Board to oversee AML, CFT rules observance in savings schemes

The government has constituted a five-member supervisory board to ensure independent oversight of implementation of National Savings Schemes (AML& CFT) Rules 2019 to comply with the requirements of the Financial Action Task Force (FATF).

The FATF Plenary and Joint Working Group meetings are scheduled for February 16-21 in Paris to decide Pakistan's possible exclusion from the grey list.

In a notification issued here, the ministry of finance announced formation of the five-member board "to provide independent oversight of implementation of these rules and take necessary enforcement actions against violations thereof". It said the board had been constituted "in pursuance of Section-9 Chapter-III of National Savings Schemes, AML & CFT Rules".

The supervisory board is headed by the additional finance secretary (budget) and comprises State Bank of Pakistan Director Syed Jahangir Shah, Additional Director of the Securities and Exchange Commission of Pakistan Tanzila Nisar Mirza, Financial Monitoring Unit Director Adnan Imran and a joint secretary of the ministry of finance.

Last week, the government announced that it was initiating screening of entire customers' base of more than seven million involving almost Rs4.038 trillion investments in the National Savings to identify and block financial transactions of terrorist organisations and their members, particularly those named by the United Nations. The move also aims to stop flow of any ill-gotten money into the country's the financial system and to safeguard investors from the menace of money laundering and terror financing as required by the FATF and its regional Asia Pacific Group (APG).

The APG in its recently published mutual evaluation report had pointed out a number of deficiencies on the part of Central Directorate of National Savings (CDNS) which has negatively affected the overall grading of different FATF recommendations. The FATF wants Pakistan to trace and identify the owners of these investments in the NSS.

On Saturday last, the finance division promulgated the National Savings Schemes Anti-Money Laundering & Combating the Financing of Terrorism Rules, 2019, and set to motion the process of engaging an AML-CFT compliant bank, through competitive bidding, to meet the FATF requirement and conduct training of CDNS employees.

Accordingly, an expression of interest, in consultation with the SBP, has been sought from interested banks to conduct KYC (know your customer) training of the employees and meet other FATF requirements.

This would include biometric verification of new and existing clients of the CDNS and screening of potential clients in UN Proscribed Person List.

According to the finance ministry, the CDNS is one of the longstanding institutions in the country with a legacy of more than 140 years and has always been a symbol of unshakable trust of the public.

National Savings play a pivotal role to inculcate the culture of savings, facilitate financial inclusion and extending social security net to the deserving sections of the society. Around 33 per cent of CDNS deposits are in welfare schemes, which attribute around 2pc incremental rate of profit over and above other regular savings schemes.

The NSS provides risk free and competitive avenue to all segments of the society, especially senior citizens, pensioners, widows, physically challenged persons and family members of martyrs. On the other hand, it also provides a non-inflationary and cost effective borrowing to the government to bridge the overall fiscal deficit which ultimately reduces dependency on external borrowing.