Importers, Exporters to Be Monitored for Suspicious Financial Transactions


Pakistan has started checking suspicious business transactions and financial activities of importers/exporters to detect possible cases of “Proliferation Financing” involving transfer and export of technology, goods, software, services, or expertise that could be used in nuclear, chemical or biological weapon-related programs having a significant threat to global security.

Within this context, the Financial Monitoring Unit (FMU) Karachi has asked the State Bank of Pakistan (SECP), Federal Board of Revenue (FBR), and Securities and Exchange Commission of Pakistan (SECP) to raise Red Flags in cases of Proliferation Financing involving transfer and export of technology, goods, software, services or expertise that could be used in nuclear, chemical or biological weapon related programs having a significant threat to global security.

According to the circular of the FMU issued to the SBP, SECP, FBR, ICAP, and DG FMU here on Friday, in terms of Section 7 (1) of the Anti-Money Laundering Act, 2010, the reporting entities are required to promptly report Suspicious Transactions Reports (STRs) to Financial Monitoring Unit for potential Money Laundering (ML) / Terrorism Financing (TF) / Proliferation Financing (PF) related activities.

In order to identify a suspicion that could be indicative of Proliferation Financing FMU has prepared the red flag indicators that are specially intended as an aid for the reporting entities, which are attached as “Red Flags Indicators For Proliferation Financing”.

These red flags may appear suspicious on their own; however, it may be considered that a single red flag would not be a clear indicator of potential Proliferation Financing activity. However, a combination of these red flags, in addition to analysis of overall financial activity and client profile may indicate a potential Proliferation Financing activity, FMU added.

The FMU stated that to identify a suspicion that could be indicative of proliferation financing activity, FMU has prepared the red flags indicators that are specially intended as an aid for the reporting entities. These red flags may appear suspicious on their own; however, it may be considered that a single red flag would not be a clear indicator of potential proliferation financing activity.

A combination of these red flags, in addition to analysis of expected overall financial activity, business profile may indicate potential proliferation of financing activity.

Customer Behavior (Red Flags)

  • When a customer is involved in the supply, sale, delivery or purchase of dual-use, proliferation-sensitive or military goods, particularly to higher risk jurisdictions.
  • When a customer or counter-party, or its address, is the same or similar to that of an individual or entity found on publicly available sanctions lists. The customer is a research body connected with a higher risk jurisdiction of proliferation concern.
  • When customer’s activities do not match with the business profile provided to the reporting entity.
  • When a customer is vague about the ultimate beneficiaries and provides incomplete information or is resistant when requested to provide additional information.
  • When a customer uses complicated structures to conceal the connection of goods imported/exported, for example, uses layered letters of credit, front companies, intermediaries and brokers.
  • When a freight forwarding/customs clearing firm is listed as the product’s final destination in the trade documents.
  • When the final destination of goods to be imported/exported is unclear from the trade-related documents provided to the reporting entity.

Transactional Patterns (Red Flags)

Project financing and complex loans, where there is a presence of other objective factors such as an unidentified end-user. The transaction(s) involve an individual or entity in any country of proliferation concern. The transaction(s) related to dual-use, proliferation-sensitive or military goods, whether licensed or not.

The transaction(s) involve the shipment of goods inconsistent with normal geographical trade patterns i.e. where the country involved does not normally export or import or usually consumed the types of goods concerned.

Over/under invoice of dual-use, proliferation-sensitive or military goods, trade transactions. 6. When goods destination/shipment country is different from the country, where proceeds are sent/ received without any plausible reason, it added.



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *