Definitions of DNFBP – Designated Non-Financial Business and Profession

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  • AML/CFT: AML/CFT means anti-money laundering and counter terrorist financing.
  • Attempted transaction: in the context of suspicious transactions (see definition of suspicious transaction below), an attempted transaction is one which the customer begins to undertake but does not complete. For example, a customer may begin the purchase of jewellery but cancel the transaction before the purchase is complete, or may begin the process of forming and registering a company only to abandon it before all the relevant documentation has been finalized.
  • Beneficial owner: a beneficial owner is the individual (not an entity) who has ultimate ownership or control over a customer.
    • If the customer is a legal person (see definition of legal person below), the beneficial owner is the person who has ultimate ownership or control of that legal person: either through owning 25% or more of the shares or voting rights, directly or through a chain of control, or by exercising ultimate effective control through some other means such as through family connections.
    • If the customer is a legal arrangement (see definition of legal arrangement below), beneficial ownership includes the settler, the trustee, beneficiaries and any other individual who exercise ultimate effective control through some other means.
    • For further details on how to identify the individual who is the beneficial owner, refer to the definition of “customer identification and verification” below.
  • Competent authorities: competent authorities are all public authorities with designated responsibilities for combating money laundering and/or terrorist financing. This includes the AML/CFT regulators (including FBR, ICAP and ICMAP), the Financial Monitoring Unit (FMU), and federal law enforcement agencies.
  • Compliance program: every (accountant/real estate agent/jeweler) is required by law to have a compliance program to ensure it is fulfilling its AML/CFT obligations.  A compliance program must include:
    • Appointing a compliance officer to be responsible for compliance;
    • An employee screening program;
    • An employee training program; and
    • An independent audit system to test the compliance program.
  • Currency transaction report (CTR): a currency transaction report is a report that must be submitted to the FMU.
  • Customer identification and verification: customer identification and verification is a key component of the customer due diligence measures required under the AMLA and the Regulations. Click here to download.
    • Customer identification means obtaining the relevant information from the customer.
    • Customer verification means verifying that information against independent and reliable documentation.
    • Independent and reliable documentation may include:
      • If the customer is a person: a CNIC card or a national identity card for overseas Pakistanis;
      • if the customer is a legal person: a certified copy of the certificate of incorporation or memorandum of association;
      • if the customer is a legal arrangement: certified copies of the trust instrument or waqf declaration, or certified copies of the trust or waqf registration.
    • This is not a complete list of independent and reliable documentation. For a complete list, please refer to section 8(11) FBR AML/CFT Regulations/15 ICAP/ICMAP AML/CFT Regulations. Click here to view the list.
  • Designated persons: individuals and entities who are the subject of targeted financial sanctions (see definition of targeted financial sanction below).
  • Face-to-face: A face-to-face transaction is one which takes place in person between the (accountant/real estate agent/jeweler) and the customer or the customer’s agent.
  • Financial Intelligence Unit (FIU): a financial intelligence unit (FIU) is a government entity which receives:
    • suspicious transaction reports from reporting entities and members of the public about suspicions of money laundering or terrorist financing, and
    • reports about designated transactions above a certain threshold, such as currency transaction reports.
  • Financial Monitoring Unit (FMU): The Financial Monitoring Unit (FMU) is Pakistan’s financial intelligence unit.  All suspicious transaction reports (STRs) and currency transaction reports (CTRs) must be submitted to the FMU.
  • Legal persons: legal persons means entities such as companies, cooperative societies, partnerships, associations and foundations.
  • Legal arrangements: legal arrangements means entities such as trusts and waqfs.
  • Non-face-to-face: A non-face-to-face transaction is one which takes place between the (accountant/real estate agent/jeweler) and the customer or customer’s representative through methods other than in person, such as over the phone or via the internet.
  • Occasional customers: an occasional customer is a customer with whom the (accountant/jeweler/real estate agent) does not have an ongoing business relationship, such as a walk-in customer. In most cases, a customer with whom the reporting entity conducts a one-off transaction will be an occasional customer.
  • Ongoing client relationship: an ongoing client relationship or ongoing business relationship is a relationship between the (accountant/jeweler/real estate agent) that takes place over a course of months or years, and which is made up of multiple transactions.
  • Ongoing due diligence: ongoing due diligence means taking steps to monitor an ongoing client relationship and maintain up-to-date information on that customer.  Ongoing due diligence includes:
    • Reviewing customer transactions to make sure they line up with the (accountant/real estate agent/jewelers’) knowledge of the customer; and
    • Reviewing customer documentation to make sure it is kept up to date.
  • Pakistan domestic list: a list of domestic designated persons who are subject to targeted financial sanctions (see definition below).  The list is published and updated by the Ministry of Interior/NACTA. Click here to view the list.
  • Politically exposed person: a politically exposed person is a person who has been entrusted with a prominent political function in a country, either in Pakistan (domestic politically exposed person) or abroad (foreign politically exposed person).
    • A politically exposed person includes heads of state (such as a Presidents, Kings or Queens), heads of government (such Prime Ministers), senior politicians (such as Ministers), senior government, judicial or military officials, senior executives of state-owned corporations and political party officials.
    • A politically exposed person can also be a member of senior management of an international organization, or a person who has been entrusted with an equivalent function (for instance, the Head of the United Nations).
  • Suspicious transactions: a suspicious transaction is a transaction or attempted transaction that the (accountant/jeweler/real estate agent) knows, suspects or has reasonable grounds to suspect:
    • involves funds that come from illegal activities;
    • takes place in order to hide or disguise funds that come from illegal activities;
    • is designed to evade any requirements of the law or regulations;
    • after examining all the circumstances, does not seem to have any obvious lawful purpose; or
    • involves financing of terrorism, including fund collected, provided, used or meant for, or otherwise linked or related to, terrorism, terrorist acts or organizations and individuals concerned with terrorism.
  • Suspicious transaction report (STR): A suspicious transaction report (STR) must be filed to the FMU when the accountant/real estate agent/jeweler identifies a suspicious transaction (refer to the definition of suspicious transaction above).
  • Targeted financial sanctions: targeted financial sanctions are requirements to freeze funds and assets held by designated persons, and prohibitions on making those funds or assets available to designated persons, whether directly or indirectly.
  • Third party introducers, intermediaries or agents: a third-party intermediary or agent is a person who is acting on behalf of the entity, for instance, to find and onboard clients on the entity’s behalf
  • Tipping off: in the context of identifying a suspicious transaction, “tipping off” means the customer may become aware that you are suspicious of the purpose of the transaction, or source of wealth or funds.
  • United Nations Security Council Resolution (UNSCR) 1267: a resolution by the United Nations Security Council which requires targeted financial sanctions (see definition above) to be applied to all designated persons in relation to terrorism and terrorism financing.
  • United Nations Security Council Resolution 1718 and related resolutions: resolutions by the United Nations Security Council which requires targeted financial sanctions (see definition above) to be applied in relation to North Korea.
  • United Nations Security Council Resolution 2231: a resolution by the United Nations Security Council which requires targeted financial sanctions (see definition above) to be applied in relation to Iran.

 

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