According to the Securities and Exchange Commission of Pakistan (SECP), income tax returns and wealth statements do not fully prove the source of wealth/funds of banking institution clients.
The SECP was replying to a question concerning whether it may depend exclusively on the Wealth Statement filed with a client’s Income Tax Return for additional verification of the customer’s Source of Wealth (SoW) and Source of Funds (SoF).
A new edition of the SECP’s Frequently Asked Questions (FAQs) on anti-money laundering and counter-terrorist financing (AML/CFT) has been released.
These FAQs are intended to help SECPs better understand their regulated persons (RPs) under the AML/CFT system and to meet changing regulatory requirements for anti-money laundering and sanctions compliance.
Customer Due Diligence (CDD), Politically Exposed Persons (PEPs), Targeted Financial Sanctions (TFS), and other AML/CFT-related duties have received specific attention from the SECP.
According to SECP, income tax returns and wealth statements do not fully demonstrate a customer’s source of wealth/funds, but rather serve as evidence against income/wealth sources for the predicate offence of Tax Evasion.
For the purpose of verifying the source of income/wealth, a wealth statement filed with an income tax return is important.
Additional verification measures for high-risk business relationships could include obtaining additional information on the intended nature of the business relationship, the reasons for intended or performed transactions, bank statements, and obtaining senior management approval to start or continue the business relationship, among other things.
To read our blog on “SECP allows listed companies to conduct E-voting on important decisions” click here.
