The central bank on Monday asked the banks and development finance institutions (DFIs) to review their existing accounts maintained by the non-governmental, non-profit and charitable organizations by the end of this financial year. The State Bank advised the banks and DFIs to conduct enhanced due diligence to avoid risks arising out of money laundering and terrorist financing activities that, the regulator said, were fast changing. “All existing relationships of NGOs/NPOs should be reviewed by June 30, 2012 to ensure that these organizations, their authorized signatories, members of their governing body and the beneficial owners are not linked with any proscribed entities and persons, whether under the same name or a different name,” said an SBP circular issued Monday.
In case of any positive match, the circular said, the banks and DFIs should consider filing Suspicious Transaction Report (STR) or take other legal action. It has been made binding upon the junior staff in the banks and DFIs to seek approval of their senior management while establishing relationship with the NGOs, NPOs and any charitable organization. This, it said, would help the banks and DFIs ensure that these accounts were used for legitimate purposes and the transactions were commensurate with the stated objectives and purposes. The SBP said that the accounts should be opened in the name of relevant NGO and NPO as per title given in its constituent documents.
“The individuals who are authorized to operate these accounts and members of their governing body should also be subject to comprehensive Customer Due Diligence,” the circular added. The banks and DFIs should ensure that these persons were not affiliated with any proscribed entity, whether under the same name or a different name, it warned. In case of advertisements through newspapers or any other medium, especially when bank account number was mentioned for donations, the banks and DFIs would 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.”
Also, the regulator warned the banks against allowing the personal accounts to be used for charity purposes as well as the collection of donations. The central bank said for opening an account the NGO, NPOs and charities would have to submit certified copies of registration documents, by-laws, rules and regulations, resolution of the Governing Body/Executive Committee, attested photocopies of valid CNICs of the authorized person(s) and members of governing body/executive committee (if it is the ultimate governing body), 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 to assess the risk profile of the prospective customer. Attaching great significance on the continuous training of banks’ staff especially relating to AML/CFT, the SBP said to contact its relevant department for acquiring or/and developing relevant training programs and tests.
