Instruction Circular No.

151/2012

Date: October
25, 2012

To: All Resident Managers, Operations Managers, Branch From: Principal

Managers, Area Manager, Zonal Heads, CPU, Divisional Office,
Heads, All Staff Members. Karachi.

Sub: Account Opening and Conducting Customer Due Diligence under Revised "Anti Money Laundering
and Combating the Financing of Terrorism (AML/CFT) Regulations for Banks & DFls" Issued by State Bank
of Pakistan vide BPRD Circular No. 2 dated September 13, 2012.

State Bank of Pakistan (SBP) has replaced the existing CDD and Anti Money Laundering Prudential
Regulations M-1 to M-5 with revised Anti Money Laundering and Combating the Financing of Terrorism
(AML/CFT) Regulations (Regulations 1 to 6) for Banks issued vide BPRD Circular No. 2 dated September
13, 2012, which will take effect from October 31, 2012.
Key features of these Regulations regarding account opening, ongoing monitoring and record keeping are
given below. For further details, reference should be made to the enclosed SBP Circular and Regulations
which are required to be complied with. For definitions of terms like Politically Exposed Persons (PEPs),
Originator, Beneficial Owners etc., reference should be made to Part A of the enclosed SBP Regulations.
For the purpose of this circular, the term senior management, includes executives of the rank of General
Managers, Zonal Heads and above.
At the Time of Fast Opening of Accounts:
Account opening form (AOF) must be properly filled in and signed by the customer and the branch
managers / operations managers.
KYC/CDD form must be properly filled in and signed by branch managers/operations managers. Branches
shall obtain sign-off from the customer on every revision of KYC/CDD form.
Obtain a minimum set of duly attested / certified documents listed in the Annexure 1.
In case of joint account, KYC/CDD of all joint account holders shall be conducted separately.
In case of an individual with shaky/immature Signatures, in addition to a valid identity document, a recent
passport size photograph of the account holder, right and left thumb impressions on the specimen signature
card and account opening form, will be obtained along with the undertaking (DEP 30/1 or 2 or DEP/3 as the
case may be).
In case of expired CNIC, account may be opened on the basis of attested copies of NADRA receipt/token and
expired CNIC subject to the condition that Branch Managers shall follow up and obtain a copy of renewed
CNIC from the customers within 03 months of the opening of account.
In case the customer wishes to authorize any person(s) to act on his/her behalf (mandate holder, authorized
Signatory etc.), evidence of mandate / authorization along with attested copy of valid identity document of the
mandate holder/authorized signatory, will be obtained from the customer as per existing bank practice.
In case the prospective customer is an entity, identities of the beneficial owners shall be verified as follows:
Obtain attested copy of valid identity documents as per Sr. No. 1 of Annexure 1, relating to all natural persons
who own 5% and more shareholding in that entity.
where another company owns more than 5% of shareholding of the prospective customer, obtain certified
copies of certificate of incorporation / registration and attested photocopies of valid identity document, as per
Sr. No. 1 of Annexure 1, of the individuals (natural persons) who own 5% and more shareholding of the
beneficial entity/company.
In case of NGO/ NPO/ Trust/ Club/ Association, attested photocopies of valid identity documents as per Sr.
No. 1 of Annexure 1, in respect of natural persons who ultimately control the prospective customer, shall be
obtained.
Valid identity documents (as mentioned at Sr. No. 1 of Annexure 1) of the customers and the beneficial
owner(s) or controller(s) (as the case may be) must be verified as follows, before the account is fast opened:
CNIC/NICOP/POC will be verified through NADRA Verisys system.
ARC will be verified from NARA.
Passports having valid visa and/or any other proof of legal stay (for foreign individuals only) will be verified
from the relevant authorities / document issuing body. Verification of visa is not required.
Verification of the identity documents must be completed before the fast opening of accounts. However, in
exceptional circumstances where it is essential to conduct business / to establish business relationship before
completion of COD and the risks can be effectively managed, then requirement of verification of the identity
of the customer and beneficial owner(s) may be deferred with approval of senior management subject to the
following conditions:
Branch Managers will complete verification of identity documents within 5 business days from the date of
fast opening of the account.
Neither debit transaction is allowed nor cheque book is issued until positive verification is completed.
Branches shall intimate the verification results to CPU, which shall only open accounts and issue cheque
books on receiving positive verification.
In case of negative verification, branches will close the accounts and maintain half yearly list of such
accounts/deposits with the help of I.T. Division.
Names of customers (individuals and entities) and their directors, trustees, members of governing
bodies/executive committees, signatories, partners, mandatees and beneficial owners (as the case may be)
must be checked and cleared through the List of Debarred Persons, available on Lotus Notes. If branches are
satisfied that these individual customers, entities, directors, trustees, members of governing bodies/ executive
committees, signatories, partners, mandate holders, etc. (as the case may be) do not match with the List of
Debarred Persons, branch managers must affix a rubber stamp containing words "Checked Debarred List" and
put their full signature beneath it. CPU must ensure that branches have affixed "Checked Debarred List"
stamp and branch managers have put their signatures beneath it, as an evidence of having checked these
names against List of Debarred Persons and then proceed to open accounts of these customers.
Anonymous/ Benami accounts or accounts in the name of fictitious persons or numbered accounts must not
be opened.
Government accounts will not be 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 the 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, accounts 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.
The branches shall also take into account any rules, regulations or procedures prescribed in the governing
laws of such entities relating to opening and maintaining of their bank accounts. Opening of such accounts
will continue to be approved as per existing practice.
Instructions regarding opening of accounts of Politically Exposed Persons (PEPs), NGOs, NPOs, Charities,
Trusts, Societies, Associations, Partnerships, etc. remain unchanged. It may be noted, however, the accounts
of PEPs, will require approval of senior management.
In case the CNIC does not contain a photograph, branches shall obtain all of the following:
A duly attested copy of either driving license, service card, nikah nama, birth certificate, educational degree/
certificate, pension book, insurance certificate.
A photograph duly attested by gazette officer/Nazim/Administrator/bank officer.
A copy of CNIC without photograph duly attested by the same person who attested the photograph.
Ongoing Monitoring of Accounts and Transactions:
During the course of business relationship with the customer, branches must ensure that:
Transactions in the account(s) are consistent with the customer’s KYC/CDD profile and source of funds.
However, the Branch Managers must conduct further due diligence when they find that it is necessary to
obtain additional information from existing customers, based on the conduct or behaviour of the account, i.e.
when there is a suspicion of money laundering/financing of terrorism, regardless of threshold.
For any complex, unusually large and out of pattern transaction in the account, which makes no economic
sense or has no visible lawful purpose, the background and purpose of that transaction must be recorded and
documented.
Accounts without CNICs as per bank record, will be blocked (but after serving one month's notice period) and
no debit transactions/withdrawals, irrespective of mode of payment, will be allowed till CNICs are submitted
to the bank. However, restriction of debit transactions does not apply to 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.
Debit block from the accounts will only be removed upon submission of attested and verified photocopy of
CNIC.
Personal accounts are not allowed to be used for business purposes. However, these personal accounts may be
used for proprietorships, small businesses and professions where constituent documents are not available and
branches are satisfied with KYC/CDD profile of the account holder, purpose of relationship and expected
turnover of the account keeping in view financial status and nature of business of that customer.
It is not bank's policy to offer the bank's services to walk-in customers, except where mandated by law or
regulation (e.g., accepting share subscription applications or encashment of cheques drawn on the bank,
making payment of Home Remittances to non-account holders/cash over counter, issuing POs, DDs to
students for making payments to educational institutions etc.) subject to:
obtaining a copy of CNIC from occasional customers/walk-in customers (i) while encashing bearer cheques
above Rs. 50,000; CNIC number should be recorded on the reverse of the cheque and a copy of the CNIC be
attached to the cheque and (ii) while depositing cash above Rs. 1 Million (in single or multiple transaction in
a day); CNIC number should be recorded on the reverse of the deposit slip and a copy of the CNIC are
attached to the deposit slip.
Obtaining originator information along with a copy of CNIC while carrying out online transactions
(regardless of threshold) by occasional customers/walk-in-customers or where such person is conducting
transaction on behalf of an account holder;
capturing name and CNIC No. of originator, in system in relation to (b) above, and making accessible along
with transaction details at corresponding branch if (i) online transaction exceeds Rs. 100,000; and (ii)
transaction is taking place between two branches. While the system enhancement for the automatic capture of
such information is in process, branches should ensure that the relevant information is available in their
records.
Dormant/ inoperative account means "the account in which no transaction has taken place for one year".
Credit transactions will be allowed without changing the dormancy status of these accounts whereas debit
transactions/ withdrawals will not be allowed until the customer requests for re-activation & removal of
dormancy in line with the existing bank practice and Branch Managers are satisfied with CDD of the
customer. However, restriction of debit transactions does not apply to 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.
In compliance with Instruction Circular No. 144 dated October 21, 2009 - Dormant Accounts, Branch
Managers have to ensure that customers conduct debit or credit transaction on the very same day they request
for re-activation of accounts. If this is not done, the system will re-flag the account as Dormant at the time of
the execution of End of Day on that day.
In case branches are not able to satisfactorily complete CDD measures as per bank's policy, the account must
not be fast opened or any service provided. If the prospective customer or his intended transaction is found
suspicious, filing of an STR should be considered. Likewise if CDD of an existing customer is found
unsatisfactory, the relationship will be treated as High Risk and reporting of suspicious transaction, should be
considered.
Branch Managers will periodically review information of customers and beneficial owners to keep it up to
date as per the bank’s policy and State Bank's instructions.
For CNICs which expire during the course of the customer's banking relationship, I.T. Division will modify
the system to generate alerts about the expiry of CNICs at least 1 month before the date of expiry and provide
a report to respective branches. Branch Managers will follow up with their customers and obtain copies of
renewed CNICs.
Branch Managers are also instructed to follow the process of checking the names against the List of Debarred
Persons available on Lotus Notes whenever new directors, trustees, members of governing bodies/executive
committees, signatories, partners, mandate holders, etc. (As the case may be), are added. CPU will ensure that
branches have affixed the "Checked Debarred List" stamp and Branch Managers have put their signatures
beneath it, as evidence of having checked these names against List of Debarred Persons and then proceed to
update the customer records accordingly.
Staff members are reminded that, in terms of the bank's Statement of Ethics and Business Practices, signed by
them, they are required to maintain complete confidentiality and shall not disclose to any person any
information as to the dealings or affairs of the bank or any of its customers or as to any other matter which
may come to their knowledge by reason of their employment. Accordingly, it should be clearly understood
that they are also strictly prohibited to disclose to the customer 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.
Record Keeping
CPU and branches will ensure that necessary records on transactions, both domestic and international,
including the results of any analysis undertaken (e.g. inquiries to establish the background and purpose of
complex, unusual large transactions) for a minimum period of ten years from completion of the transaction.
Records shall be sufficient to permit reconstruction of individual transactions including the nature and date of
the transaction, the type and amount of currency involved and the type and identifying number of any account
involved in the transactions so as to provide, when necessary, evidence for prosecution of criminal activity.
The records of identification data obtained through COD process, like copies of identification documents,
account opening forms, CDD/KYC forms, verification documents and other documents along with records of
account files and business correspondence, shall be maintained for a minimum period of ten years after the
business relationship is ended. The identification records may be maintained in document as originals or
copies subject to bank’s attestation.
However, records where transactions, customers or accounts involve litigation or are required by the court or
other competent authority will be retained for longer period.
CPU and branches should ensure that, when required, the record is made available to the Compliance
Division for replying to any queries from SSP, FMU and other law enforcement agencies.
In case you have any questions or require any clarification, please immediately contact Compliance Division
on the following contact numbers:
021-32466315, 021-32466314, 021-32466313, 021-32466312 and 021-32466177.

Dolan Fernandes Rafiq A. Suhrwardy

Deputy General Manager General Manager
Systems and Procedures Division Compliance Division

Encl:
BPRD Clircular No. 2 dated September 13, 2012 – Anti-Money Laundering and Combating the Financing of
Terrorism (AML/CFT) Regulations.
AML/ CFT Regulations.