P a g e |6

Customer Due Diligence

P a g e |7

Business Initiation Stage

New Customer Acquisition Policy
It is a statutory obligation to reasonably know all those for whom the Bank undertake transactions and also
understand the nature of business and each transaction that is being conducted. This applies to every type of account
regardless of who the customer is and the personal status of the customer.
New customer acquisition and approval process shall perform the requisite degree of due diligence as spelled out in
the regulatory framework on the subject in order to sufficiently assess that the customer's wealth is derived from
legitimate sources, that the uses to which the customer intends to put the account are legitimate and that the quality
of the customer's reputation and dealings are of a satisfactory standard.
All customer relationships shall be documented on the AOF and KYC and no new account shall be opened without
clearance of Centralized Account Opening (CAO) Unit of Operations Division.
Name of all new customers are to be filtered through the World-Check screening software before account opening to
check and ensure that the customer in not a proscribed person / entity and also to assist in categorizing risk rating of
the customer in case the customer is PEP or belongs to a country having higher than normal risk rating.
The CDD / KYC Form shall be reviewed and approved by the BM/OM or Authorized Person in case of Segments
on before entering in formal relationship.
The information and documents required for opening each type of account shall be completed in all respects and
kept up to date.

Customer Due Diligence

Customer is defined as any individual, company or a legal entity that has a relationship or initiates a relationship
with KASB Bank Limited for products and services offered through conventional modes of banking or electronic /
internet banking.
CDD is one of the best defenses a Financial Institution can take to guard against the threats of ML and other
financial crimes. It is also termed as KYC and begins at the stage of account opening and collecting all possible
information to determine the nature of his business and the level of AML risk that the new customer poses. KYC
should be properly filled in to provide adequate information for making an accurate evaluation of who customer is
and what to expect from them. It should be risk based and in accordance with banks AML/CFT policy, to convey
that the dealing branch/segment properly understands the connection between customers identification and ability
to efficiently monitor for suspicious activity.
Customer Due Diligence is a continuous and integrated procedure of determining the true identity and source of
funds during the course of customers dealing with the bank and the beneficial ownership of their wealth. It is the
igniting stage in the sustaining fight against ML.
CDD measures must be carefully invoked when:

Establishing business relationship.

Dealing with occasional / Walk-In Customer:
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.
Obtain copy of CNIC (regardless of threshold) while conducting online transactions by occasional
customers/walk-in-customers (except deposits through Cash Deposit Machines or cash

P a g e |8

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.
Carrying out occasional wire transfers (domestic / cross border) regardless of threshold.
There is a suspicion of ML/TF; and
There is a doubt about the veracity or adequacy of available identification data on the customer. At least the
following CDD measures are to be taken:Should not open and maintain anonymous accounts or accounts in the name of fictitious persons or
numbered accounts.
All reasonable efforts shall be made to determine identity of every prospective customer by obtaining the
minimum set of documents as prescribed in Appendix - A
In case of joint accounts, CDD measures on all of the joint account holders shall be performed as if each of
them were individual customers of the bank.
Identify and verify the identities of beneficial ownership of accounts/ transactions
Determine whether the customer is acting on behalf of another person, and should then take reasonable
steps to obtain sufficient identification data to verify the identity of that other person.
Where one or more natural persons are acting on behalf of a customer or where customer is legal person,
bank shall identify the natural persons who act on behalf of the customer and verify the identity of such
persons.
For customers that are legal persons or for legal arrangements, take reasonable measures to
Understand the ownership and control structure of the customer
Determine that the natural persons who ultimately own or control the customer. This includes
those persons who exercise ultimate effective control over a legal person or arrangement.
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, account can be opened on the basis of special resolution/authority from the concerned
administrative department or highest executive committee/management committee of that entity duly
endorsed by their respective unit of finance. Rules, regulations or procedures prescribed in the Governing
laws of such entities relating to opening and maintaining of their bank accounts shall also be taken into
account.

Guiding principles
The guiding principles mentioned below are common practices followed by prudent bankers world-wide
context of CDD and governing all dealings both with existing customers as well as prospective customers:

in the

Deal with reputable persons with legitimate businesses

Establish legitimate source of income and wealth
Ensure transaction flow is proportionate to their income and serves purpose of known business dealings
Determine and record the identity and background of all customers
Regularly monitor relationship and transactions to identify unusual or suspicious Activity
Keep CDD / KYC form updated
In case of inconsistency take appropriate action

Having sufficient information about customers and making effective use of that information is the most effective
weapon used against ML/TF attempts. In addition to minimizing the risk of being used for illicit activities, the
information provides protection against any fraud attempt and enables suspicious activity to be recognized. It also
protects from reputation, financial and legal risks.

P a g e |9

CDD / KYC is not a onetime exercise to be conducted at the time of entering into a formal relationship with
customer / account holder. This is an on-going process for prudent banking practices. SBP, during the course of
inspection would particularly check the efficacy of CDD / KYC policies and system of the bank and its compliance
by all the branches / segments and the associates. SBP is also empowered to impose penalties, cancel commercial
banking license and order winding up of a bank in case the bank is massively non-compliant with relevant laws and
SBP regulations.
In case banks is not able to satisfactorily complete required CDD measures, account shall not be opened or any
service provided and consideration shall be given if the circumstances are suspicious so as to warrant the filing of an
STR. If CDD of an existing customer is found unsatisfactory, the relationship should be treated as high risk and
reporting of suspicious transaction be considered as per law and circumstances of the case.

Beneficial Owner
As per AML/CFT Regulations, Beneficial owner in relation to a customer of a bank means the natural person(s)
who ultimately own(s) or controls a customer or the person on whose behalf a transaction is being conducted and
includes the person(s) who exercise(s) ultimate effective control over a person or a body of persons whether
incorporated or not whereas beneficiary means the person to whom or for whose benefit the funds are sent or
deposited in bank. Placing the emphasis on this person is a necessary step in determining what the source of fund is.
To determine Beneficial Owner the following guidelines have been prescribed vide AML Regulations 2008:
a)

Obtain a declaration setting forth the identity of the beneficial owner. Such declaration is to be kept on
record in an appropriate manner.
b) Ensure that the contracting partner is also the beneficial owner of the assets/funds placed.
c) In case of beneficial owner(s) in relation to a customer, reasonable measures shall be taken to obtain
information to identify and verify the identities of the beneficial owner(s).
d) If the contracting party states that the beneficial owner is a third party, complete data (name, address, date
of birth, nationality, country of domicile, etc.) of the beneficial owner should be obtained by the Bank.
e) In case of legal persons complete data, as mentioned in point (d) above, of the authorized attorneys shall be
obtained. Take reasonable measures to understand the ownership and control structure of the customer for
obtaining information as to the purpose and intended nature of business relations and determine that the
natural persons who ultimately own or control the customer.
f) If serious doubts persist about the accuracy of the contracting partners written declaration and cannot be
dispelled through further clarification, the bank shall refuse to enter in a business relationship or to execute
the transaction.
g) The holder of a joint account or a joint securities account is required to provide to the bank a full list of
beneficial owners, pursuant to point (c) above, and to inform the bank of any changes without delay.

Beneficial Ownership is conventionally used in Anti Money Laundering context and it could be viewed at two
stages. Firstly it will be done at the time of customer acceptance policy and secondly at the time of transaction
review.
The identity of the beneficial owner will be reviewed by the Relationship Manager by asking whether such person is
acting on his own behalf and the person respond in affirmative then this person is beneficial owner. If there is doubt
arise in prospective clients explanation as to source of his/her funds does not make sense, further due diligence
would be appropriate.
Moreover after the account has been opened, subsequent activity in the account may become inconsistent with the
originally anticipated account activity, the most famous example to this context is that customer is house wife and in
her account transactions were taken place, clearly inconsistent with the CDD of prospective customer and source of
funds were mentioned as savings from husbands business and transactions were quite in the context of the business
then it clearly mentioned as husband is the beneficial owner of the prospective customers account.

P a g e |10

Some of the examples of beneficial owners are mentioned below:

In corporate context, the beneficial owner of a non-listed company is any one that ultimately owns or controls
(including indirectly) more than 25 % of the shares or voting rights of the company, or who otherwise exercise
control over its management.
XYZ (Private) Limited is the prospective customer of the bank and it is the subsidiary of NYK Limited so NYK
hold the control over the business of the subsidiary and truly called as the beneficial owner of the prospective
customer business.
Mr. X and Mr. Y is the employee of ABC limited and are the prospective customer of the bank and were engage
in sale and purchase of property on behalf of the company and in this case company is the beneficial owner of
the clients business.
Alpha is a Trust which governs the stakes of the welfare of public and Mr. A, Mr. B and Mr. C are the trustees
of the company and Mr. A is the founder member of the trust and as per trust deed Mr. A has power to appoint
and remove trustees and regulate the operation of the trust then of course Mr. A is the beneficial Owner of the
Trust.
If there are individuals who are in position to extent control over the funds held by the company (e.g., directors
or persons with power to give direction to the directors), and such individuals are not related to the apparent
provider of funds, the banker should consider why this might be so.
Always watch for the nominee directors of the holding companies because they are working on behalf of the
holding company and taking cares the benefits of the holding company because holding company is the
beneficial owner of the business.
Mr. Y is the legal advisor of Mr. M and wishes to open an Alpha Company account, Mr. Y will serve as the
representative and authorized signatory of Alpha Company, but in this case personal banker should ask the
customer about the beneficial owner of the company because in that case Mr. M is the beneficial owner of the
company.

Reduced CDD Customers

AML/CFT Regulations categorizes reduced CDD customers as follows:

Where information on the identity of the customer and the beneficial ownership is publicly available
Financial Institutions provided they are subject to requirements to combat ML and TF consistent with the FATF
recommendations and are supervised for compliance with those requirements.
Public companies that are subject to regulatory disclosure requirements and such companies are listed on a
stock exchange or similar situations.
A Non-Bank Finance Company (NBFC) regulated/ supervised by Securities and Exchange Commission of
Pakistan (SECP) unless an entity is notified for application of the requirements
Public administrations or enterprises
Government administrations or entities.
A foreign government entity.
Country identified by credible sources such as mutual evaluation or detailed assessment reports, as adequately
complying with and having effectively implemented the FATF Recommendations; and Country identified by
credible sources as having a low level of corruption, or other criminal activity.

However, enhanced CDD / KYC measures shall be applied where:

There is risk of ML or TF or when a customer resides in a country, which does not comply with FATF
recommendations.
In case of certain high risk factors are identified in internal risk assessment or as per international standards

P a g e |11

In relation to customers that are from or in jurisdictions which have been identified for inadequate AML/CFT
measures by FATF or identified by the bank itself having poor AML/CFT standards or otherwise identified by
the State Bank of Pakistan.

There are no exceptions in reporting suspicion to FMU within the provisions of AML Act.

P a g e |12

Business Dealings Stage

Enhanced Customer Due Diligence (EDD)
EDD process will involve further critical insight on daily basis, as to the nature of transactions and over all dealings
pattern reflected by the account of the client with whom the relationship has been established.
EDD shall be applied in all cases of:
1.

High-risk customers
(i)
Non-resident customers; Pakistani nationals permanently residing and domiciled abroad, foreign
nationals residing abroad and overseas entities residing in countries which are proclaimed by FATF as
High Risk Jurisdictions (Appendix - N).
(ii)
Private banking customers; Private Banking services include lending and investment management, for
wealthy individuals or counter parties.
(iii)
Legal persons or arrangements including non-governmental organizations (NGOs) / not-for-profit
organizations (NPOs) and trusts / charities; that engage in raising or disbursing funds for charitable,
religious, cultural, educational, social or fraternal purposes, or for the carrying out of other types of
good works from being misused or exploited by the financiers of terrorism. EDD for such accounts
should include guidelines given in point No. 15 below:
(iv)
Customers belonging to countries where CDD / KYC and AML regulations are lax;
(v)
Customers with links to offshore tax havens;
(vi)
Customers in cash based businesses; like Exchange Companies, restaurants, parking garages
Laundromats, car washes, Money Services Businesses (MSBs), securities dealers.
(vii) High net worth customers with no clearly identifiable source of income; Lawyers, Notaries, Legal
Professionals, accountants when they manage their clientele such as buying and selling of real estate,
managing of clients money, securities or other assets, savings or securities accounts, organization of
contributions for the creation, operation or management of companies.
(viii) Customers in high-value items such as dealers of antique items, jewelers and precious stones, pawn
broker, auto dealers, boat dealers and travel agencies etc.

2.
3.
4.
5.
6.
7.
8.

There is reason on record to believe that the customer has been refused banking facilities by another bank.
There is a doubt about the veracity or adequacy of available identification data on the customer
Opening of correspondent banks accounts particularly if they are from a high-risk jurisdiction;
Dealing with non-face-to-face/online customers.
Countries subject to sanctions, embargos, for example, the United Nations,
Countries identified by credible sources as having significant levels of corruption, or other criminal activity
Countries or geographic areas identified by credible sources as providing funding or support for terrorism
activities
Cash intensive or other forms of anonymous transactions
Payment received from unknown or un-associated third parties
Companies that have nominee shareholders or shares in bearer form
Legal persons or arrangements that are personal asset holding vehicles
Establishing business relationship or transactions with counterparts from or in countries not sufficiently
applying FATF recommendations.
Dealing with Politically Exposed Persons (PEP) or Holders of Public or high profile positions. PEP may include
Head of Estate, Senior Politicians / Political Parties and Senior Officials of Political Party / Government, Senior
Officials of Public and Military, Senior Executives of State Owned Corporations, Member of National
Assembly / Provincial Assembly, Bureaucrats, Senior Judicial Persons, Ambassadors, Trade Missionaries,
Family Members of the entire above category. PEPs EDD includes the following:-

9.
10.
11.
12.
13.
14.

P a g e |13

a)

Relationship should be established and or maintained with approval of senior management (not below the
rank of Executive Vice President as designated by the board of a bank for the purpose of AML/CFT
regulations) including when an existing customer becomes holder of public or high profile position.

b) Monitoring of such relationships on regular basis.

c)

Establish, by appropriate means, the sources of wealth or beneficial ownership of funds, as

appropriate; including Banks own assessment to this effect.

15. Senior management approval should be obtained while establishing relationship with Non-Governmental
Organizations (NGOs)/Not-for-Profit Organizations (NPOs) and Charities to ensure that these accounts are used
for legitimate purposes and the transactions are commensurate with the stated objectives and purposes.
The accounts should be opened in the name of relevant NGO/NPO as per title given in its constituent
documents of the entity. The individuals who are authorized to operate these accounts and members of their
governing body should also be subject to comprehensive CDD. Banks should ensure that these persons are not
affiliated with any proscribed entity, whether under the same name or a different name.
In case of advertisements through newspapers or any other medium, especially when bank account number is
mentioned for donations, Banks will ensure that the title of the account is the same as that of the entity soliciting
donations. In case of any difference, immediate caution should be marked on such accounts and the matter
should be considered for filing STR.
Personal accounts shall not be allowed to be used for charity purposes/collection of donations.

Customer Risk Based Approach

It is pertinent to mention here that without proper quantification of risks, it may be difficult to decide which
customer qualifies for simplified due diligence (SDD) or enhanced due diligence (EDD). A sound Customer risk
Based Approach is based on the following major elements:
Customer Risk: Identifying risk determinants, comprising of various elements like, Overall Back Ground and
Reputation, Business Interest and Practices, Business Associates, Political Affiliation, Beneficial Ownership and
Source of Fund.
Product Risk: Foreseeing risk elements resulting from customers need for financial services and appropriate
controls. Entailed in case of Private Banking Customers where the Bank is generally not aware of the fact that
customer is investing money in their institution on behalf of the main money owner whose particulars are not
disclosed to the bank.
Delivery Channels: Identifying risks associated with delivery channels like cash, wire transfers which may vary
from customer to customer depending on their needs
Business Risk: Includes various elements like, Nature of business, Location of Business, Region of Business and
Prime customers of business.
Geographical/Jurisdictional/Country Risk: Risks resulting from customer geographic presence and jurisdiction in
which the customer is operating. Relates to various elements like, Political Stability, Legal Status, Economic
Situation, Standing of Financial Service Industry, Exposure to organized crimes, money laundering and corruption
culture.
After identification and quantification of inherent risks, controls and residual risks, the decision should be taken
while establishing relationship whether to take the customer on-board, mark as high risk or refuse to accept the
customer etc.

P a g e |14

Risk Assessment:
Risk profiling of every new customer is to be done using the information obtained through CDD/KYC by the
Relationship Manager of requisite segment / Branch Managers as per the Customer Risk Profiling template given
in Annexure - E for all customer relationships categorized under AML Table.
Business should review and update customer profile

High & Medium AML/ CTF Risk Customer Quarterly

Low Risk Customers - Annually
All Commercial / Business Name Accounts - Minimum every two years Others - Minimum every three years
Approval criteria for customers falling under PEP / NGOs / NPOs / Trust & Charities category shall require
sign-off by the Designated Senior Management.
Approval criteria for customers categorized under (Money Changers, Intermediaries, Off-shore Financial
services, Journalists, Private banking customers, Customers dealing in High value items, Insurance companies)
shall require sign-off from Region Head Business.
Approval criteria for customers categorized under (Non - resident, High net worth customers with no
identifiable sources of income, Import / Export Business, property brokers, travel agencies, cash driven
businesses) shall require sign-off from concerned Business Head and Operations Head.
Obtain approval of senior management to commence or continue the business relationship with customers
falling under the category of High Risk.
Customer having medium risk rating shall require sign-off from concerned Business Head & Operations Head.
Self - Declaration form for customers that are classified to be under (self -employed / freelancer / landlords /
agriculturists, Fixed Income, Students / Housewives / others) shall be referred to concerned Business Head prior
to account opening for their review & approval.

During the process of Review of High/Medium/Low Risk Customers the following points should be specifically
considered:

Obtaining additional information on the customer (occupation, volume of assets, address, information available
through public database, internet etc.), intended nature of business relationship, reasons for intended or
performed transaction, source of funds or source of wealth, wherever required.
Obtaining documentary evidence to support transactions where possible
Elevating risk profile on the basis of customer business conduct and transaction profile of the 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.

Prohibited Customers
Transaction with Non-Account Holder:
Bank business centers will not under any circumstances, accept anonymous relationships, for any purpose. One-off
Pay order favoring Government and Education bodies is permitted to walk in customers subject to due diligence, or
if explicitly permitted so under any product features.
Known Beneficiaries of Corruption or Illegal Activities:
Any individual or entity whose wealth or funding has been accumulated through corruption or activities that are
illegal will not be accepted as Bank customer.

P a g e |15

Shell Companies:
Bank shall not indulge into any business with shell companies due to the complexity of the organization and
structure, as it is difficult to determine the true owners/beneficial owners and may be subject to misuse. Some of
such companies may not exist for legitimate business and may merely be a shell or front company. Dealing with all
such companies shall be strictly prohibited.
Proscribed Individuals / Entities
Bank shall not provide any banking services to proscribed entities and persons or to those who are known for
their association with such entities and persons, whether under the proscribed name or with a different name.
The bank should monitor their relationships on a continuous basis and ensure that no such relationship
exists. If any such relationship is found, the same should be immediately reported to Financial Monitoring
Unit (FMU) and other actions shall be taken as per law.

Ongoing monitoring
All business relations with customers shall be monitored on an ongoing basis by their respective branches / segment
to ensure that the transactions are consistent with customer profile, its business and risk profile and where
appropriate, the sources of funds.

Prohibition of personal accounts for business purposes

Personal accounts shall not be used for business purposes except proprietorships, small businesses and professions
where constituent documents are not available and the Branch/related Segment is satisfied with KYC profile of the
account holder, purpose of relationship and expected turnover of the account keeping in view financial status &
nature of business of that customer.
The business transactions in personal accounts of proprietors may only be permitted by linking it with
account/business turnover. Such customers having monthly credit turnover of Rs. 5 million or above may be
required to open a separate account for business related transactions.
In order to verify the physical existence of business or self-employment status, banks may 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, bank may consider reporting it to FMU and/or may change risk profile,
as appropriate.

P a g e |16

Suspicious Transactions

P a g e |17

Suspicious Transactions
As the types of transactions that may be used by a money launderer are almost unlimited, it is difficult to define a
suspicious transaction. Suspicion is personal and subjective and falls far too short of proof based on firm evidence.
However, the suspicion must have some foundation and not just be based on mere speculation. A suspicious
transaction shall often be:

Any transaction or instruction that is not logical from an economic, financial or banking point of view
Any transaction where the amount, duration or other specific feature is inconsistent with the customer's
professional or business activities or expected account activity as per KYC.

Even "Good Customers" launder money with the financial institution unknowingly assisting them. Be cautious of
customers who are too friendly, since the key to successful ML is to conduct business at a financial institution that
doesn't ask too many questions and appears to look the other way.

Suspicion
The key to recognizing suspicious transactions is based on having enough knowledge about a customer's normal
expected transactional profile or activities to be able to recognize the abnormal/unusual and from the abnormal, what
might be suspicious.
At the start of a relationship, suspicions might arise:
If a customer refuses or is reluctant to provide information or documents
If the time taken to provide information or documents proves to be unusually long
If the information provided does not make sense when assessed in respect of nature of the relationship

Examples
Examples of what might constitute a suspicious transaction are attached as Appendix - B. The examples mentioned
in Appendix - B are not meant to indicate that all such activities would be indicative of ML, they are meant to be
used as indicators which, given your knowledge of the customer, their normal account and business activities and
the sector in which they operate might assist in recognizing suspicious transactions. Identification of any of the types
of transactions listed or any other circumstances that are unusual for that customer should prompt enquiry.

Suspicious & Currency Transactions Monitoring

Designated Officers in branches should conduct regular monitoring of Large Transactions (Rs.0.5M and above)
daily generated on their Branch Folders and Occasional transactions 0.5 Million and above, showing unusual
behavior in a particular account on the basis of data generated by IT system.
Additionally, transactions are monitored through installed SAS-AML Solutions software at Compliance Division on
the basis of pre-defined parameters/thresholds for analysis to check transaction pattern and to ensure that the
transactions are in accordance with customer profile available in Banks record and possible reporting of
suspicious transactions. Individual large transactions and transactions structured to avoid CTR reporting are
identified and monitored for the purpose of regulatory requirement of reporting CTRs and to track any suspicious
transaction executed by the customer.

Management of alerts
Large Transaction Monitoring Unit of Compliance Department should review all alerts generated on predefined
thresholds from SAS/AML Software in the following manner:
i) Alerts to be checked with Customer profile in the System.
ii) In case of mismatch, report to concerned branch under copy to Compliance Chief in context of investigation on
mismatched transaction.

P a g e |18

iii) Reply of branch should be reviewed and;

a) If satisfactory then customer profile should be updated and the alert may be closed.
b) If not satisfactory then the background & purpose of such transaction shall be examined and findings
established in writing for availability to assist the relevant authorities in inspection & investigations.
iv) The transactions / wire transfers, which are out of character or are inconsistent with the history, pattern, or
normal operation of the account including through heavy deposits, withdrawals and transfers, shall be viewed
with suspicion, be properly investigated and referred to Compliance chief for possible reporting to FMU under
AML Act
v) Nothing to be disclosed to the customer that a suspicious transaction or related information is being or has been
reported to any authority, except if required by law.
All remittance transactions / wire transfers / SWIFT messages are filtered through SWIFT Sanction Screening
system to ensure that no transaction is conducted with individuals / entities / countries that falls in any negative /
proscribed sanction list.

Monitoring at Source
However, monitoring by Large Transactions Monitoring Unit of Compliance Division does not relieve Branch/
Segments officials to monitor all complex, unusual large transactions, and all unusual patterns of transactions, which
have no apparent economic or visible lawful purpose leading them to have reasonable grounds to suspect that a
transaction is directly or indirectly related to the commission of a ML offence or to the commission of a terrorist
activity financing offence. 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.
Relationship with accounts wherein ML illegal activity is established should be immediately terminated after
seeking guidance / instructions from the Compliance Division.

Screening names against OFAC / UN Security Council / NAB / and other list
Bank is committed to monitor and take actions on all Sanctioned names by OFAC/UN Sanctions / NAB and other
lists. In addition, U.N. Security Council regulation makes it mandatory for all Banks to block funds and also not to
enter into any transactions with individuals or entities reported to be involved in financial crimes and money
laundering. Following procedure is applied

All customer are filtered in World-check screening system prior to account opening and if any match is found
the matter is further investigated and advise is given to CAO accordingly on the basis of findings
NAB Circulars for convicted individuals/entities, SBP S.R.O.s and letters received from Ministry of Foreign
Affairs are circulated by the Compliance Department to all concerned.
If during SAS monitoring any Alert is raised about the account holder it will be communicated to the branch /
segments to put the account on watch.
If during SWIFT monitoring any Alert is raised about the account holder, the transaction shall not be allowed to
be processed further, branch / segments would be instructed to hold the transaction and raise STR. Further
action should be taken as per law.
Branches/Segments should consolidate the UNSC/NAB/S.R.O.s circulated by Compliance from time to time
and check the names through the consolidated lists prior to opening of account

Reporting Agency
As per AML Act, 2010, and AML Regulations, 2008 (available on Banks portal), Financial Monitoring Unit
(FMU) set up at, SBP Main Building, Karachi is the only designated agency in Pakistan to which suspicious
transaction reports (STRs) and the currency transaction report (CTRs) shall be made by the Compliance Division
within 7 working days after forming suspicion / respective currency transaction.

P a g e |19

E-Banking
E-Banking related risk should be recognized, adjudged and managed in a prudent manner according to the
fundamental characteristics and challenges of e-banking Services. These Characteristics include unprecedented
speed of change related to technological and customer service innovation, the ubiquitous and global nature of open
electronic networks, the integration of e-banking applications with legacy computer systems and the increasing
dependence of bank on third parties that provide the necessary information technology.
While not creating inherently new risks, use of e-banking increases and modifies some of the traditional risks
associated with banking activities, in particular strategic, operational, legal and reputation risks, thereby influencing
the overall risk profile of banking.
Investigations of major ML cases over the last few years have shown that criminals make extensive use of electronic
payment and message system. The rapid movement of funds between the accounts in different jurisdiction increases
the complexity of investigation. In addition, investigation becomes even more difficult to pursue if the identity of the
original ordering customer is not clearly appear in such transactions.

Correspondent Banking
In addition to the CDD requirements given in this policy, sufficient information about correspondent banks should
be secured and properly understood by FI and International Division before establishing correspondent banking
relationship.
In opening correspondent banking account following measures (as deemed necessary by the Bank) shall be taken:
a)

Assess the suitability of the correspondent bank by:

i) Gathering adequate information about the correspondent bank to understand the nature of correspondent
banks business including the following
Know Your Customer Policy
Correspondent Banks Management and Ownership
Major Business Activities
Geographical presence/jurisdiction (country) of correspondence
Business location
Money Laundering Prevention and Detection Measures
Purpose of Account or service
Identity of Third Party that will use the correspondent banking services (Payable Through Accounts)
Condition of the bank regulation and supervision in the correspondents country.
ii) Determine the reputation of the correspondent bank, the quality of supervision over the respondent bank,
including where possible whether it has been the subject of money laundering or financing of terrorism
investigation or regulatory action; and
iii)

Assess the correspondent Bank in the context of sanctions/embargoes and advisories about risks

b) Understand and document the AML/CFT responsibilities of the correspondent bank

c)

Obtaining approval of Senior Management before establishing new correspondent banking relationship.

The Bank should ensure that business relationship with foreign banks should be establish after checking customer
acceptance and KYC policies and are sufficiently supervised by the relevant authorities.
Banks shall pay special attention when establishing or continuing correspondent relationship with banks/ financial
institutions which are located in jurisdictions that have been identified or called for by FATF for inadequate and
poor AML/CFT standards in the fight against money laundering and financing of terrorism.

P a g e |20

The bank should ensure not to establish or continue correspondent banking relations with a shell bank and that the
correspondent bank do not allow their accounts to be used by shell bank.

Where the cross-border banking services involve a payable-through account, the correspondent bank shall be
satisfied that:
(a) the respondent bank has performed appropriate CDD measures at least equivalent to those specified in
Regulation a) on the third party having direct access to the payable-through account; and
(b) the respondent bank is able to perform ongoing monitoring of its business relations with that third party and is
willing and able to provide customer identification information to the correspondent bank upon request.
In case where a Pakistani bank is availing correspondent banking services from a bank/financial institution abroad, the CDD
measures specified above should be applied, as considered necessary to mitigate ML/TF risks.

STRs Reporting
Suspicious Activity is a difficult concept to define, because it can vary from one transaction to another based upon
on all the circumstances surrounding the transaction or group transactions. For example, transactions by one
customer may be normal, because of your knowledge of that customer, while similar transactions, by another
customer, may be suspicious. Many factors are involved in determining whether transactions are suspicious,
including the amount, the location of business, comments made by your customer, the customers behavior, etc. That
is why it is important to detect suspicious activity and structured transactions after in depth analysis and undertaking
reason to establish that:
1.
2.
3.
4.

Involve funds derived from illegal activity or is intended to hide funds derived from illegal activity;
Is structured to avoid recordkeeping or reporting requirements;
Has no business or apparent lawful purpose; or
Facilitates criminal activity.

Any suspicious transaction (STR) effected or attempted by, at or through financial institution if the financial
institution knows, suspects, or has reasons to suspect that the transaction (or a pattern of transactions of which the
transaction is a part) involves funds derived from illegal activities or is intended or effected in order to hide or
disguise proceeds of crimes or is designated to evade any requirements of section 7 of the AML Act 2010, or has no
apparent lawful purpose after examining the available facts, including the back ground and possible purpose of the
transaction shall be reported immediately as per Appendix - H to the Chief of Compliance. The record will be
thoroughly scrutinized and if the suspicion is found to be well substantiated, the matter will be reported to Financial
Monitoring Unit (FMU) in consultation with President / CEO.
The STR, including attempted transactions shall be reported (regardless of the amount) immediately but not later
than seven working days after forming that suspicion in respect of a particular transaction, irrespective of the fact
that the transaction was followed through or not.

CTRs Reporting
When a financial institution under takes a cash based transaction involving payment, receipt, or transfer of an
amount exceeding the minimum threshold as specified by the National Executive Committee (NEC), hereinafter
referred to as the NEC, the financial institution shall file a report of such transaction (CTR) through Compliance
Department on prescribed format Appendix - I immediately but not later than seven working days, after the
respective currency transaction for onward submission to FMU.
The NEC has declared the threshold of above Rs. 2.5 million for CTRs reporting by Banks as per requirement of
AML Act.

P a g e |21

The NEC may exempt a financial institution from the reporting requirements with respect to transactions between
financial institutions and the following categories of entities, namely:a)

A department or agency of the Federal Government or a Provincial Government or any autonomous body
under the Federal Government or Provincial Government.

b) Any business or category of business the reports on which entail little or no risk concerning ML and TF.

Freezing of property by DG, FMU

Where a financial institution knows, suspects or has reasons to suspect that any property or account is involved
in ML or TF and needs immediate attention or action on the part of FMU as to the freezing of such property or
account, the concerned financial institution as the case may be, shall immediately inform the Director General
of such property or account along with the grounds that warrant immediate action.

The Director General FMU may, if there appear to be reasonable grounds to believe that any property or
account is involved in ML or TF, order freezing of such property of account for maximum period of fifteen
days, in any manner that he may deem fit in the circumstances.

Disclosure and provision of reported information & immunity to Bank Officials

AML Act, 2010 & AML Regulations, 08 explicitly provides as follows:
Prohibition

The financial institution and their officers strictly prohibited to disclose directly or indirectly the fact to the
customer or notifying any person involved in the transaction or any other quarter that a suspicious transaction or
related information is being or has been reported to any authority, except if required by law.

Immunity

Any financial institution or officer which makes a disclosure pursuant to the Ordinance and these regulations
shall not be subject to any civil, criminal or disciplinary proceedings under any law or regulation or under any
contract or other legally enforceable agreement (including any arbitration agreement), for such disclosure or any
failure to provided notice of such disclosure to the person who is the subject of such disclosure or any other
person identified in the disclosure.

Disclosure to FMU

The financial institutions must provide all documentation supporting the filing of a STR or any other related
information upon demand by FMU. When asked to provide supporting documentation or any information,
financial institution should take special care to verify that the person asking for information is, in fact, an
authorized representative of FMU.

P a g e |22

Customer Relationship

P a g e |23

Customer Transaction Profile and Relationship Review

The foundation of any monitoring procedure lies in the initial collection of CDD / KYC information and the
ongoing updating of that information. The nature value and volume of business expected to be undertaken, shall be
recorded at the start of the relationship and regularly updated enabling to judge whether transactions are in line
with the KYC profile of the customer or whether unusual transaction suspects any cause for concern that criminal
money may be involved.
The initial period of any new customer relationship warrants close monitoring at the business location to determine
possibility to any suspicious transaction Activity and transaction review shall include both scrutiny at the point
of transaction and historic review. Particular attention must be paid to cash, high volume accounts, third- party
transfers, outward /inward remittances both domestic and international, collections both clean and documentary
and unexpected prepayment of advances.
To ensure that customers remain in good standing, on observance of sudden CTP variation with KYC disclosures,
large occasional transaction (s), high volume of unusual cash transactions, change in customers business
nature/behavior, indifferent pattern of remittances and account activity; immediate review and update of customer
KYC as per Appendix - G would be essential. Wherever necessary, inquiries shall be made to obtain a
clarification from the respective customer for unusual large transaction volumes or other inconsistent patterns.
Besides periodical review of customers relationship profile will be undertaken as an ongoing process and shall be
properly documented. The review shall include updating of customer data. This shall provide a current assessment of
the relationship, thus enabling to assess the potential nature of the customers activities and determine that overall
account activity is commensurate with the information known and recorded.
All associates shall have a responsibility to be vigilant throughout the course of carrying out their duties and to
report any activity they may observe or become aware of, in dealing with the customer, they deemed to be
potentially suspicious or in consistent with expected activity or business.
Whenever any unusual trends in turnover volume patterns or holding are observed, the same shall reported to BMs/
OMs, who shall undertake a critical review of account activity and its worthiness for reporting as STR/ CTR through
Chief of Compliance.

Process to relate customer transaction profile

Before opening an account due diligence is required to be performed on all prospective clients. This process should be
completed by fulfilling the documentation requirements and also a Know Your Customer (KYC) profile which
is used inter alia to record a clients source of funds, expected transaction activity and other related information
at its most basic level.
Once the due diligence / enhanced due diligence process is completed and the client relationship is established,
Branch should monitor the conduct of the relationship / account to ensure that it is consistent with the nature of
business stated when the relationship / account opened. Branch do this firstly by their officer being diligent and
includes visiting customer / place of business where appropriate; to know whether the business premises are selfowned or rented, the type of clients visited, commercial environment, mode of payment (cheque or cash) / receipt
generally resorted to the client. The Officer will record his observations and sign the KYC Profile form and submit to
BM / Segment Head for review and signoff.
Updating the clients KYC profile for any significant change in their lifestyle (e.g., change of employment status,
nature of business, transactional activity and consequential increase in net worth); monitoring the transaction
activity and pattern over the clients account regularly is critical to identify any unusual or suspicious transaction in a
timely manner and reporting any suspicious transaction as per prescribed process.

P a g e |24

General Requirements Applicable on All relationship

At a minimum, all businesses must adhere to the following customer acceptance policies when opening new accounts or
establishing any relationships:

Business associates of relevant segments should only accept customers whose identity can be established.
Business associates of relevant segments should make a concerted effort to determine the true identity of all
customers and to identify and know the beneficial owners of all accounts.
Business associates of relevant segments should only accept customers who are willing to cooperate and provide the
needed documents and information.
Business associates of relevant segments should obtain proper and valid identification documents from the
customers.
No account should be opened or transaction processed until:
1. The personal valid identity of the individual or commercial identity of legal entity opening the account has been
established and verified.
2. Identity of the beneficial owner has been established.
3. Information on the purpose and intended nature of the business relationship has been obtained.
No accounts shall be opened for non-face-to-face customers.
No account should be opened or retained if there is any evidence of the account being used for any type of
"alternative remittances," i.e. Hawala / Hundi. Any activities noted under this category should be reported as
"Suspicious Activities".
All accounts opening, at the minimum, shall be subject to the Branch Manager /concerned Business Head approval
as applicable. A site visit must be made and documented for all commercial/ business purpose accounts.
Account(s) should be closed if any outstanding identity verifications cannot be resolved.
Personal accounts should not be used for business purposes except proprietorships, small businesses and professions
where constituent documents are not available and the banks is satisfied with KYC profile of the account holder,
purpose of relationship and expected turnover of the account keeping in view financial status & nature of business
of that customer

Customer Identification & Transaction Profiling Procedures

The branch where a customer has his primary account should be responsible for carrying out customer acceptance
requirements even though the customers may choose other branches of the bank to process their transactions. The staff
obtaining the identification documents must compare them with original documents to ensure their conformity and
authenticity and must stamp with the Bank Stamp "Original Seen" as and when received the documents.
Customer transaction profile should be prepared to capture the number of transactions expected to be used by a
customer, and the value of transactions for an average month, for each product and service. All efforts should be made to
establish the source of funds to the bank's satisfaction and the customer and transaction profiling methodology to assist in
establishing the source of funds.
A. KYC Profiling:
Obtaining and document the customers basic background information.
Try to use this information to evaluate the correctness and rationality of the customers transaction activity.
Determine the source of the customers funds.
The customers expected transaction trends (monthly or annually),
The source of wealth and
Net income
Mode of transaction
B. KYC Profile periodic update:
Regular reviews of transaction activity and large transactions reports;
Print and News Media, financial statements, brochures, industry activities relating to the customer;
Periodical discussions with the client relating to their business activities including future plan.

P a g e |25

Process of Identification of Customer Source of Earning and Status of Customer

Process to identify
Process to verify status
S.
Account
Basic Documentation
source of earning
of customer
No. Category

Salaried

AML & CDD / KYC

Policy Appendix - A Sr. No. 1

Amount
of
Salary,
Organization working, Position
Held, Area of Expertise,
Clients Past experience and
funds
Add description of
received from any activity.

House Wife

AML & CDD / KYC

Policy Appendix - A Sr.
No. 13 Self Declaration
form, Any one (Account
Maintenance,
Account
Statement last six
months)

Estimation of pocket money,

Supporting person relationship
and Position held; Nature of
Job / business; location;
business products.

Professional

AML & CDD / KYC

Policy Appendix - A Sr.
No. 1

Nature of Profession, Area of

Specialty and wealth derived
from nature of practice.
Estimated income.

Free Lancer /
Agriculturist

AML & CDD / KYC

Policy Appendix - A Sr.
No. 14 Self-Declaration
form, Any one document
(Account
Maintenance
Certificate,
Account
Statement last six
months)

Area of business; Nature of

deals;
Estimated
annual
Income. In case of agriculturist
if possible efforts needs to be
made to obtain agriculture Pass
Book or any other document

5.

Student

AML & CDD / KYC

Policy Appendix - A Sr.
No. 1

6.

Retired
Person

AML & CDD / KYC

Policy Appendix - A Sr.
No. 1

1.

2.

3.

4.

7.

Sole
Proprietorship
/ Self
Employed

8.

Partnership

9.

Company
Accounts

10.

Clubs,

AML & CDD / KYC

Policy Appendix - A Sr.
No. 2, Self-Declaration
form, Any one document
(Account
Maintenance
Certificate,
Account
Statement last six months)
AML & CDD / KYC
Policy Appendix - A Sr.
No. 3
AML & CDD / KYC
Policy Appendix - A Sr.
No. 4
AML & CDD / KYC

Customer status can be

verified through
appearance,
Residential
locality,
Family
Background, Assets owned
by the customer.

Estimation of pocket money,

Sponsors relationship; Position
held; Nature of Job / business;
location; business products.
Occupation / investments,
position last held, length of
service, organization(s) served;
estimated annual income.
Investments;
Nature
of
Business; Ownership type
(Private, public); Estimated
Sales Volume; Estimated Net
Income; Length of Business;
No. of Employees; Area of
Business;
Products
of
Business; as the case may be
for
the
prospective
accountholder.

Paying a visit to customer

address, business locations;
family background; Nature
of
product
acceptance;
Financial
Statement.
Primary
Trade Area, Anticipated
Volume of Cash and Total
Sales and a list of major
customers and suppliers

Specific Purpose for which the

P a g e |26

S.
No.

Account
Category
Societies,
Trust and
Associations
etc.

High
Net
worth
Customers

11.

Basic Documentation

Process to identify
source of earning

Process to verify status

of customer

Policy Appendix - A Sr.

No. 6

entity is established; Members /

Office Bearers; in case of
foreign remittances highlight
amount of remittance and
country.
Customers residence or place
of business, Sources of funds
and sources of wealth; Proof of
income / evidence of service
from
employer;
Current
Investment, Size of Investment,
AML & CDD / KYC Estimated Capital Investment;
Policy Appendix - A Sr. Nature of Business; Ownership
No. 1
type
(Private,
public);
Estimated Sales Volume;
Estimated Net Income; Length
of Business; No. of Employees;
Area of Business; Products of
Business; Area of expertise;
Past Experience.

CDD Measures for Occasional Customers/ Walk-in Customers and Online Transactions):
A walk-in customer is one who neither maintains any type of account nor holds any KYC record with the Bank. Over
the counter occasional / walk-in customers will be required to produce Original Valid CNIC / NICOP / POC / NARA
with noting original seen which will be seen and Copy of the same will be retained by the Branch before executing
the following transaction:
(i) While conducting cash transactions above rupees 0.5 million; and
(ii) While issuing remittance instruments e.g. POs, DDs and MTs etc.
Also, obtain copy of CNIC (regardless of threshold) while conducting online transactions by occasional
customers/walk-in-customers (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.
These transactions includes encashment of cheques, online deposit / withdrawal of cash into account, issuance of
demand draft / Payment orders or any other financial transaction, if the CNIC is expired no financial transaction will be
allowed. In case amount deposited by customer other than the accountholder, Branch should obtain satisfactory
evidence for identification of applicants on (Appendix - L) for Bank record.

Wire Transfers / Fund Transfers

The requirement stated hereunder shall apply during the course of sending or receiving funds by wire transfer except
transfer and settlement between KASB and other banks where both the banks are acting on their own behalf as
originator and the beneficiary of the wire transfer. All remittance transaction routed through SWIFT are filtered through
SWIFT sanction screening system prior to further processing of transaction to ensure that no transaction is conducted
with individuals / entities / countries that falls in any negative / proscribed sanction list
(a) Checking Identities of Originator
Bank shall include the following information in the message or payment instruction which should accompany or
remain with the wire transfer throughout the payment chain:

P a g e |27

(i)
(ii)

the name of the originator;

the originators account number (or unique reference number which permits traceability of the
transaction); and
(iii) the originators address or CNIC/passport number;
(b) Responsibility of Beneficiary Institution
As a beneficiary, it should be ensured that the incoming remittance should bear the following information of the
remitter:

Name of remitter
Address of remitter with business details
Purpose of remittance

Beneficiary institution shall adopt risk-based internal policies, procedures and controls for identifying and handling incoming wire transfers that are not accompanied by complete originator information. The incomplete originator
information 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. 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.
Note: In context of wire transfers/fund transfer, it may be noted that as per AML/CFT Regulation 3 of SBP, the
requirements may not apply to domestic fund transfer transactions through e-banking channels (e.g. ATM,
internet banking & mobile banking etc.) and RTGS provided appropriate controls are in place
(c) Responsibility of Intermediary Institution
A bank that is an intermediary institution shall, in passing onward the message or payment instruction, maintain all the
required originator information with the wire transfer.

Home Remittance Products

The product is being used for inward transaction only, for clients using this service customer service staff should verify
the true identity of beneficiaries through identification process. Copy of CNIC from the beneficiary should be obtained
and retained by the branch. Further, RM / BM should verify from beneficiary on the purpose of amount that is being
transferred, remitter name and relation.

Where CDD Measures are Not Completed

In case bank is not able to satisfactorily complete required CDD measures, account shall not be opened or any service
provided and consideration shall be given if the circumstances are suspicious so as to warrant the filing of an STR. If
CDD of an existing customer is found unsatisfactory, the relationship should be treated as high risk and reporting of
suspicious transaction be considered as per law and circumstances of the case.

Dormant accounts
Dormant or in-operative account means the account in which no transaction has been taken place from last one year.
For customers whose accounts are dormant or in-operative, bank may allow credit entries without changing the
dormancy status of such accounts. Debit transactions/ withdrawals shall not be allowed until the account holder
requests for activation and produces attested copy of his/her CNIC, if already not available and bank is satisfied with
CDD of the customer.
It may be noted that transactions e.g. debits under the recovery of loans and markup etc. any permissible bank
charges, government duties or levies and instruction issued under any law or from the court will not be subject to
debit or withdrawal restriction.
Dormant and inactive account shall be subjected to proper monitoring and authorization to execute any transaction
activity because of the dormant nature of the account warrants particular review or approval.

P a g e |28

Verification & authenticity of identity

While opening accounts of customers, all reasonable efforts must be made to determine the true identity of the
customer and the sources and utilizations of funds. To have a uniform procedure for CDD/ KYC Form is to be
completed by the PB / OM/ BM. For segments like Consumer and WSB; Authorized persons will incorporate
complete and fair information on this account in the BBFS.
During the course of meetings with the customer to complete the account opening formalities, they should be asked
about the type of the transactions for which the bank account would be used and any information gathered must be
recorded on the CDD / KYC Form. Any further information felt necessary and obtained during conversation with the
customer should be recorded on the CDD / KYC Form and placed on record. However, branches shall ensure that the
CNIC and the photograph are of the same person whose account is being opened with them. The particulars / CNIC of
such persons must be confirmed from NADRA in writing or through its Verisys system by the bank.
The Bank 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 shall be
the responsibility of concerned Branch / Segment for which the customer should neither be obligated nor the cost of
such verification be passed on to the customers.
In relation to above, where one or more natural persons are acting on behalf of a customer or where customer is
legal person, bank shall identify the natural persons who act on behalf of the customer and verify the identity of such
persons. Authority of such person acting on behalf of a customer shall be verified through documentary evidence
including specimen signature of person so authorized.
Verification of the identity of the customers and beneficial owners are to be completed before establishment of
business relationship including verification of Smart Card/CNIC/NICOP/POC from NADRA for customers under
these regulations.

Documentation Requirement
All reasonable efforts shall be made to determine true identity of every prospective customer. For this purpose,
minimum set of documents given at Appendix - A along with those mentioned in General Banking
Manual/Instruction Circulars, must be obtained from various types of customers/ account holder(s). While opening
bank account of proprietorships, the requirements laid down for individuals at serial No. (1) of Appendix - A shall
apply except the requirement mentioned at No. (3) of the appendix. Extra care should be exercised in view of the
fact that constituent documents are not available in such cases to confirm existence or otherwise of the proprietorships.

MISYS Support
To meet with regulatory requirement I.T. has rolled out AIM/CIM fields/ data structure in MISYS (Appendix- I). The
main purpose is to record the requisite information and to have system generated customer KYC, AOF features and risk
rating profile as and when required.
CAO should ensure that at the time of Account opening, no field related to customer information/KYC/transaction
profile is left blank as appearing in ECI option.

P a g e |29

Allied Issues

P a g e |30

Review of Products and services

Prior to initiation of any new product or services it should be ensured by the concerned segment that consideration is
given in identifying and assessing ML/FT risks that may arise in relation to new products, services, business practices
and delivery mechanisms. Also, existing products and services are to be reviewed periodically in the light of revised
AML/CFT regulations and establish a practice to review products and services on on-going basis, specifically after any
changes in regulations.

Record Retention
Documents and records on transaction (domestic and international) including any working done in relation to those
transactions shall be retained for a minimum period of ten years from completion of the transaction. Filing and storage
shall be done in a manner suitable for speedy retrievals of every individual transaction. The transaction record may be
maintained in both hard and soft copy (like scanning or electronic form or microfilm) so as the same could be retrieved
upon, when necessary, if required by any court of law or authorized Law Enforcement Agencies for review or as an
evidence for prosecution of criminal activity admissible in a court of law.
Record related to transactions/customers/accounts involved in litigation or required by court or other competent
authority is to be retained till such time the case is settled or the bank is advised/permitted to destroy the records.
Banks shall 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.
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
Record of Identification data like Account opening form, identification documents, KYC Forms, verification
documents and other documents related to customer relationship along with internal correspondence and account files
shall be maintained for at least ten years after the business relationship is ended as required by applicable regulations.
The documents shall be maintained in originals or copies with banks attestation.

Training and Awareness

HR, Learning and Organizational Development Unit shall arrange periodical programs at all critical centers to impart
appropriate training on all matters pertaining to ML and TF with special emphasis on up-gradation of staff skillset for
AO, CDD, EDD and other KYC dimensions to keep banks associates updated with the latest development, ML and
FT techniques, methods and trends. Method of analyzing abnormal/out of pattern transactions and alert generation for
possible reposting of suspicious transaction should be a focal point in the training.
In this regard, Computer Based Training software has been launched in order to train bank staff with relevant skills and
knowledge according to their respective roles and responsibilities and to test their competency levels on rules and
regulations.

Certification
All associates shall be required to read and understand this policy and are aware of their obligations. Branches and
respective segments will maintain proper record to that effect. In this connection, Quarterly Compliance Review
Checklist submitted by the branches will bear certification that KYC, AML/TF measures are complied in letter and
spirit.

P a g e |31

Appendices

P a g e |32

Appendix - A
Documents to be obtained from various types of Customers / Account Holder
Serial
No.

Category of Account

Minimum Documentary Requirement

(i)

Attested photocopy of one of the following valid identity documents by

a gazetted officer / Nazim / Administrator or an officer of the bank
i) Computerized National Identity Card* (CNIC)
ii) SMART National ID Card
iii) National Identity Card for Overseas Pakistani (NICOP)
iv) Pakistan Origin Card (POC)
v) Alien Registration Card (ARC)
vi) Passport; having valid visa on it or any other proof of legal stay
along with passport (foreign national individuals only)

(ii) In case the CNIC does not contain a photograph, the bank should also
obtain, in addition to CNIC, any other document such as driving
license etc. that contains a photograph. However, if the individual does
not have any other valid document which bears photograph, following
documents should be obtained:
i)

1.

Individual

A copy of the photograph duly attested by gazetted officer / Nazim

/ Administrator / Bank Officer.
ii) A copy of CNIC without photograph duly attested by the same
person who attested the copy of photograph as per Sr. No. (i)
above.
iii) A confirmation in writing to the effect that the individual have no
other document bearing photograph.
Bank shall ensure that the CNIC and the photograph are of the same person
whose account is being opened with them. The particulars / CNIC of such
persons must be confirmed from NADRA in writing or through its Verisys
system by the bank.
(iii) In case of expired CNIC, account may be opened on the basis of
attested copies of NADRA receipt / Token and expired CNIC.
However, this need to be ensured that renewed CNIC of the customer
is collected from the customer within 3 months from date of opening of
account.
(iv) 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.
(v) In case of illiterate person or individual having shaky/immature
signatures, a passport size photograph of the new account holder
besides taking his right and left thumb impression on the specimen
signature card.
(vi) Declaration of Beneficial Ownership should be obtained from
customer.
(vii) If the customer is other than Beneficial Owner then complete data
(name, address, date of birth, nationality, country of domicile, etc.)
should be obtained.

P a g e |33

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

proprietor.
(ii) Registration certificate for registered concerns.
2.

(iii) Sales tax registration or NTN, wherever applicable.

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

Sole Proprietors

(v) Declaration of sole proprietorship on business letter head.

(vi) Account opening request on business letter head.
(i)

Attested photocopy of identity documents as per Sr. No. 1 above of all

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 should be clearly
mentioned on the Account Opening Form.
3.

Partnership

(iv) Authority letter, in original, in favor of the person authorized to operate

on the account of the firm.
(v)

Declaration of Beneficial Ownership should be obtained from

customer.

(vi) If the customer is other than Beneficial Owner then complete data
(name, address, date of birth, nationality, country of domicile, etc)
should be obtained.
(vii) Always check for sleeping Partners in the firm.
i)

Certified copies of:

(a) Resolution* of Board of Directors for opening of account
specifying the person(s) authorized to operate the company account.
(b) Memorandum and Articles of Association.
(c) Certificate of Incorporation.
(d) Certificate of Commencement of Business (where applicable).
(e) List of Directors on Form A / Form B issued under Companies
ordinance 1984, as applicable and
(f) Form 29, where applicable

4.

Limited Companies
Corporations

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 20% or above

stake (10% or above in case of EDD) in an entity, identification and
verification of such natural persons.
iv)

v)
vi)

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.
Declaration of Beneficial Ownership should be obtained from
customer.
If the customer is other than Beneficial Owner then complete data
(name, address, date of birth, nationality, country of domicile, etc.)
should be obtained.

P a g e |34

5.

(i)
(ii)

A copy of permission letter from Board of Investment.

Photocopies of valid passports of all the signatories of account.

(i)

Certified copies of

Branch Office / Liaison

Office
of
Foreign (iii) List of directors on company letter head or prescribed format under
relevant laws/regulations.
Companies
(iv) A Letter from Principal Office of the entity authorizing the person(s) to
open and operate the account.

(a) Certificate of Registration/Instrument of Trust

(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) Obtain declaration from Governing Body / Board of Trustees /
Executive Committee / Sponsors on ultimate control, purpose and
source of funds etc.
6.

Trust, Clubs, Societies

and Associations etc.**

(v) Obtain declaration from Governing Body / Board of Trustees /

Executive Committee / Sponsors mentioning that when any change
takes place in control or ownership or persons authorized to operate on
the account, the banker will be informed immediately
(i)

Declaration of Beneficial Ownership should be obtained from

customer.

(ii) If the customer is other than Beneficial Owner then complete data
(name, address, date of birth, nationality, country of domicile, etc.)
should be obtained.
(iii) Always check for family members involve.
(iv) Declaration of Beneficial Ownership should be obtained from
customer.
(v) If the customer is other than Beneficial Owner then complete data
(name, address, date of birth, nationality, country of domicile, etc.)
should be obtained.
(i)

Certified copies of
(a) Registration documents/certificate
(b) By-laws/Rules & Regulations

7.

NGOs / NPOs / Charities

(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) Obtain declaration from Governing Body / Board of Trustees /
Executive Committee / Sponsors on ultimate control, purpose and
source of funds etc.
(iv) Obtain declaration from Governing Body / Board of Trustees /
Executive Committee / Sponsors mentioning that when any change

P a g e |35

takes place in control or ownership or persons authorized to operate on

the account, the banker will be informed immediately
(v) 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.
(vi) 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.
(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.
8.

(iii) The relevant documents/papers from Sr. No. 2 to 7, if agent or the

principal is not a natural person.

Agent Accounts

(iv) Declaration of Beneficial Ownership should be obtained from

customer.
(v) If the customer is other than Beneficial Owner then complete data
(name, address, date of birth, nationality, country of domicile, etc.)
should be obtained.

9.

Executors
Administrators

and

(i)

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

(i)

10.

Minor Accounts

11.

(iii) Establish, by appropriate means, the sources of wealth or beneficial

ownership of funds, as appropriate; including Banks own assessment
to this effect
(iv) If the customer is other than Beneficial Owner then complete data
(name, address, date of birth, nationality, country of domicile, etc.)
should be obtained.

(ii)
Government Accounts

Relationship should be established and or maintained with the approval

of senior management including when an existing customer becomes
holder of public or high profile position.

(ii) Appropriate risk management systems to determine whether a potential

customer, a customer or the beneficial owner is a politically exposed
person/ holder of public or high profile position

(i)

12.

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.
(i)

Politically
Exposed
Person
/
Customer
Holding Public / High
Profile Position

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

Executor/Administrator.

Banks shall ensure that government accounts are not opened in the
personal names of the government official(s).
Any such 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 Provincial or Local
Government.

P a g e |36

(iii) In case of autonomous entities and Armed Forces including their allied
offices, account may be opened on the basis of special resolution /
authority from the concerned administrative department or highest
executive committee/management committee of that entity duly
endorsed by their respective unit of finance. Rules, regulations or
procedures prescribed in the governing laws of such entities relating to
opening and maintaining of their bank accounts shall also be taken in
account prior to establishment of relationship.
(i)

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

housewife

(ii) Obtain self-declaration for source of funds and beneficial ownership of

funds
13.

Housewife Accounts

(iii) Obtain and update details of fund providers along with customers
profile
(iv) Identify and verify funds providers if monthly transaction turnover (as
per KYC) exceeds Rs. 0.5 Million or equivalent.
(v) If the customer is other than Beneficial Owner then complete data
(name, address, date of birth, nationality, country of domicile, etc.)
should be obtained.
(i) Photocopy of identity document as per Sr. No. 1 above of the
customer

14.

Landlord / Agriculturist
Accounts

(ii) Copy of either Passbook / Fard Document / Jamabandi / Khasra

Girdwari to be obtained, where applicable.
(iii) Obtain self-declaration for source of funds and beneficial
ownership of funds
(iv) If the customer is other than Beneficial Owner then complete data
(name, address, date of birth, nationality, country of domicile, etc.)
should be obtained

* 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/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.
** Bank should 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 the condition that all other requirements laid down under
AML/CFT Regulation R-1 shall be complied with in letter and spirit.
Agriculture Pass Book means a document which confirms land ownership of the farmers and it is issued by the
concerned official from Revenue Records of the Provincial Governments/District/City Governments. It contains all
revenue records and gives details of Ownership of Land with address, exact location of the land, Khewat, Khatooni
& Khasra Number, Produce Index Units (PIU) Value & Market Value of the land, mutation / transferred, loan
obtained/repaid, the name of mortgagee etc. All entries in the said Pass-book are made & authenticated as per
provisions contained in Agriculture, Commercial and Industrial Purposes Act 1973 by the competent authority of
the Revenue Department.

P a g e |37

Fard: A document
the books of patwari

showing

details

of

ownership

about

piece

of

land

as

per

in

Girdawari is the record of land cultivation. It records the crop and ownership of the crop. The record is maintained
by the Patwari
Jamabandi meaning "rights of records" and refers to land records i.e. a document prepared as part of record-of-right
of all persons owning land in a village according to Punjab Land Record Manual.

P a g e |38

Appendix - B
Examples or Characteristics of Suspicious Transactions (Red Alerts)
That May Require for Increased Scrutiny for AML/CFT Purposes
The above Regulations provide examples of potential suspicious transactions for both ML and TF. The lists of
situations attached are intended mainly as a means of highlighting the basic ways in which money may be laundered.
These lists may help recognize in possible ML and TF schemes.
While each individual situation may not be sufficient to suggest that ML or a criminal activity is taking place, a
combination of such situations may be indicative of such a transaction. A customers declaration(s) regarding the
background of such transactions should be checked for plausibility. Not every explanation offered by the customer
can be accepted without additional scrutiny. Closer scrutiny should help to determine whether the activity is
suspicious or one for which there does not appear to be a reasonable business or legal purpose.
It is justifiable to suspect any customer who is reluctant to provide normal information and documents required
routinely by bank in the course of the business relationship. Branches/Departments should pay attention to
customers who provide minimal, false or misleading information or, when applying to open an account, provide
information that is difficult or expensive to verify.

POTENTIAL TRANSACTIONS THAT POSE SUSPICIONS - I

Transaction that do not make economic sense
1.
2.
3.
4.
5.
6.
7.

Transaction in which assets are withdrawn immediately after being deposited unless customers business
nature allow it.
Transaction that cannot be reconciled with the usual business activities of the customer.
Transactions which result in the intensive use of what was previously a relatively inactive account
without any plausible reason.
Provision of bank guarantees or indemnities as collateral for loans between third parties that are not in
conformity with market conditions
Unexpected repayment of an overdue credit without any plausible explanation.
Back to back loans without any identifiable and legally admissible purpose.
Persons involved in currency transactions share an address or phone number, particularly when the
address is also a business location or does not seem to correspond to the stated occupation (e.g. student,
unemployed, or self-employed);

Transaction inconsistent with customer business

8.
9.
10.
11.
12.
13.

The transaction patterns of the customer business show a sudden change inconsistent with normal
activities.
A large volume of cheques, money orders or fund transfers is deposited into or purchased through an
account when the nature of customer business does not allow it.
A customer retail business has dramatically different patterns of deposits from similar business in the
same residing location.
Unusual transfers of funds occur among related accounts.
When Retail business or cheque-cashing customers do not ask for currency when depositing cheques, a
possibility of another source of currency.
Goods and services purchased by the business do not match with the customers stated line of business.

Transaction involving large amount of cash

14.

Exchanging large amount of small denominated noted with higher denomination.

P a g e |39

15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.

Bank account holders that purchase or sell foreign currencies in substantial amounts by cash settlement.
Frequent withdrawal of large cash amount by means of cheques and travelers cheques.
Frequent withdrawal of cash amounts that do not justify the customer's business activity.
Large cash withdrawals from an active/inactive account which just received an unexpected credit from
abroad.
Company transactions, both deposits and withdrawals that are denominated by unusually large amounts
of cash, rather than ways of debit and credits.
Depositing cash by means of numerous credit slips by a customer such to show that deposit amount is not
substantial.
Deposit of unusually large amounts of cash by a customer to cover requests for bank drafts, money
transfer etc.
Customers whose deposits contain counterfeit notes or forged instruments.
Customers making large and frequent cash deposits by cheques withdrawn on accounts that are not
normally associated with their businesses.
Customers who use separate tellers to conduct large cash transactions or foreign exchange transactions.
The size and frequency of currency deposits increases rapidly with no corresponding increase in noncurrency deposits.

Transactions involving structuring to avoid reporting or identification requirement

26.
27.
28.
29.

Customer makes currency deposit or withdrawal transactions so that each is less than specified threshold.
Customer purchases bank cheques, money order or travelers cheques with currency in amounts less than
the specified amount to avoid identification.
Deposits are structured through multiple branches of the same financial institution or by groups of people.
Person uses ATM to make several deposits below a specified threshold.

Transactions involving transfers to and from abroad

30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.

Transfer of money abroad by an interim customer in the absence of any legitimate reason.
A customer which appears to have accounts with several financial institutions in the same locality for
onward transmission of the funds elsewhere.
Repeated transfers of large amounts of money abroad accompanied by the instruction to pay the
beneficiary in cash.
Large and regular payments that cannot be clearly identified as bonafide transactions, from and to
countries associated with criminal conduct.
Increase in cash deposits by a customer without apparent cause if such deposits are transferred within a
short period of time not associated with customer.
Large balances not consistent with the known turnover of customer's business, and subsequent transfer to
account(s) held overseas.
Cash payments remitted to a single account by a large number of different persons without any adequate
explanation.
Funds transfer occurs to or from a financial secrecy haven without a business reason or when activity is
inconsistent with customer's business or history.
Incoming transfers of funds and deposits through cheques and money orders are immediately wired to
another city or country in a manner inconsistent with customer's business activity.
Incoming funds transfer with limited content and lack of remitter's information.
Unusually large number and variety of beneficiaries are receiving funds transfers from one company

Investment related transactions

41.
42.
43.

Purchasing of securities to held in safe custody which does not appear appropriate given the customer's
standing.
Requests by a customer for investment management services where the source of funds is unclear.
Larger or unusual settlements of securities transactions in cash form.

P a g e |40

44.

Buying and selling of security with no discernible purpose or in circumstances which appear unusual.

Transactions involving unidentified parties

45.
46.
47.
48.
49.

Provision of collateral by way of pledge or guarantee without any discernible plausible reason by third
parties.
Transfer of funds to another financial institution without indication of the beneficiary.
Payment orders with inaccurate information concerning the person placing the orders.
Use of fictitious names and numbered accounts for effecting commercial transactions.
Customers who wish to maintain trustee or clients' accounts that do not appear consistent with their type
of business.

Transactions involving embassy and foreign consulate accounts

50.
51.
52.
53.

Official embassy business is conducted through personal accounts.

Account activity is not consistent with the purpose of the account.
Accounts are funded through substantial currency transactions.
Accounts directly fund personal expenses of foreign nationals without appropriate controls i.e. account
should be limited to the specified purpose and nothing else.

Miscellaneous Transactions
54.
55.
56.
57.
58.
59.
60.
61.

Purchase or sale of large amounts of precious metals by an interim customer.

Purchase of bank cheques on a large scale by an interim customer.
Extensive or increased use of safe deposit facilities that do not appear to be justified by the customer's
personal or business activities.
Unusual traffic patterns in the safe deposit box area or unusual use of safe custody accounts.
Loans are made for or paid on behalf of a third party with no reasonable explanation.
Suspicious movements of funds occur from one financial institution to another and then funds are moved
back to the first financial institution.
Purchases of real estate on price higher that the determinable value.
A series of purchases of real estate within relatively short span of time.

Potential Indicators of money laundering/ terrorist financing - II

Activity inconsistent with customer business
62.
63.
64.
65.
66.

Funds are generated by business or business owned person from high risk countries.
Stated occupation of the customer is not commensurate with the type and level of activity.
Person involved in currency transactions share an address or phone number does not seem to correspond
to the stated occupation.
In Non profit or charitable organizations, financial transactions occur for which there appears to be no
logical economic purpose or there is no link between the organization and the other third parties in the
transaction.
A safe deposit box is opened on behalf of the business entity when the business activity is unknown and
does not justify the use of safe deposit box.

Funds Transfers
67.
68.
69.
70.

Large number of incoming or outgoing funds transfers takes place through a business account and there is
no logical business or economic purpose for the transfers.
Fund transfers are executed in small amounts in a apparent effect to avoid triggering identification or
reporting requirements.
Funds transfers do not include information on the originator, or the person on whose behalf the
transaction is conducted.
Multiple personal and business accounts or the accounts of nonprofit organizations or charities are used to
collect and funnel funds to number of foreign beneficiaries.

P a g e |41

71.

Foreign Exchange transactions are performed on behalf of customer followed by fund transfers to
locations having no apparent business connection with customer or to high risk countries.

Financial transactions that may require increased scrutiny - III

Accounts
72.
73.
74.
75.
76.
77.
78.
79.
80.

Accounts that receive periodical deposits and are dormant at other periods.
A dormant account containing a minimal balance suddenly receives deposits followed by daily cash
withdrawals till the sum has been removed.
When opening an account, the customer refuses to provide information required by the financial
institution.
An account which several persons have signature authority yet these persons have no relation among each
other.
Account opened by entity that has same address as other entities but for which the same persons have
signature authority when there is no economic or legal reason for such an arrangement.
An account opened of a recently formed legal entity which deposits a high expected level of deposits in
comparison with the promoter of the entity.
Multiple accounts held by the same customer make numerous small deposits which are not commensurate
with the expected income of the customer.
An account opened in the name of legal entity that engaged in activities of an association or foundation
whose aims are related to claims of terrorist organizations.
An account opened in the name of legal entity that engaged in activities of an association or foundation
which may be linked to terrorist organizations that show movements of funds above the expected level of
income.

Deposits and Withdrawals

81.
82.
83.
84.
85.
86.
87.

Deposits for a business entity in combinations of monetary instruments.

Large cash withdrawals made from a business account not normally associated with cash transaction.
Large cash deposits made to the account of an individual or legal entity when business activity would
normally be conducted in cheques or other payments.
Mixing of cash deposits and monetary instruments in an account in a way that transactions do not appear
to have any relations with the normal use of account.
Multiple transactions carried out on the same day at the same branch using different tellers.
The structuring of deposits through multiple branches by groups who enter a single branch at the same
time.
The deposit or withdrawal of cash in amounts which fall consistently below the specified thresholds.

Transactions linked to locations of concern

88.
89.
90.
91.

Transactions involving foreign currency exchanges that are followed within a short time by wire transfers
to high risk countries (designated by FATF).
Deposits are followed within a short time by wire transfers of funds, particularly to or through a location
of specific concern.
The opening of accounts of financial institutions from locations of high risk concern.
Sending or receiving funds by international transfers from/or to locations of specific concern.

Entity wide approach to identify Suspicious Transactions

The listed below only provides a few examples of the most basic way by which money can entity wide be laundered
and activities which could create suspicion. In your day to day business there may be a number of such critical areas
which would require your vigilance and best sense of judgment, identification of any of the types of transaction does
not automatically establish suspicion, but should prompt enquiry and consideration of the circumstances.

P a g e |42

International Banking
Customers who make regular and/ or large remittances by demand drafts, SWIFT etc that cannot be clearly
identified as bona fide transactions to, or receive regular and / or large remittances by demand drafts SWIFT, etc
from countries which are commonly associated with the production, processing or marketing of drugs, countries
that have terrorist organization and are known to be countries that support strict banking secrecy.
Build up excessive balances, not consistent with the known turn over of the customers business and subsequent
transfer to accounts held abroad.

Trade Finance
Using Proforma invoice without description of goods and apparent reticence to provide description of goods and
appropriate supporting document.
Documentation is restricted to a simple receipt, with no documentation confirming that movement of goods has
taken place and an apparent reticence to provide full documentation
Using an advance payment guarantee and not providing other documentation, such as underlying contract.
Assignment of proceed to a third party that is apparently not connected with the underlying transaction.
Transfer between the same parties where the beneficiary / applicants are same body and it is a difficult to
confirm the existence of any underlying transaction.
Shipment of goods which are out of line with the normal import/ export of goods associated with the countries
involved whether out of line by volume and / or type of goods.
Use of letter of credit and other means of trade finance to move money between countries, where such trade is
not consistent with the customers usual business.

Use of Bank Accounts and Payment Methods

Customers who wish to maintain a number of Third Party Mandates which do not appear consistent with the type
of business.
Any company whose account shows virtually no normal banking or related activities but is used to receive or pay
large sums which have no obvious purpose or relationship to the account holder and/or their business e.g. a
substantial increase in turnover on account.
Customer having a large number of accounts with the same financial institution, frequent transfers between
different accounts or exaggeratedly high liquidity.
Reluctance to provide normal information when applying to open an account, providing minimal or fictitious
information or information that is difficult to verify.
Customers who appear to have accounts with several financial institutions within the some locality.
Matching of payments out with credits paid in by cash on the same or previous day.
Paying in "large" third party cheques endorsed in favor of the customer.
Large cash withdrawals from a previously dormant or inactive account or from an account which has just
received an unexpected large credit from abroad.
Companies' representatives avoiding contact with the bank.

P a g e |43

Customers who have numerous accounts and pay in amounts of cash to each of them in circumstances in which
the total of credits would be a large amount.
Customers who decline to provide information that in normal circumstances would make the customer eligible
for credit or for other banking services that would be regarded as valuable.
Large number of individuals making payments into the same account without an adequate explanation.
High velocity of funds through an account, i.e. low beginning and ending daily balances, which do not reflect
large volume of funds flowing through an account.
Incoming funds transfers with limited contents and lack of remitters information.
Use of unusual payment routes.
Multiple depositors using a single account.

Financing profile related transactions

Customers who repay problem loans unexpectedly without having or disclosing ostensible resources.
Requests to borrow against assets held by a financial institution or a third party where the origin of the assets is
not known or the assets are inconsistent with the customer's standing.
Request by a customer for finance where the course of the customer's financial contribution to a deal is unclear
particularly where property is involved.
A loan without apparent justification or where the conditions are abnormal.
Loans made against offshore/external bank guarantees.
Guarantee deposits made by third parties, who do not maintain close business relationships with the customer.
The presentation of a bank guarantee for abnormally large amounts.

Cash Transactions
Unusually large cash deposits made by an individual or company whose business activities would normally be
generated by cheques etc.
Frequent withdrawals of large cash amounts that do not appear to be justified by the customers business activity.
Substantial increase in cash deposits of any individual or business without apparent cause especially if such
deposits are subsequently transferred within a short period out of the account to a destination not normally
associated with the customer.
Customers who deposit cash by means of numerous credit slips so that the total of each individual deposit is
insignificant but the total of all credits is significant.
Company accounts whose transactions, both deposit and withdrawals are denominated by cash rather than by
cheques etc.
Customers who constantly pay in deposits of cash to cover requests for remittances without an apparent reason.
Customers who seek to exchange large quantities of low denomination notes for those of a higher denomination.
Customers transferring large sums of money to overseas locations or large sums of money transferred from
overseas locations.

Customer Behavior
A "too good to be true" customer - is there a rational business reason for them using our services.

P a g e |44

A customer who does not make effective use of cost efficient services.
A customer who deliberately complicates a series of transactions.
A customer who deliberately avoids direct contact with the bank.
A customer who has no obvious reason for conducting an international transaction with the other country
involved.

Other Matters
. Extensive or increased usage of safe deposit facilities that do not appear to be justified in keeping with customers
personal or business activities profile as per KYC.
Suspicious movements of funds occur from one financial institution to another, and then funds are moved back to
the first financial institution.
The stated occupation of the customer is not commensurate with the type or level of activity.
In non profit or charitable organizations, financial transactions for which there appears to be no logical economic
purpose or in which there appears to be no link between the stated activity of the organization and the other
parties in the transaction.

P a g e |45

Appendix - C
Confidential
Bank Use Only
Customer Due Diligence Risk Profile
Individual / salaried Individuals
Branch Name
:
_________________________
Date: _______________
(Required to be filled by the Branch Manager / Designee for every New Account / Customer Addition)
Customer Account No:

1-Customer Identification
Customer Residence Country:

Pakistan

Others (Please Specify):______________________

PEP:

Yes

No

(In case of Yes attached details)

2-Salaried Customer
Name of Employer: ____________________________________________________________
Designation: _______________________________ Nature of Job: _________________________
Residential Address: ____________________________________________________________

____________________________________________________________
____________________________________________________________
Residential Address Verification:
No. of Years in Job:

Utility Bill

Up to 1 year

Others: _______________________

1-3 Years

4-5 Years

5-10 Years

More than 10 Years

Location of Employer:

Others (Please Specify) _____________________________

Pakistan

Indicate Remittances are expected from any

Countries: Yes No

(If Yes then Specify the Names of Countries: ______________________________________________________)

3-Risk Assessment of Account:

High

Low

Prepared by: Branch Manager

Name:

_________________________________________________

Signature:

_________________________________________________

Approved by: Area Manager

Name of Designee: _________________________________________________
Signature:

_________________________________________________
P a g e |46

Appendix - D
Confidential
Bank Use Only
Customer Due Diligence Risk Profile
Corporate / Retail Business
Branch Name
:
_________________________
Date
:
__________________
(Required to be filled by the Branch Manager / Designee for every New Account / Customer Addition)
Customer Account No:

1-Customer Identification
Customer Residence Country:

Pakistan

Others (Please Specify):______________________

PEP:

Yes

No

(In case of Yes attached details)

2-Business Details
Entity Name

Permanent Address:

____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________

Address Verification:
Products of Business:

Utility Bill

Others: ________________________

____________________________________________________________
____________________________________________________________

Business Ownership:

Owned

Family Business

NGO

Trust

Societies

Partnership

NPO

Exchange Company

Partner

Charities

Director/CEO
Association

Clubs

Sole-Proprietor

Others (Except Company / Government Organization) __________________

Beneficial Ownership:
Customer
Other Than Customer
(Note: If Beneficial Owner is other than customer then obtain CNIC, Place of Birth, Country of Origin, Address,
Nationality)
Customer Relationship with Beneficial Owner: _______________________________
Beneficial Owner is PEP:

Yes

No

(In case of Yes attached details)

No. of Years in Business :

Up to 1 year

1-3 Years

4-5 Years

5-10 Years

More than 10 Years

P a g e |47

Location of Business:
Business Associates:

Pakistan
Yes

Others (Please Specify):______________________

No

(If customer owns more than one business)

Name of Business:

____________________________________________________________

Address of Business:

____________________________________________________________
____________________________________________________________

Business Products:

____________________________________________________________

Nature of Business:

_________________________________________________________

Main Geographical Area of Business Activity:

Pakistan

Others (Specify Countries):___________________________________

Indicate Transactions expected from any Countries:

Yes

No

(If Yes then Specify the Names of Countries: ______________________________________________________)

3-Risk Assessment of Account:

High

Low

4-ASSESSMENT OF EXCHANGE CO. RELIGIOUS INST. & PEPS A/C AS HIGH RISK
Please mark the risk level of these accounts as High Risk

High

5-PLEASE OBTAIN APPROVAL FROM SENIOR MANAGEMENT BEFORE OPENING PEP

A/Cs.
Prepared by: Branch Manager
Name:

_________________________________________________

Signature:

_________________________________________________

Approved by: Area Manager

Name:

_________________________________________________

Signature:

_________________________________________________

P a g e |48

Appendix - E
CUSTOMER RISK PROFILING (CRP) FORM
Risk
Determinants

Customers

Product &
Services

Channels

Locations

Others

Risk Variables/ Determinants

Assigned
Risk
Weight

Exceptions in getting KYC related information from customer

High net worth customer or high value transactions
Politically exposed person, its close associate or family member
Relatively complex control/ ownership structure
Reliability of verification measures
Unclear source of funds or income from undocumented sources
Beneficial ownership of funds may not belong to customer
Use of products & services which entail non face-to-face conduct
Customer seeks private banking or other riskier services
Excessive use of funds remitting instruments
Customer subscribes for International/ foreign products & services
Large wire-in/wire-out or inland online transfers
Level of cash based transactions
Element of anonymity in transactions
Customer is based or linked to High Risk Jurisdictions as per FATF
Customer is based or linked to UN Sanctioned Countries
Customer's link to offshore centers or tax heavens
Name matches with databases i-e World Check, OFAC, EU lists etc.
Transaction pattern matches with SBP's examples on Red Alerts or guidance
provided by FMU on ML/FT typologies
Any other risk factors etc
Total Risk Score
Please note that risk weight assigned as above have been selected according to
prevalence of risk i.e.

Scale

Never = 0
Low = 5
Moderate = 10
High = 20

Benchmarking

Rating

Risk Score Range

Below 50
51 80
81 110
111 140
141 170
170 & above

1
2
3
4
5
6
P a g e |49

Rating
12
3 4
5-6

Check

Customer Risk Profiling

Low Risk
Moderate Risk
High Risk
Customer Risk Profile is re-considered in line with pre-defined criteria of SBP or
Bank's own Internal Risk Assessment

Prepared by:

Reviewed by:

Approved by:

P a g e |50

Appendix - F
CUSTOMER RISK PROFILE
ENHANCED DUE DILIGENCE
BUSINESS RELATIONSHIP INVOLVING HIGH RISK
Name of Branch:

________________________________

Date: ___________________

Title of Account:

_____________________________________________________________________

Account Number: _____________________________________________________________________

Please Mark () in the following relevant boxes that made this account as High Risk account.
S.
No.
1.

Remittances from Risk countries.

2.

Remittances to Risk Countries.

3.

Country of Origin for Foreign Nationals residing in Pakistan.

4.

Country of Residence for Non-Residents Customers.

5.
6.

Nature of Business such as Precious Metal, Precious Stones, Property

Dealer, Automobile Dealer, etc.
Cash Involve in business more than 1 M.

7.

Business location other than Pakistan.

8.

Prime customers of Clients business.

9.

Nature of Business of Prime Customers of Client business.

10.

Geographical coverage of business activities.

11.

Business products of client.

12.

Risk Economic activities such as Exchange Co.

13.

Welfare Organizations such as Trusts, NPOs, NGOs, Charities, Religious

Institution, etc. and their funding from Money Laundering Countries.
Customers Country of Origin providing funding to Trust, NPOs, NGOs,
Charities, Association of Persons, etc.
Relationship with Politically Exposed Person / Customer Holding Public /
High Profile Position.
Customer is Politically Exposed Person / Customer Holding Public / High
Profile Position.

14.
15.
16.

High Risk Monitoring Criteria

Risk
Points
(0 or 2)

Points
Obtained

Total Risk

P a g e |51

Decision Tool: (0=Normal, 1=low sensitivity to Risk & 2=High Sensitivity to Risk)
1.
Reason for account getting High Risk Customers.

2.

Means of Information provided above: (Please mark as much as relevant)

Call to Customer

Review of Account Statement

Internal Knowledge of Customer Business

3.

Review of Transaction

Other Sources (Please Specify)

Conclusion
Based on our enhanced due diligence of the subject account we conclude that:
The conduct of account is satisfactory with no material High Risk Category.
The account has High Risk Category.

Prepared By:

Reviewed By:

OPERATIONS MANAGER
Reviewed / Approved By:

BRANCH MANAGER
Approved By:

REGIONAL HEAD

GHBB (If Applicable)

P a g e |52

Appendix - G
Customer Transaction Profile
Confidential Information
Branch Name
:
_________________________
Date
:
__________________
(Required to be filled by the Branch Manager / Designee for every New Account / Customer Addition)
Customer Account No:

Any substantial change in Transaction of business / Type of business:

Yes

No

If Yes then Specify that change: _________________________________________________________________

_________________________________________________________________________________________
_________________________________________________________________________________________
Customer Profile (Transaction Activity/Customer Snapshot)
i) Expected Monthly Number of Transactions:
Personal Account
Business Account
1-10
1-10
10-15
11-30
15-20
31-50
21-30
51-100
31-90
>100
91-120
>120

ii) Expected Monthly Volume of Transactions (Credit)

Personal Account
Business Account
0.1 0.5 M
15M
0.6 3 M
6 10 M
35M
11 15 M
6 10 M
16 25 M
11 25 M
26 75 M
26 50 M
75 100 M
> 50 M
> 10 M

iii) Source of funds (Tick as many as Relevant)

iv) Expected Monthly Volume of Transactions (Cash)

Personal Account

Salary
Savings / Inheritance
Remittances / Investments from Abroad
Rental Income
Investments / Real Estate / Shares
Business
Others (Please Specify)

0.1 0.5 M
0.5 1 M
15M
>5M

Business Account

0.1 0.5 M
13M
45M
5 15 M
> 15 M

v) Annual Turnover: ______________________________

Any other Comments: _________________________________________________________________________
_____________________________________________________________________________________________
Prepared By:

_________________________
(Name of PB)

_________________________
(Signature)

Reviewed By:

_________________________
(Name of OM)

_________________________
(Signature)

Approved by:
Branch Manager
Name:

_________________________________________________

Signature:

_________________________________________________

P a g e |53

Appendix - H
Suspicious Transaction Report
(Check appropriate box)
1) Date .........../......../........ dd/mm/yyyy
Initial Report

2)

PartI

Corrected Report

Supplemental Report

Reporting Financial Institution Information

3)

Name of Institution

4)

NIFT Code

5)

Address of Financial Institution

_____________________________________________________________________________________________
6)

Name of Branch where transaction/activity occurred:

7)

Branch Code

8)

Address of Branch:

_____________________________________________________________________________________________
9)

Primary Regulator
SBP

SECP

Other (Please Specify)

Reporting Officer
10)

Name

______________________________________________________________________________

11)

Designation

12)

Phone Number (s) (Include area code)

E-mail Address

13)

15)

Fax Number(s) (Include area code)

Cell Number (s)

14)
Contact for Assistance (If different from Reporting Officer)
16)

Name

______________________________________________________________________________

17)

Designation

18)

Phone Number (s) (Include area code)

19)

Fax Number(s) (Include area code)

20)

E-mail Address

21)

Cell Number (s)

P a g e |54

PartII

Suspect Information

22)

Name

23)

Father / Husbands Name

24)

Address (Permanent)

25)

Address (Present)

26)

Other Known Address

27)

Phone Number(s) - Residence (Include area code)

28)

Phone Number(s) - Office (Include area code)

29)

Fax Number(s)

30)

Cell Number(s)

31)

CNIC Number

32)
33)

_______________________________________________________________________________
_____________________________________________________________

NIC Number (in case CNIC number is not available)

________________________________________

Any other Identification Number

34)

National Tax Number (NTN), if available

________________________________________

35)

Date of Birth:

(dd/mm/yyyy)

36)

Nationality

37)

Occupation / Type of Business

38)

____ / ____ / ________

Relationship with Financial Institution

Accountholder
Other (Please Specify)

Agent
Employee
__________________________

39)

Business Relation with Suspect (if any)

40)

Is Relationship Still Maintained With the Person?

41)

In Case No, Mention Date of Termination of Relationship

42)

Capacity in which the person is performing the transactions / acts

Individual

43)

Company

Walk in Customer

Yes

No

____ / ____ / ________ (dd/mm/yyyy)

Agent

Broker

Other (Please Specify) __________________________

Identities of other persons known to be involved in reported activity

P a g e |55

PartIII
44)
45)
46)

Suspicious Transaction Information

Date of Suspicious Transaction

Amount Involved (Please specify Currency)

Suspicious Transactions:
Date

47)

____ / ____ / ________ (dd/mm/yyyy)

Amount

Description of Transaction

Brief Narrative (Reasons for Suspicion)

(Include suspicious activity information, explanation / description and background details)

48)

Characterization of Suspicious Transaction (i.e. nature of suspected predicate schedule offence)

49)

Has the transaction already been reported to any Law Enforcement Agency? If so, list the agency

a)
b)
c)
d)

PartIV

Account Information

50)
a)

Account number (s) effected, if any

b)

c)

d)

51)
a)

Account (s) opened on (dd/mm/yyyy)

b)

c)

d)

52)
a)

Current Status of the Account(s)

b)

c)

d)

53)
a)

Purpose of account (s)

c)

d)

b)

P a g e |56

54)
a)

Average Monthly Turnover

T
of acccount (s)
b)

c)

d)

55)
a)

Agg
gregate Credits / Debits for last 3 Years
b)

c)

d)

56)
a)

Peak
k Balance(s) off last 3 Years
b)

c)

d)

57)

Natu
ure of Accountt (s):

Individual
Other (Pleasee Specify)
58)

Com
mpany

Trust

__
____________
_______________

Tran
nsaction Mean / Method

Cash

Cheque

Rem
mittance

Pay Order

Credit Card

Debit Card

Dep osits

Fixed Depposits

Draft

Transfer

LC

Online Traansfer

Other (Pleasee Specify)

59)

Partnership
P

__
____________
_______________

Copies of Followin
ng Documents are attached:
Customer Id
dentification documents
d
/ Account
A
Open
ning Form
KYC / CDD of Customer or
o Suspect
ments obtained at the time of opening of acccount / relationnship
Other Docum
Relevant doccuments supporrting the STR

60)

Other Relevant In
nformation (in
nformation link
ked to STR or action taken byy the reportingg entity)

(Seal & Signnature of Repoorting Officer )

P a g e |57

Appendix - I
Currency Transaction Report
(Check appropriate box)
1) Date .........../......../........ dd/mm/yyyy
Initial Report

2)

PartI

Corrected Report

Supplemental Report

Person(s) Involved in Transaction(s)

Section A --Person(s) on Whose Behalf Transaction(s) Is Conducted

3)
4)

Name

_______________________________________________________________________________

Father / Husbands Name

_____________________________________________________________

5)

Address (Permanent)

6)

Address (Present)

7)

Other Known Address

8)

Phone Number(s) - Residence (Include area code)

9)

Phone Number(s) - Office (Include area code)

10)

Fax Number(s)

11)

Cell Number(s)

12)

CNIC Number

13)
14)

NIC Number (in case CNIC number is not available)

________________________________________

Any other Identification Number

15)

National Tax Number (NTN), if available

________________________________________

16)

Date of Birth:

(dd/mm/yyyy)

17)

Nationality

18)

Occupation / Type of Business

19)

____ / ____ / ________

Relationship with Financial Institution

Customer
Other (Please Specify)

Employee

Agent

Walk in Customer

__________________________

P a g e |58

20)

Business Relation with Customer (if any)

Section B -- Individuals Conducting Transaction(s) (if other than above).

21)

Name

_______________________________________________________________________________

22)

Father / Husbands Name

_____________________________________________________________

23)

Address (Permanent)

24)

Address (Present)

25)

Contact Numbers (Include area code)

CNIC Number

26)

Any other Identification Number

27)
28)

Date of Birth:

29)

Nationality

30)

Occupation / Type of Business

31)

____ / ____ / ________

Relationship with Financial Institution

Customer

Employee

Other (Please Specify)

PartI
32)

(dd/mm/yyyy)

Agent

Walk in Customer

__________________________

Amount and Type of Transaction(s) Check all boxes that apply.

Date of Transaction:
____ / ____ / ________
(dd/mm/yyyy)
(In Case of Local Currency)
Total Cash In

33)

Total Cash Out

34)

(In Case of Local Currency)

35)

Foreign Cash In

36)

Foreign Cash Out

37)

Name of Foreign Country

38)

Negotiable Instrument(s) Purchased

39)

Negotiable Instrument(s) Cashed

40)

Currency Exchange(s)

41)

Deposit / Withdrawal

42)

Account Number(s) Affected (if any)

43)

Wire Transfer(s)

P a g e |59

44)

Others (Specify)

PartIII
45)

Financial Institution Where Transaction(s) Takes Place

Name of Institution

_____________________________________________________________________________________________
46)

NIFT Code

47)

Branch Code

48) Address of Financial Institution

_____________________________________________________________________________________________
_____________________________________________________________________________________________
49)

Name of Branch where transaction / activity occurred :

_____________________________________________________________________________________________
50)

Address of Branch:

_____________________________________________________________________________________________
_____________________________________________________________________________________________
Reporting Officer
51)

Name

52)

53)

Phone Number (s) (Include area code)

54)

E-mail Address

56)

Designation

Fax Number(s) (Include area code)

Cell Number (s)

55)
Contact Person
51)

Name

52)

Phone Number(s)

(Seal & Signature of Reporting Officer )

P a g e |60

Appendix - J
Customer Level Information
Customer Level Information:
Individual:
Item No
Field Name
1
CNIC
2
CNEX
3
ATMR
4
TAC
5
PAD1
6
PAD2
7
PAD3
8
CCTY
9
PTEH
10
PDST
11
CPRV
12
PCON
13
FHNF
14
FNHN
15
MMN
16
GNDR
17
PROF
18
OPRF
19
MOBI
20
EMAI
21
DOB
22
PLNG
23
OLNG
24
CNAT
25
ONAT
26
CRES
27
ORES
28
MRST
29
NNK
30
CNK
31
RNK
32
ENK
33
MNK
34
NOM
35
BFRM
36
DOBM
37
DOM
38
SPI1
39
SPI2
40
SPI3
41
INTN
42
INTA
43
INIC
44
INTY
45
INTM
46
CAB

Field Description
Field Length
Computerized NIC Number
13
CNIC Expiry Date
6
ATM Card Required
1
Title to Appear on ATM Card
17
Permanent Address-1
35
Permanent Address-2
35
Permanent Address-3
35
Customer City
3
Permanent Tehsil
20
Permanent District
20
Customer Province
2
Permanent Country
25
Father/Husband
1
Father's Name/Husband's Name
35
Mother's Maiden Name
35
Gender
1
Profession/Occupation
1
If Other(Profession)
20
Mobile Number
15
Email Address
35
Date of Birth
6
Preferred Language
1
If Other(Language)
10
Nationality
1
If Other(Nationality)
15
Country of Residence
1
If Other(Country Of Residence)
15
Marital Status
1
Name of Next of Kin
35
CNIC No. of Next of Kin
13
Relationship of Next of Kin
15
Email Address of Next of Kin
35
Mobile of Next of Kin
11
Name of Minor
35
B Form No.
13
Date of Birth of Minor
6
Dt.of Attaining Maturity Minor
6
Special Instructions 1
25
Special Instructions 2
25
Special Instructions 3
25
Introducer's Name
35
Introducer's Account
20
CNIC of Introducer
13
Years-Introducer Knows Applicant
2
Months-Introducer Knows Applicant
2
Customer Approach the Bank
25

P a g e |61

47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68

KAKA
RACA
BOA
RBC
NOT
MMT
AINC
NOEM
DESG
NYS
NOJ
SOF
UMT
POA
REP
QMR
COM1
COM2
RISK
CTPR
SBPD
SBPA

Know About KASB

Reason for A/C Opening
Beneficiary of Account
Relationship of Beneficiary with Customer
Approx No of Transaction/Month
Max Value of Monthly Trans
Annual Income
Name of Employer
Title/Designation of Customer
No. of Years of Service
Nature of Job
Source of Funds
Usual Mode/Type of Transaction
Purpose of Account
Personal Real Estate Property (Y/N)
Quarterly Monitoring Requirement (Y/N)
Comments 1
Comments 2
Risk Category
Customer Transaction Profile.
SBP Classification - Deposits
SBP Classification Advances

Corporate:
Item No
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27

Field Name
NTN
NOB
DOE
DOI
PRMA
CCTY
CPRV
CTTL
CP1D
CP1N
CP1T
CP2D
CP2N
CP2T
CP3D
CP3N
CP3T
CP4D
CP4N
CP4T
SPI1
SPI2
SPI3
INTN
INIC
INTA
MINT

Field Description
National Tax No
Nature of Business
Date of Establishment
Date of Incorporation
Preferred Mailing Address
Customer City
Customer Province
Title(Salutation) Customer
Contact Person 1 Designation
Contact Person 1 Name
Contact Person 1 Telephone No.
Contact Person 2 Designation
Contact Person 2 Name
Contact Person 2 Telephone No.
Contact Person 3 Designation
Contact Person 3 Name
Contact Person 3 Telephone No.
Contact Person 4 Designation
Contact Person 4 Name
Contact Person 4 Telephone No.
Special Instructions 1
Special Instructions 2
Special Instructions 3
Introducer's Name
CNIC of Introducer
Introducer's Account
Mobile of Introducer

1
1
35
15
6
21
21
25
25
2
25
35
35
25
1
1
35
35
3
2
10
10

Field Length
13
25
6
6
1
3
2
4
25
35
11
25
35
11
25
35
11
25
35
11
25
25
25
35
13
20
11

P a g e |62

28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61

INTM
INTY
EINT
CAB
KAK
RACO
COMP
OCOM
GEOA
AINC
SOF
UMT
POA
BOA
RBC
IDP
NOT
BUA
BUI
REP
MTU
YTU
QMR
COM1
COM2
COM3
PFL1
PFL2
PFL3
PFL4
PFL5
PFL6
RISK
CTPR

Months-Introducer Knows Applicant

Years-Introducer Knows Applicant
Email Address of Introducer
Customer Approach the Bank
Know About KASB
Reason - A/c opening with KASB
Parent Company / Group Name
Other Companies of The Group
Geographic Area of Activity
Annual Income
Source of Funds
Usual Mode/Type of Transaction
Purpose of Account
Beneficiary of Account
Relationship of Beneficiary with Customer
Initial Deposit
Approx No of Transaction/Month
Business Region/Area
Business Investment
Personal Real Estate Property (Y/N)
Monthly Turnover
Yearly Turnover
Quarterly Monitoring Requirement (Y/N)
Comments 1
Comments 2
Comments 3
Parameter Field 1
Parameter Field 2
Parameter Field 3
Parameter Field 4
Parameter Field 5
Parameter Field 6
Risk Category
Customer Transaction Profile.

2
2
35
25
25
25
35
25
15
21
35
35
25
35
15
21
6
25
21
1
21
21
1
35
35
35
25
10
6
6
8
10
3
2

P a g e |63

AIM Data Structure

Item No.
1
3
4
5
6
7
8
9
10
11
12
13
14
15

FieldName
TOA
2
ZDED
OINS
ALTO
SUBB
JOIN
JA1N
J1NI
JA2N
J2NI
JA3N
J3NI
JA4N
J4NI

Field Description
Field Length
Title of Account
35
HLDM Hold Mail
1
Zakat Deduction
1
Operating Instructions
35
Alternate A/C Officer
5
Sub-Branch
4
Joint A/C
1
Joint A/C Holder-1 Name
35
Joint A/C Holder-1 CNIC
13
Joint A/C Holder-2 Name
35
Joint A/C Holder-2 CNIC
13
Joint A/C Holder-3 Name
35
Joint A/C Holder-3 CNIC
13
Joint A/C Holder-4 Name
35
Joint A/C Holder-4 CNIC
13

P a g e |64

Appendix K
Acronyms
AIM
AML
AOF
APG
Associate
BM
BPRD
CAO
CDD
CEO
CIM
COD
CTP
CTRs
DFIs
DG
E banking
EDD
FATF
FMU
GOP
KYC
MIS
ML
MMU
MSB
NEC
NGO
NPO
OFAC
OM
PB
PEP
PR
SBP
SDD
SDNs
STRs
TF
WSB

Account Information
Anti Money Laundering
Account Opening Form
Asia/Pacific Group
Specially designated employee
Branch Manager
Banking Policy and Regulation Department
Centralized Account Opening
Customer Due Diligence
Chief Executive Officer
Customer Information
Centralized Operation Division
Customer Transaction Profile
Currency Transactions
Development Financial Institutions
Director General
Electronic Banking
Enhance Due Diligence
Financial Action Task Force
Financial Monitoring Unit
Government of Pakistan
Know Your Customer
Management Information System
Money Laundering
Mail Management Unit
Money Service Business
National Executive Committee
Non Government Organization
Not for profit Organization
Office of Foreign Assets Control
Operation Manager
Personal Banker
Politically Exposed Person
Prudential Regulation
State Bank of Pakistan
Simplified Due Diligence
Specially Designated Nationals
Suspicious Transactions
Terrorist Financing
Wholesale Banking

P a g e |65

Appendix L
Details of Walk-in / Online Cash Depositors
Name of Depositor:
Branch Name:
Account #:
Date of Birth:

Nationality:

Fathers Name:
Mailing Address:
Permanent Address:
Telephone (Office) #:

Telephone (Res) #:

Mobile #:
CNIC / NICOP / POC / NARA #:
Passport #:
Other Information:
Amount of Transaction
Date of Transaction

___________________________
Authorized Signatory

Signature of Customer

___________________________
Authorized Signatory

P a g e |66

Appendix M
Compliance Forum Agenda -FMU
A. STRs lack quality/completeness:
STRs either do not provide complete information or lack complete documentation, for example:
The reporting entities most of the time do not identify or mention the suspicious transactions, instead the whole
account is reported as suspicious.
The background information and brief synopsis of transactions under suspicion are generally not provided.
Instead, reporting is based on turnover alone. It would be helpful, if banks carry out their internal analysis and
share their findings with FMU.
Wherever traceable, banks can provide FMU alongwith STR the counter party details that may include Cheque
Number, Bank Name, Branch Name etc. of the identified suspicious transactions.
Sometimes, the STRs involve internal fund transfers, however, information in that respect is not provided
upfront.
Sometimes, known information is not shared in full with FMU, leading to a faulty analysis. Every single piece of
information is important in analysis and should be shared with FMU.
STRs have been reported either with no or incomplete reasons for reporting. It is imperative to provide maximum
possible information relevant to STR.
The reporting entities prefer providing the generic information instead of detailed reporting which in return
subdue the utilization of the same. For example nature of profession is usually mentioned as business / self
employed / proprietor / trader which require further probing by FMU and hence, is time consuming.
If an inquiry is being conducted by law enforcement agency on an accountholder(s), then the STR should be
accompanied by letter / financial intelligence shared with the LEA or FIR available with the bank.
Subsequent to reporting, if any development takes place, the same should be shared with FMU in continuation of
previous reporting.
B. Re-profiling of accounts:
The reporting entities are recommended to conduct re-profiling of accounts on regular basis to capture any
change in business activities, frequency and pattern of transactions and other KYC/CDD details.
Reporting entities need to upgrade their systems to capture STRs & CTRs
C. Filing of STR after relationship termination:
In many cases, reporting entities file the STR after termination of the customer relationship that limits the
analysis / investigation horizon of LEAs. It is recommended to improve the internal KYC/CDD procedures in
order to detect the suspicious activity promptly, instead of reporting it after the closure of account.
D. Individual accounts for business transactions:
Individuals, associated with trade related business, are usually allowed by the reporting entities to carry out
business transactions through personal accounts, which in most cases violate the spirit of State Banks BPRD
Circular Letter No. 42 of 2009. Keeping in view the volume of transactions, financial status and nature of
business, banks need to determine the risk profile and monitor the activity in such accounts accordingly.
E. Foreign Currency Accounts:
Use of FCY accounts for trade transactions need to be checked.
The reported STRs reflect number of cases whereby account holders were allowed to open & operate numerous
foreign currency accounts without regular surveillance on the account activities. The reporting entities are,
therefore, recommended to regularly monitor whether the purpose / conduct of these accounts corresponds with
the profile of the customer besides being in line with spirit of the regulatory framework.
In many instances, it has been noticed that reporting entities have allowed the account holders to remit funds
abroad against imports through FCY accounts with or without documents.

P a g e |67

F. Accounts involved in Tax related matters:

The reporting entities tend to avoid reporting the transactions in the accounts, which are apparently linked to tax
evasion. It is not advisable for reporting entities to accept the matter as a norm and avoid reporting. Hence, they
are advised to report such transactions / accounts to FMU for further analysis to discount the possibility of
smuggling or trade related offences or any other predicate offences.
G. Use of a specified reporting format:
The reporting entities have been found deviating from provided formats of STR/CTR Form. For example,
instances have been noted whereby dates (where required) are reported in two different formats i.e. at one place
it is reported as mm/dd/yy, whereas at another point in the same STR/CTR, it is reported as dd/mm/yy
H. CTRs accompanied by incomplete information:
Following observations has been made:
Details of person(s) conducting the transactions other than the account holder (Section B of CTR Form) are not
furnished in most instances.
Complete information in mandatory columns ,e.g. date of transactions, mode of transactions, nature of profession
of person conducting / involved in transaction, denomination of FCY, name/code of branch where transaction
occurred, contact number & identification number, and relationship with reporting entity etc., is usually not
provided.
It is also noticed that CTR for an amount equivalent to Rs. 2.5 million is also reported. As per Notification No.
F.3(40)BKG(R&S)/1994-514 dated October 15, 2009 issued by the Ministry of Finance, cash transactions
exceeding Rs. 2.5 million [per transaction] need to be reported as CTR.
Each transaction exceeding Rs. 2.5 million shall be reported on a separate CTR even if same account is being
used.
It is not permissible to report both Debit & Credit cash transactions in a single CTR form. For example, if a
customer has deposited cash exceeding Rs. 2.5 million and has withdrawn cash exceeding Rs. 2.5 million on the
same date, then separate CTRs should be filed with FMU.

Some Recent Common TYPOLOGIES

House / Car Financing Scams:
Fraudsters deceive the general public by enticing them to avail financing products without letting them go through
the cumbersome process / documentation. The process involve opening of account by fraudsters with the account
title ABC HFD / CFD [ABC refers to bank name and HFD / CFD represents House Finance Division / Car
Finance Division]. The general public is then targeted through spurious applications, terms of which require the
applicant to deposit case processing fee through cross cheque in the aforementioned account. The accounts are
opened in banks with similar names and upon receiving funds, the fraudsters immediately withdraw funds from the
account via ATM / online cheque encashment. The applicant is then informed that the case is being processed and
eventually these fraudsters absconded with the funds.
Fraudulent Car Lottery Scams:
The car lottery scheme is being used by the fraudsters to entice general public. They contact public at large with the
promise to deliver cars at their door step and call them to deposit funds in their accounts in the name of processing
fee / transportation fee. These obnoxious people open the account with the title of ABC Enterprises/Traders, etc to
reveal themselves as business individuals. Once the account is opened, the calls are then made to general public
randomly with an intent to swindle them as car lottery winner. The victims are informed that they are the winner in a
car lottery scheme/ any other lottery scheme, for which they are required to deposit processing fee in the account.
Upon receiving the funds, withdrawals are made immediately through ATM/Online cheque encashment.

P a g e |68

Illegal Alternative Remittance System:

The Hawala system is an illegal way of transferring funds through a network of brokers / hawaladars. In this system,
customer approaches a hawala broker for remitting/ receiving the funds to /from abroad. The accounts are opened in
the names of traders and transactions involving millions & millions of rupees are transacted on daily basis. The
common characteristics of the account being used for Hawala involves frequent cash /cheque deposits in the account
followed by frequent transfer of funds; transactions with non related business professionals; transfer of funds to
remote areas; use of personal accounts of employees/relatives/customers for business purpose, etc
Similarly, wherever under / over invoicing in trade transactions are practiced, the settlement amounts are routed
through other modes including third-party accounts / hawala operators.
The banks are advised to pursue proper customer due diligence at the time of opening of account to avoid usage of
account for a malicious intent. In this regard, structure of account , frequency / pattern of transactions, counterparties
of the transactions (where available), contact details, nature of profession should be examined at regular intervals.

P a g e |69

Appendix N

High Risk Country List

FATF Statement
October 31, 2010
S. #
1.
3.
5.
7.
9.
11.
13.
15.
17.
19.
21.
23.
25.
27.
29.
31.
33.
35.

Country Name
Afghanistan
Barbuda
Ecuador
Greece
Kenya
Nigeria
Sao Tome and Principe
Syria
Trinidad & Tobago
Venezuela
Iran
Turkmenistan
Antigua
Bolivia
Ghana
Indonesia
Nepal
Philippines

S. #
2.
4.
6.
8.
10.
12.
14.
16.
18.
20.
22.
24.
26.
28.
30.
32.
34.
36.

Country Name
Angola
Bangladesh
Ethiopia
Honduras
Morocco
Paraguay
Srilanka
Tanzania
Turkey
Vietnam
Yemen
North Korea
Sudan
Thailand
Turkmenistan
Ukraine
Kazakhstan
Uzbekistan

P a g e |70