KYC/ AML/ CFT PROCEDURE MANUAL

COMPLIANCE
GROUP

KYC / AML / CFT PROCEDURE MANUAL

KYC/ AML/ CFT PROCEDURE MANUAL

TABLE OF CONTENTS

1.

PREAMBLE ..................................................................................................................................... 3

2.

INTRODUCTION ............................................................................................................................. 4

3.

APPLICABLE LAWS AND REGULATIONS......................................................................................... 6

3.1. Anti-Money Laundering Act, 2010 ................................................................................................ 6

3.1.1.

Offence of Money Laundering (Section 3) ............................................................................ 6

3.1.2.

Punishment for Money Laundering (Section 4) .................................................................... 6

3.1.3.

Procedure and Manner of Furnishing Information by Financial Institutions (Section 7) ..... 6

3.1.4.
Liability for Failure to File Suspicious Transaction Report and for Providing False
Information (Section 33) ....................................................................................................................... 7
3.1.5.

Disclosure of Information (Section 34) [Tipping Off] ............................................................ 7

3.2. Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) Regulations for
Banks/DFIs Issued By State Bank of Pakistan (Revised and Issued on 13 September 2012)................ 8
4.

KNOW YOUR CUSTOMER .............................................................................................................. 9

5.

KNOW YOUR CUSTOMER GUIDELINES........................................................................................ 10

5.1. Customer Profiling ...................................................................................................................... 10

5.2. Controls and Precautions ............................................................................................................ 10
5.2.1.
5.2.1.1.
5.2.2.

Customer Acceptance and Identification............................................................................ 10

Type of Customers NBP will not accept .......................................................................... 10
Risk Assessment .................................................................................................................. 11

5.2.2.1.

Review of High Risk Accounts ......................................................................................... 16

5.2.2.2.

General Principle ............................................................................................................. 17

5.2.2.3.

Completion of Account Opening Requirements ............................................................. 17

5.2.2.4.

Customer Identity Verification ........................................................................................ 31

5.2.2.5.

Timing of Verification ...................................................................................................... 32

5.2.2.6.

Discrepancies Uncovered During Identity Verification ................................................... 32

5.2.3.

Ongoing Monitoring of Accounts ........................................................................................ 32

5.2.4.

Record Keeping ................................................................................................................... 33

6.

TRANSACTION MONITORING ...................................................................................................... 34

7.

TRANSACTION REPORTING ......................................................................................................... 36

7.1. Suspicious Transactions Defined................................................................................................. 36

KYC/ AML/ CFT PROCEDURE MANUAL

7.2. Maintenance of Suspicious Transactions Register...................................................................... 36

7.3. Reporting Of Suspicious Transactions......................................................................................... 37
7.4. Suspicious Transaction Report Flow ........................................................................................... 37
7.5. Liability for Failure to File Suspicious Transaction Report .......................................................... 38
7.6. Currency Transaction Reporting ................................................................................................. 38
7.7. Filing of Currency Transaction Report ........................................................................................ 38
7.8. Confidentiality of STR and CTR / Tipping Off .............................................................................. 38
7.9. Retention of Records Related to STR and CTR ............................................................................ 38
8.

REMITTANCE TRANSACTIONS (INWARD/OUTWARD) ................................................................ 39

8.1. SWIFT Message Type for Handling Outward Remittances ......................................................... 40

8.2. SWIFT Message MT103 ............................................................................................................... 40
8.3. SWIFT Message for Cover Payments (MT 202 COV) ................................................................... 40
9.

CORRESPONDENT BANKING ....................................................................................................... 42

9.1. Correspondent Banking Clients Domicile................................................................................... 43

9.2. Correspondent Banking Clients Business and Customer Base................................................... 43
10. FOREIGN BRANCHES AND SUBSIDIARIES .................................................................................... 45
11. STAFF TRAINING .......................................................................................................................... 45
12. EFFECTIVE DATE .......................................................................................................................... 46
ANNEXURES .................................................................................................................. 47
ANNEXURE-I ................................................................................................................. 48
ANNEXURE-II................................................................................................................. 52
ANNEXUREIII ................................................................................................................ 53
ANNEXURE-IV................................................................................................................ 58
ANNEXURE-V ................................................................................................................ 61
ANNEXURE-VI................................................................................................................ 65
ANNEXURE-VII ............................................................................................................... 66
ANNEXURE-VIII .............................................................................................................. 67
ANNEXURE-IX ................................................................................................................ 68
ANNEXURE-X ................................................................................................................ 70

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Compliance Group
Version Control
Document owner
Compliance Group
Version Number
03
Release Date
4th March 2010
Revised Version Number
04
Revision / Amendment Date
Availability
Intranet and PDF copies
Next Review Date This Procedure Manual will be subject to review on need basis. If there is no
change in the KYC/AML/CFT procedure manual within one year, a note will be moved to renew the
manual with no change. Instruction Circulars concerning AML/KYC/CFT issued by the Bank or the
Regulatory Authorities from time to time shall become integral part of this manual.
This Manual shall be available on intranet and shall be forwarded to Regional Heads and
Compliance Officers to make sure its availability and thorough understanding at all the Branches.
In addition, this Manual is to be distributed to the following persons, groups/ divisions **;

Distribution List
S. No.
1
2
3
4
5
6

Group / Division
President
All Group Chiefs/ Divisional Heads
All Regional Chief Executive and Country Heads
All Regional Heads & Regional Compliance Officer
All Branch Managers
All Country Compliance & Money Laundering Prevention Officer (CC & MLPO) and all
Principal staff colleges

**This is a Bank-wide procedure manual that is to be adopted and followed across the Bank
including Islamic Banking.

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ABBREVIATIONS
AOF
ARC
BBO
BCO
BM
CAOP
CDD
CFT
CIF
CNIC
CTR
EBS
EDD
EU
E-HRMC
FATF
FMU
IBT
NADRA
NEC
NICOP
OFAC
PEP
POC
RMA
SBP
SDD
SNIC
SSC
STR
SWIFT
UN
UNSC

Account Opening Form

Alien Registration Card
Branch Back Office
Branch Compliance Officer
Branch Manager
Centralized Account Opening Portal
Customer Due Diligence
Combating the Financing of Terrorism
Customer Information File
Computerized National Identity Card
Cash Transaction Report
Electronic Banking System
Enhanced Due Diligence
European Union
Electronic Home Remittance Monitoring Cell
Financial Action Task Force
Financial Monitoring Unit
Inter Branch Transactions
National Database and Registration Authority
National Executive Committee
National Identity Card for Overseas Pakistanis
Office of the Foreign Assets Control
Politically Exposed Persons
Pakistan Origin Card
Relationship Management Application
State Bank of Pakistan
Simple Due Diligence
Smart National Identity Card
Specimen Signature Card
Suspicious Transaction Report
Society for Worldwide Interbank Financial Telecommunication
United Nations
United Nations Security Council

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1.

PREAMBLE
Pakistans Central Bank (State Bank of Pakistan) has issued Anti-Money Laundering and
Combating the Financing of Terrorism (AML/CFT) Regulations on September 13, 2012,
emphasizing upon:
Prevention of criminal use of banking channels for the purpose of Money Laundering and
other unlawful trades.
To ensure that a proper Procedure Manual framework on Know Your Customer and AntiMoney Laundering Measures is put in place, and
To follow certain customer identification processes for opening of accounts and monitoring
transactions of suspicious nature, keeping in view the possibility of use of money through
these accounts for criminal and other unlawful purposes.
All the measures for Anti-Money Laundering and Combating the Financing of Terrorism are
governed by Anti Money Laundering Act 2010 which was enforced on March 27, 2010.

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2.

INTRODUCTION
Modern Banking is offering a chain of products and services to customers worldwide round the
clock. Globalized trade, state-of-the-art communication systems and computer technologies
have made it possible for business and trade to diversify activities to meet global competitive
edge feasibly and within predefined parameters and values.
The rising desire to become financially sound, cutting corners and avoiding legitimate means of
business and trade, created the urge for concealing funds and their movement. However, there
are certain customers who are taking advantage of sophistication in banking technology and are
carrying on unethical business i.e. Money Laundering.
Money Laundering involves taking criminal proceeds and disguising their illegal source in
anticipation of ultimately using the criminal proceeds to perform legal and illegal activities.
Simply put, money laundering is the process of making dirty money look clean. According to
The Financial Action Task Force (FATF), crimes such as illegal arms sales, narcotics trafficking,
smuggling and other activities of organized crime can generate huge amounts of proceeds.
Embezzlement, insider trading, bribery and computer fraud schemes can also produce large
profits, creating the incentive to legitimize the ill-gotten gains through money laundering.
The threat of trafficking in drugs, arms, refugees and the criminal activities of ransom,
kidnapping, terrorism, etc. has strengthened and therefore spread black money to the various
segments of society.
Catering to the increasing money laundering menace, efforts are being made by various bodies
to spread awareness of money laundering all around the globe. Regulatory institutions have
necessitated the implementation of anti money laundering campaigns by central banks and
financial institutions. The Governments all around the world have been involved in developing
and enforcing regulations to put this illicit trade to end.
Purpose of This Procedure Manual
This Procedure Manual aims to provide procedural guidelines about the measures and individual
legal obligations set out under The Financial Action Task Force (FATF) Recommendations, State
Bank of Pakistans Anti-Money Laundering/ Combating Financing of Terrorism Regulations as
well as Customer Due Diligence for Banks and Core Principles for Effective Banking
Supervision set out by Basel Committee on Banking Supervision while keeping intact the
compliance of Anti-Money Laundering Act, 2010. The Procedure Manual also aims to aid the
training of employees in spotting and reporting suspicious transactions.
Through this Manual we aim to:
1.
2.
3.
4.

Put in place and implement a robust KYC process.

Describe the main symptoms of money laundering.
Understand the sources & Channels of money laundering.
Suggest controls & remedies.

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5. Specify the requirements of State Bank regulations,

6. Describe the steps taken by National Bank of Pakistan to counter Money Laundering and
Terrorist Financing.
Procedure Manual Objectives
To enable the bank to ensure that only legitimate and bonafide customers are accepted.
To aid the bank in verifying the identity of customers using reliable and independent
documentation.
To enable the bank to monitor customers financial dealings. This would help the bank to
mitigate the risk of its channels being used for Money Laundering.
To enable bank in implementing processes to effectively manage the risks posed by
customers trying to misuse facilities.
To prevent criminal elements from using the bank for money laundering and terrorist
financing activities.
To put in place appropriate controls for detection and reporting of suspicious activities in
accordance with applicable laws and regulations, and procedural guidelines.
To take necessary steps to ensure that the relevant staff are adequately trained in
KYC/AML/CFT procedures.
Penalties Due to Non Compliance
The Bank and its employees are expected to comply with legal requirements that also require
reporting of suspicious transactions. Failure to comply could have serious implications for both
the dealing officials and the Bank. This could include individual criminal penalties and
disciplinary action.
Role as a Prudent Banker
Our role is to make sure that we all know, and follow at all times, the procedures which apply
in each of the day-to-day operations we are involved in. These will include:
Identifying customers thoroughly when opening accounts.
Moving money around between accounts.
Recording transactions.
Reporting suspicious transactions.
Communications with Employees
There will be regular communication from the Compliance Head about AML/KYC issues to the
staff of the bank.

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3.

APPLICABLE LAWS AND REGULATIONS

The following laws and regulations deal with the issue of money laundering in Pakistan.

3.1.

Anti-Money Laundering Act, 2010

Under the Anti-Money Laundering Act, 2010 the Government has established Financial
Monitoring Unit (FMU) to properly monitor suspicious transactions for checking money
laundering in Pakistan. The act of money laundering is a serious offence punishable under the
provisions of the AML Act. Some of the important provisions extracted from AML Act, 2010 are
mentioned below:

3.1.1. Offence of Money Laundering (Section 3)

A person shall be guilty of offence of money laundering, if the person:
a) Acquires, converts, possesses or transfers property, knowing or having reason to believe
that such property is proceeds of crime; or
b) Conceals or disguise the nature, origin, location, disposition, movement or ownership of
property, knowing or having reason to believe that such property is proceeds of crime.
c) Holds or possesses on behalf of any other person, any property knowing or having reason to
believe that such property is proceeds of crime; or
d) Participates in associates, conspires to commit attempts to commit aid, abets, facilitates
or counsels the commission of the acts.
3.1.2. Punishment for Money Laundering (Section 4)
Whoever commits the offence of money laundering shall be punishable with rigorous
imprisonment for a term which shall not be less than one year but may extend to ten years and
shall also be liable to fine which may extend to one million rupees and shall also be liable to
forfeiture of property involved in the money laundering, provided that the aforesaid fine may
extend to five million rupees. In case of a company, every director, officer or employee of the
company, found guilty under this section, shall also be punishable under this section.
3.1.3. Procedure and Manner of Furnishing Information by Financial Institutions (Section 7)
Every financial institution shall file with the Financial Monitoring Unit (FMU), to the extent and
in the manner prescribed by the FMU, Suspicious Transaction Report, conducted or attempted
by, at or through that financial institution if the financial institution knows, suspects, or has
reason to suspect that the transaction or a pattern of transaction of which it is a part:
a) Involves funds derived from illegal activities or is intended or conducted in order to hide or
disguise proceeds of crime;
b) Is designed to evade any requirements of this section; or
c) Has no apparent lawful purpose after examining the available facts, including the
background and possible purpose of the transaction or involves financing of terrorism.

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Provided that Suspicious Transaction Report shall be filed by the financial institution or
reporting entity with the FMU immediately but, not later than seven working days after forming
that suspicion.
CTRs (Cash Transaction Report) on cash transactions exceeding Rs. 2.5 million shall be filed
with FMU immediately but not later than seven working days, after the respective currency
transaction.
Every reporting entity shall keep and maintain a record of all transaction related to Suspicious
Transactions Report and CTRs filed by it for a period of at least five years after the reporting
date of transaction.
3.1.4. Liability for Failure to File Suspicious Transaction Report and for Providing False
Information (Section 33)
a) Whoever willfully fails to comply with the suspicious transaction reporting requirement or
gives false information shall be liable for imprisonment for a term which may extend to
three years or with fine which may extend to one hundred thousand rupees or both.
b) In the case of conviction of a reporting entity, the concern regulatory authority may also
revoke its license or take such other administrative action, as it deems appropriate.
3.1.5. Disclosure of Information (Section 34) [Tipping Off]
a) The directors, officers, employees and agents of any reporting entity financial institution,
non-financial business or profession or intermediary which reports a suspicious transaction
or cash transaction pursuant to this law or any other authority, are prohibited from
disclosing directly or indirectly to any person involved in the transaction that the
transaction has been reported.
b) A violation of (a) is a criminal offence and shall be punishable by a maximum of three years
imprisonment or a fine which may extent to five hundred thousand or both.
c) Any confidential information furnished by a financial institution, non-financial business and
profession, intermediary or any other person under or pursuant to the provisions of this
AML Act, shall, as far as possible, be kept confidential by the Financial Management Unit
(FMU), investigation agency or officer as the case may be.

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3.2.

Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) Regulations

for Banks/DFIs Issued By State Bank of Pakistan (Revised and Issued on 13 September 2012)
State Bank of Pakistan has issued the following regulations on anti-money laundering and
combating the financing for terrorism.
R-1
R-2
R-3
R-4
R-5
R-6

Customer Due Diligence

- Correspondent Banking
Wire Transfers / Fund Transfers
Reporting of Transactions (STRs/CTRs)
Record Keeping
Internal Controls, Policies, Compliance, Audit and Training

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4.

KNOW YOUR CUSTOMER

The inadequacy or absence of KYC standards can subject banks to serious customer and
counterparty risks, especially reputational, operational, legal and concentration risks. It is
worth noting that all these risks are interrelated. However, any one of them can result in
significant financial cost to banks (e.g. through the withdrawal of funds by depositors, the
termination of inter-bank facilities, claims against the bank, investigation costs, asset seizures
and freezing of assets and loan losses), along with considerable management time and energy
to resolving problems that arise.
Effectively devised KYC policy is the most important defense against the money launderers.
While fulfilling legal requirements, the contents of regulatory requirements should be kept in
view before establishing a customer/account opening relationship.
Benefits of KYC
The knowledge of the banks customer base and business operations will also help the bank as
under:
a)
b)
c)
d)
e)
f)
g)
h)

Detect suspicious activity in a timely manner.

Enable deeper analysis of potential and current clients.
Promote compliance with all banking laws.
Promote safe and sound banking practices.
Minimize the risk of banks channels being used for illicit activities.
Protect the Banks reputation & image.
Bolster confidence among its customers, other banks, and bank regulators.
Protect bank against negative legal consequences related to cooperating with entities
supporting terrorism.

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5.

KNOW YOUR CUSTOMER GUIDELINES

5.1.

Customer Profiling
Customer profiling is a way to create a portrait of our customers to help make decisions
concerning our service. Customers are broken down into groups of customers sharing similar
goals and characteristics. Factors such as customers background, country of origin, public or
high profile position, linked accounts, business activities or other risk indicators shall be
considered while profiling customers.
The main purpose of profiling is to understand our customer, particularly customers source of
wealth and the financial behavior in the account to highlight any unusual activities in his or her
account/conduct.
Every new customer shall be profiled in CAOP using judgment and information obtained through
Customer Due Diligence (CDD)/KYC process.
Change, if any, in customer profile (such as change of address, change in business, change in
phone number, etc.) and their sources of funds should be recorded to maintain an updated
knowledge about the customer and their businesses.

5.2.

Controls and Precautions

NBP will exercise sound controls, precautions and vigilance on KYC measures adopted to
counter the money laundering menace.
The Bank will develop and maintain necessary controls and precautions in its Banking
Operations by different ways i.e.
1.
2.
3.
4.

5.2.1.

Risk Assessment
Customer Acceptance and Identification.
On-Going Monitoring of Accounts.
Record Keeping.

Customer Acceptance and Identification

5.2.1.1. Type of Customers NBP will not accept

As a Policy, the Bank shall not deal / accept the following types of persons/entities as
customer: The negative list shall include:
Shell banks/companies
Unregistered arms-related business
Bearer share company

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Accounts where the customer is acting on behalf of another customer to open an account.
(The account shall be opened in the name of the person who is the beneficial owner of the
funds in the account and not the benami/accounts with fictitious names)/ Anonymous or
fictitious Accounts.
Entities/persons appearing in OFAC/EU/UN lists and any other list recommended in each
jurisdiction where NBP operates.
Entities/persons appearing in negative/sanctioned lists. Proscribed entities and persons or
those who are known for their association with such entities and persons, whether
under the proscribed name or with a different name.
Gamblers/Bookies
Un-registered money changers/exchange companies.
As per policy, bank will use the following sanction lists:
1.

UN Sanctions list: List established and maintained by the Committee pursuant to resolutions
1267 (1999) and 1989 (2011) with respect to individuals, groups, undertakings and other
entities associated with Al-Qaida.
http://www.un.org/sc/committees/list_compend.shtml

2.

Office of Foreign Assets Control Specially Designated Nationals and Blocked Persons List
http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx

3.

EU-list
http://ec.europa.eu/external_relations/cfsp/sanctions/list/version4/global/global.xml
http://eeas.europa.eu/cfsp/sanctions/consol-list_en.htm

4.

Sanction lists issued by the Ministry/regulators of the respective country where NBP Operates.

5.

Banks Internal List

5.2.2.

Risk Assessment

NBP Centralized Account Opening Portal (CAOP) Risk Rating Criteria1

Keeping in view the inherent risks and in compliance with SBPs regulations, the Centralized
Account Opening Portal is updated and aligned with SBP recommendations for risk
categorization and ongoing monitoring. Accounts will be tagged as high-risk by CAOP on the
basis of following criteria:

Instruction Circular No. 98 of 2012 ( CDD Measures for Establishing Business Relationship Ranking of Accounts
Opened on the basis of KYC Risk Based Approach)

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High Risk Customer /Categorization

1.

Politically Exposed Persons (PEPs)

PEP is an individual who has been entrusted with prominent public functions in the country,
such as:
Prominent public functions
Government ministers,
Senior civil servants,
Senior judicial & military officials,
Senior executives of state owned corporations,
Senior political party officials
Their close family members which include spouses, children, parents, siblings and may also
include other blood relatives and relatives by marriage.
Their closely associated persons which include close business colleagues, personal
advisors/consultants of the politically exposed person as well as persons who are expected
to benefit significantly by being close to such a person.
The term PEP does not extend to middle ranking individuals in the specified categories.
Risks Associated with PEPs
There is always a possibility, especially in countries where corruption is widespread, that such
persons abuse their public powers for their own illicit enrichment through the receipt of bribes,
embezzlement, etc.
Accepting and managing funds from corrupt PEPs will severely damage the banks own
reputation and can undermine public confidence in the ethical standards of an entire financial
center. Since such cases usually receive extensive media attention and strong political
reaction, even if the illegal origin of the assets is often difficult to prove. In addition, the bank
may be subject to costly information requests and seizure orders from law enforcement or
judicial authorities (including international mutual assistance procedures in criminal matters)
and could be liable to actions for damages by the state concerned or the victims of a regime.
Under certain circumstances, the bank and/or its officers and employees themselves can be
exposed to charges of money laundering, if they know or should have known that the funds
stemmed from corruption or other serious crimes.
Course of Action
1. All PEPs and their close associates or family members accounts will be treated as High Risk
Accounts and accordingly will need approval of Compliance Group Head office. Compliance
Group Head office will accord approval on the recommendations of Regional Head & Branch
Manager (Who must conduct the Enhanced due diligence of all high risk customers before
requesting for approval from head office). Furthermore, branch management must obtain
additional information on the customer (occupation, volume of assets); intended nature of

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the business relationship; reasons for intended or performed transactions; additional

information on the sources of funds or sources of wealth of the customer;
All High Risk Accounts will be subject to enhanced monitoring of business relations with the
customer and annual reviews.
There is an exemption from marking as high risks based on PEPs fields for following nature of
accounts:

Financial Institution
UN and its affiliated agencies
Central/ Provincial /Local Government Accounts
Provident Fund-Government
Public Limited-Government

2. Threshold of transactions (for High Risk Categorization)

Nature of Accounts
Housewife
Other-Non Govt
partnership-Registered
Private Ltd.
Proprietor
Salaried - Accounts.
Self Employed
Student
Unemployed
partnership-Un Registered
Minor
Joint Accounts
Retired person

Threshold in Rs. (Per Month)

(1M)
50m
50m
100m
50m
5m
(5M)
500,000
500,000
50m
(1M)
(5M)
(1M)

Average No. of Cash Deposits (Monthly basis)

Up to 5
6 to 10
11 to 25

26 to 100
Over 100
No. of (non-cash transactions) Transfer Deposits/ Remittances (Monthly)
Up to 5
6 to 10
11 to 25
26 to 100
Over 100

3. Country of Origin/Residence/Business dealings

Whenever countries/Branches belonging to high risk list are selected from List of values
defined in the (CAOP) module, account will be marked as high risk each time the record is
committed.

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High risk countries can be derived from:

FATF identified high risk & non cooperative jurisdictions. (this list will be subject to
change)

Customers with place of birth, nationality or doing business with the following FATF
identified High Risk & Non cooperative Jurisdictions will be marked as High Risk.(Minus
Pakistan)
Iran
Democratic Peoples Republic of
Korea (DPRK)
Ecuador
Ethiopia
Indonesia
Kenya

Myanmar
So Tom and Prncipe
Syria
Tanzania
Turkey
Vietnam
Yemen

High Risk Branches:

Following border area branches will be marked as high risk:

S. No

REGION

Mirpur AK

Muzaffarabad AK

3
4

Gilgit
Lahore East

Mardan

Peshawar

BRANCH
Takia Kohwan
Goi
Samahni
Karela Majhan
Lehri
Athmuqam
Chinnari
Leepa Valley
Kahuta
Kailler Khurshidabad
Kundal Shahi
Gogdar
Abbaspur
Hajira
Dhani Bombian
Sost
Main Branch Kasur
Inayat Kaley
Khar
Torkham
Jamrud
Bara
Zargari
Kacahi
Shabqadar

BRANCH CODE
1714
1682
1787
1781
1788
2092
1679
1718
0961
1806
0693
1805
0818
0586
1750
1705
0348
2007
1595
2070
0912
0914
1561
1736
1435

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D.I. Khan

8
9

Quetta
Gawadar

Parachinar
Wanna
Miran Shah
Sadda
Chaman
Taftan

0385
2000
0435
1914
0005
1080

However, following types of customers will be exempt:

Financial Institution
UN and its affiliated agencies
Internationally recognized NGO
Central/ Provincial /local Government Accounts
Provident Fund-Government
Public Limited-Government
Pensioners
Staff /Employee
Basic Banking Account holders
Salary Accounts
Accounts with intended turnover of less than 1M a month
4. Nature of Business
Account will be marked as High Risk when following fields are selected in Does your Customer
deal in field given in Business employment details tab Centralized Account Opening Portal
(CAOP).
High Risk accounts: For all High Risk accounts approval from Compliance Group Head office
will be required.
Compliance Group Head office will accord approval on the recommendations of Regional Head
& Branch Manager (Who must conduct the Enhanced due diligence of all high risk customers
before requesting for approval from head office).
Following entities/customers will be high risk customer.
FX(Exchange Company) Approved from SECP and SBP licensed only
Religious Organization
NGOs
NPO
Hospitals
Madrasas
Charitable organizations
Trust
Club
Society
Association
Political Parties Accounts
Embassies/Diplomat missions

15

KYC/ AML/ CFT PROCEDURE MANUAL

Politicians
PEPS (as defined in PEP definition)
Local /foreign Diplomat
Hotel /Restaurant
Cinema/Theater
Cash Based Business in high value items (Artifacts/Antiques, Diamonds, Art dealer,
Precious Metals/Stones)
Carpet Dealer
Unlisted Real Estate Company/ Property dealers/ Real Estate Agents
Travel Agent
Transporters/Automobile dealer
Jewelers
Art Gallery

5. Age of Business
In case the age of business is less than the six months, the following nature of accounts will be
marked as high risk each time the record is updated:
Self Employed
Proprietor
Partnership-Unregistered or Registered
5.2.2.1. Review of High Risk Accounts
Frequency of updating CIF to update customer data is one (1) year for accounts marked as
"High Risk" whereas it is three (3) years for accounts marked as "Low Risk".2
Branch Manager shall obtain the list of high risk accounts on bi-annual basis. Customer shall be
contacted on telephone by relevant Branch Managers to reaffirm information uploaded in the
CAOP CIF. In case, customer is not contactable on the numbers available, letter shall be
written to the customer asking for any change in his/her contact information. In case of
Return Mail, the account shall be debit blocked, under advice of Compliance Group.
(Responsibility Branch Management)
The review shall be completed within 30 days from the date it falls due. The review shall be
entered in the relevant section in the CAOP CIF/KYC. Comments shall be mentioned giving
brief details of changes made and reasons for the change, as appropriate.
During the review exercise, account activity of the customer will also be reviewed by the
Branch Manager. The Branch Manager will take a printout of the account activity and review
transactions and match the same with the details as given in the CAOP-KYC/CIF. If the
transactions do not match with KYC profile of the customer (for instance turnover of
transactions is far more than given in transaction profile in KYC or customer is receiving
money from countries not mentioned by him in the KYC), an explanation will be solicited from
2

Instruction Circular No. 36 of 2013 (EBS Based Account Opening Data Migration to CAOP After Required Data
Cleansing Exercise)

16

KYC/ AML/ CFT PROCEDURE MANUAL

the customer. If the explanation is not satisfactory, transaction / transactions in question will
be escalated to Compliance on Suspicious Transaction Report. However, if the Branch
Manager decides that the explanation given by the customer is plausible; customer profile
shall be updated and authorized by Branch manager for the changes. Reason for changes shall
be mentioned.
The statement of account with any comments/annotations shall also be kept on record as
audit evidence of the monitoring activity.
Approval of High Risk Accounts:
Approval of High Risk Accounts will be accorded by the Compliance Group Head Office on the
recommendations of the Branch Manager and Regional Head/ (Business head in case of Islamic
Banking Branches). Approval should be sought through email communication to improve the
turnaround time and to keep the Question Answer record intact in the mail.
For getting approval from Head Office, email should be sent to: [email protected] and
[email protected]
5.2.2.2. General Principle
Bank will not open anonymous accounts or accounts in obviously fictitious names. It is the
requirement of laws, regulations, agreements between supervisory authorities and bank or by
self-regulatory agreements among other banks to identify, on the basis of an official or other
reliable document, and record the identity of clients, either occasional or usual, when
establishing business relations or conducting transactions.
5.2.2.3. Completion of Account Opening Requirements 3
Opening of a Bank Account is the first steps towards establishment of a Banker-Customer
relationship with a prospective client. In the backdrop of rising concerns over the issue of
financial institutions vulnerability against the menace of money laundering and terrorism
financing, the process of opening of an account has become a highly sensitive activity where
the Bank has to ensure for minimizing operational and reputational risks exposure due to
failure of detecting true identity and ownership of the account, source of income / funds,
tracking of transactions of suspicious nature and possible / potential linkage of accounts /
transactions to individuals/entities which are either in the UNSC sanctions list or proscribed
under Countrys own law such as Anti-Money Laundering Act.
Account Opening Process will stay the same as mentioned in Instruction Circular No. 106 of 2011 Centralized Account Opening Portal (CAOP).

1.

The BCO will review the account against the documents gathered by Account Opening
Officer. Further he will also ensure that the Names / Title of Account / Names of

Instruction Circular No. 106 of 2011 - Centralized Account Opening Portal (CAOP)

17

KYC/ AML/ CFT PROCEDURE MANUAL

Directors / Partners; Shareholders holding more than 10% of holding, trustees, signatories
have been scanned against the Negative/Sanctioned entities.
2.

In case of matching the name and profile (Date of Birth, profession, place of birth)
matching respective officials should forward the case to Compliance Group Head office at
[email protected] for further instructions.
If any name is matched, the CAOP Operator /Branch Management is required to send these
names as per following format to Head Office Compliance Group at
[email protected] for clearance. AML Team at Head Office will make query from
Acuity Check and respond within 2-3 hours at max.

S.No

Name

Date of
Birth

Place of
Birth

Profession

Nationality/
Country of
Origin/Country of
residence

CNIC
Number

Remarks

3.

If the account is approved by the Manager, AOF will be printed and signatures of the
customer will be obtained and all relevant documents will be attached with the AOF and
placed on Branch record.

4.

A copy of the approved Account Opening Form shall be delivered to the Account holder
under acknowledgement and retained on branch record.

5.

Initial deposit will be accepted by the branch on approval of account from Branch
Manager.

6.

Letter of thanks generated through EBS/BBO will continue to be sent vide as prescribed in
Para 89, 94 and 95 of chapter II of Revised Standard Procedure Manual (SPM).(If the Letter
of thanks is returned back undelivered, account will be debit blocked)

7.

No Account will be opened in the System before signing off the Account Opening Form by
the Branch Manager/ designated Officer.

8.

The Branch Compliance Officer will only review that all KYC/AML formalities required at
the time of opening of account and all fields are filled in as per the documents. As he will
not interview the customer, he will not be held responsible for any misreporting in
Customer Profile/KYC details (excluding details mentioned in minimum documents
required under SBP AML/CFT Regulations and attached documents) as these were
gathered by Account Opening Officer at the time of interviewing the customer. He will
also check and review that all mandatory required documents for account opening are in
place. This must be noted that all original documents must be retained by the Branch as
the Branch is the custodian of these documents.

9.

The Branch Account Opening Officer and Branch Manager will be held liable in case
account is opened without removing discrepancies pointed out by Branch Compliance
Officer as the final print out of the system offered Account Opening Form is not required
to be reviewed by the Branch Compliance Officer.

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KYC/ AML/ CFT PROCEDURE MANUAL

Management has Zero Tolerance for non-compliance of Regulatory requirements including

AML/CFT regulations and the Account Opening procedures mentioned above. Therefore, all
concerned Account Opening Officers, Branch Managers, Operation Managers and Compliance
Officers shall ensure the fulfillment of all the requisite information including verification of
CNIC/SNIC through Verisys and completion of all formalities of CDD and KYC requirements. 4
The User IDs and passwords to each authorized user of this portal will be assigned by IT
Division Head Office Karachi through their respective Regional Data Centers.
To ascertain the bona fide of the new account opener, a letter of thanks should be sent on his
address and no cheque book should normally be issued to a new account holder until
confirmation of letter of thanks is received, except where Branch Manager is personally
satisfied about the credentials of the new account holder and in which case he shall sign an
undertaking which is attached as Annexure VII to this manual.
There are instances where intending account holders, at the time of account opening, sign on
the AOF differently than the one appearing on their CNICs. Therefore, while opening accounts
of such account holders, as part of Enhanced Due Diligence exercise, the Account Opening
Officer/Branch Manager should also ensure that they have obtained an acknowledgement of
the given fact by the intending account holder on the Undertaking attached to the Manual
as Annexure-VI, and should be kept with all other documents required to be obtained from
the intending account holder.
Branch Managers/Operation Managers and all those officials involved in the process of account
opening should ensure that accounts opened on the basis of NADRA Receipt/Token are
effectively monitored for obtaining of copies of renewed CNICs and also to assure that existing
accounts with expired CNICs are also regularized through approaching and establishing contact
with these account holders.5
SNICs offered by intending account holders should also be verified through NADRA Verisys
service prior to account opening.6
I.

At The Time of Account Opening MINIMUM DOCUMENTS TO BE OBTAINED UNDER AML/CFT

REGULATIONS
Every customer shall be identified for establishing business relationship. For this purpose,
following documents shall be obtained as a minimum for different types of customers:

Instruction Circular No. 42 of 2012

Instruction Circular No. 95 of 2011 (Opening of Accounts on the basis of NADRA Receipt/Token in case of Expired
CNICs).
6
Instruction Circular No. 112 of 2012 (Mandatory NADRA Verisys test for CNICs and SNICs offered for Account
Opening).
5

19

KYC/ AML/ CFT PROCEDURE MANUAL

MINIMUM DOCUMENTS TO BE OBTAINED UNDER AML/CFT REGULATIONS

1. INDIVIDUALS
A photocopy of any one of the following valid identity documents;
i. Computerized National Identity Card (CNIC)/ Smart Card issued by NADRA.
ii. National Identity Card for Overseas Pakistani (NICOP) issued by NADRA.
iii. Pakistan Origin Card (POC) issued by NADRA.
iv. Alien Registration Card (ARC) issued by National Aliens Registration Authority (NARA),
Ministry of Interior (local currency account only).
v. Passport; having valid visa on it or any other proof of legal stay along with passport
(foreign national individuals only).
vi. Nadra Verysis
vii. Copy of utility Bill (Gas, Water, WAPDA/KESC) in the name of the person intending to
open the account. (Utility Bill must not be more than 3 months old) or copy of the
Credit Card/Bank statement showing the name and address of the customer. If any of
these documents are not available then Visit report of any of Branch staff that
confirms his address and neighborhood or Branch Managements note of satisfactions
about the customers whereabouts will suffice.
viii. In case of a salaried person, in addition to CNIC, an attested copy of his/her service
card, or any other acceptable evidence of service, including, but not limited to a
certificate from the employer will be obtained
ix. Beneficial ownership letter in case of (House wife/Student/unemployed)
x. In case the CNIC does not contain a photograph, Branch is allowed to process opening
of account subject to following conditions:
a. A duly attested copy of either driving license, service card, Nikkah Nama, Birth
Certificate, Educational Degree/Certificate, Pension Book, Insurance Certificate.
b. A photograph duly attested by gazette officer/Nazim/Administrator/bank officer.
c. A copy of CNIC without photograph duly attested by the same person who
attested the photograph.
2. Housewife and Student Accounts
Housewife means a female individual without a paid employment.
In relation to housewife and student accounts,(Because of their financial dependence) the
bank shall:
Obtain a self-declaration from the potential account holder for source and beneficial
ownership of funds. The declaration format required to be completed is attached as
Annexure VIII to this manual.
i.
ii.

Update details of funds providers, if any along with customers profile; and
Identify and verify funds providers if monthly credit turnover exceeds the decided
threshold.(CAOP automatically asks for details of the funds provider)

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KYC/ AML/ CFT PROCEDURE MANUAL

General:
The photocopies of identity documents shall invariably be attested by an authorized officer of
bank after originally seen and signed thereof.
If there is variation in signatures on the AOF of a potential account holder and his CNIC, the
Account Opening Officer/Branch Manager should ensure that they have obtained an
acknowledgement of the given fact by the intending account holder on the Undertaking
attached to the Manual as Annexure-VI, and should be kept with other documents that are
required to be taken from the intending account holder.
In case of House wife/Student/unemployed persons accounts the CIF & KYC of the fund
providers (Father/husband/guardian) will also be obtained. Also, details of average intended
number of cash based and non-cash based transactions will also be obtained.
3. SOLE PROPRIETORS
i.
ii.
iii.
iv.
v.
vi.
vii.

Photocopy of identity document as per Sr. No. 1 above of the proprietor.

Registration certificate for registered concerns.
Sales Tax Registration or National Tax Number (NTN), wherever applicable.
Certificate or proof of membership of trade bodies etc., wherever applicable.
Declaration of sole proprietorship on business letter head.
Account opening requisition on business letter head.
Visit Report

General:
The photocopies of identity documents shall invariably be attested by an authorized officer of
bank after originally seen and signed thereof.
If there is difference in signatures on the AOF than the one appearing on their CNICs. Then
Account Opening Officer/Branch Manager should also ensure that they have obtained an
acknowledgement of the given fact by the intending account holder on the Undertaking
attached to the Manual as Annexure-VI, and should be kept with other documents that are
required to be taken from the intending account holder.
4. PARTNERSHIP
i.
ii.
iii.

iv.
v.

Photocopies of identity documents as per Sr. No. 1 above of all the partners and
authorized signatories.
Attested copy of Partnership Deed duly signed by all partners of the firm.
Attested copy of Registration Certificate with Registrar of Firms. In case the
partnership is unregistered, this fact shall be clearly mentioned on the Account
Opening Form.
Authority letter from all partners, in original, authorizing the person(s) to operate
firms account.
Visit report

21

KYC/ AML/ CFT PROCEDURE MANUAL

General:
The photocopies of identity documents shall invariably be attested by an authorized officer of
bank after originally seen and signing thereof.
If there is difference in signatures on the AOF than the one appearing on their CNICs. Then
Account Opening Officer/Branch Manager should also ensure that they have obtained an
acknowledgement of the given fact by the intending account holder on the Undertaking
attached to the Manual as Annexure-VI, and should be kept with other documents that are
required to be taken from the intending account holder.
5. LIMITED COMPANIES/CORPORATIONS
Certified copies of:
(a) Resolution of Board of Directors for opening of account specifying the person(s)
authorized to open and operate the account;
(b) Memorandum and Articles of Association;
(c) Certificate of Incorporation;
(d) Certificate of Commencement of Business, wherever applicable;
(e) List of Directors on Form-A/Form-B issued under Companies Ordinance 1984, as
applicable; and
(f) Form-29, wherever applicable.
(ii) Photocopies of identity documents as per Sr. No. 1 above of all the directors and
persons authorized to open and operate the account;
(iii) For individual (natural person) shareholders holding 10% and above in an entity,
identification and verification of such natural persons; and
S.No

Name
person/entity

of

Share holding
(All
shareholders
shareholding)

holding

10%

and

above

1
2
3
CIF of all Signatories, individual (natural person) shareholders holding 10% and above
in an entity, identification and verification of such natural persons; and
(iv) For legal persons holding shares equal to 20% or above in an entity, identification
and verification of individual (natural person) shareholders holding shares equal to 20%
or above of that legal person will be created.
Their Names will also be checked from the negative lists and PEP verification will also
be made.

22

KYC/ AML/ CFT PROCEDURE MANUAL

6. BRANCH OFFICE OR LIAISON OFFICE OF FOREIGN COMPANIES

i.
ii.
iii.
iv.

A copy of permission letter from relevant authority i-e Board of Investment.

Photocopies of valid passports of all the signatories of account.
List of directors on company letter head or prescribed format under relevant
laws/regulations.
A Letter from Principal Office of the entity authorizing the person(s) to open and
operate the account.

7. AGENTS ACCOUNTS
i.
ii.
iii.

Certified copy of Power of Attorney or Agency Agreement.

Photocopy of identity document as per Sr. No. 1 above of the agent and principal.
The relevant documents/papers from Sr. No. 2 to 7, if agent or the principal is not a
natural person.

8. EXECUTORS AND ADMINISTRATORS

i.
ii.

Photocopy of identity document as per Sr.

Executor/Administrator.
A certified copy of Letter of Administration or Probate.

No.

above

of

the

9. MINOR ACCOUNTS
i.
ii.

Form-B, Birth Certificate or Student ID card (as appropriate) shall be obtained from
minor.
Photocopy of identity document as per Sr. No. 1 above of the guardian of the minor.

10. LANDLORDS
Following documents shall be obtained:
In case of Agricultural Property:
Attested copy of Passbook of Landholding Records
In case of Non-Agricultural Property:
Attested copy of Rent Agreement of building / office / house etc.
11. NGOs, NPOs, CHARITIES, TRUSTS, CLUBS, SOCIETIES AND ASSOCIATIONS etc.
Certified copies of
(a) Certificate of Registration documents/Instrument of trust certificate
(b) By-laws/Rules & Regulations
(ii) Resolution of the Governing Body/Board of Trustees/Executive Committee, if it is ultimate
governing body, for opening of account authorizing the person(s) to operate the account.

23

KYC/ AML/ CFT PROCEDURE MANUAL

(iii) Photocopy of identity document as per Sr. No. 1 above of the authorized person(s) and
of the members of Governing Body/Board of Trustees /Executive Committee, if it is
ultimate governing body.
(iv) 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 in order to assess the risk profile of the
prospective customer.
CIF of all the authorized person(s) and of the members of Governing Body/Board of
Trustees /Executive Committee, if it is ultimate governing body will be created. Their
Names will also be scanned from the sanctioned lists. If any match is found the same will be
immediately communicated to Compliance Group for lodging of SAR with FMU.
S.No

Name of person/entity/Authorized persons/ members of

Governing Body/Board of Trustees /Executive Committee, if it is
ultimate governing body.

1
2
3

Caution in Obtainment of Required Documents 7

i.

In case of an individual with shaky/immature signatures:

a. Obtain two recent passport size photographs, in addition to copy of CNIC and its NADRA
Verisys, of the new account holder besides taking his right and left thumb impression
on the Specimen Signature Card (SSC).
b. Paste one of the photographs on AOF and the other on the SSC duly attested by the
Account Opening Authorized Officer of the Branch in such a manner that his
attestation/signatures appear partly on the photograph and partly on relative
form/card.
c. Advise account holder that at the time of each withdrawal he would be required to
apply both thumb impressions on the cheque, in the presence of the passing
officer/head cashier, who will verify him personally (through photograph and thumbs
impression) before making any payment.
Accounts of individuals who have shaky/immature signatures possess high risk.
Therefore, to mitigate the associated risk, their account should be opened only after
fulfillment of these conditions.

Instruction Circular No. 102 of 2012 (CDD Measures for Establishing Business Relationship)

24

KYC/ AML/ CFT PROCEDURE MANUAL

ii.

In case of expired CNIC, account may be opened on the basis of attested NADRA
receipt/token and expired CNIC subject to condition that the Branch shall obtain copy of
renewed CNIC of such customer within 03 months of the opening of account. Besides,
taking an undertaking from customer in writing that a copy of CNIC will be submitted
immediately upon issuance of CNIC as evidenced by the receipt, Branch shall continue to
take reasonable measures to immediately obtain copies of renewed CNICs from existing
customers/account holders, whenever expired.

iii.

Branch shall obtain copies of CNICs of all the members of Governing and Executive Bodies
of DHA or ask for delegation of power to Administrator under section (7) & (8) of the
Pakistan Defense Housing Authority Order, 1980 and accept copy of CNIC of Administrator
as well as authorized signatories for the purpose of opening accounts of DHA or similar
other authorities subject to compliance of other requirements.

iv.

The condition of obtaining Board Resolution is not necessary for foreign companies/entities
belonging to countries where said requirements are not enforced under their laws and
regulations. However, such foreign companies will have to furnish Power of Attorney from
the competent authority for opening bank accounts to the satisfaction of their banks.

CDD measures on all of the joint account holders shall be performed as if each of them were
individual customers of the bank.
Compliance Groups approval in case of High Risk Account should be kept along with print out
of Account Opening Form and its supporting documents for any post-audit /compliance review.
II.

Occasional Customers/ Walk-In Customers

Occasional customer or walk-in-customer means the person conducting occasional transactions
and is not a customer; having relationship with the bank.
Being in line with the measures recommended in AML/CFT Regulations issued by State Bank of
Pakistan, the staff shall:
(a) in case of occasional customers/walk-in-customers;
(i) obtain copy of CNIC while conducting cash transactions above rupees 0.5 million; and
(ii) obtain copy of CNIC while issuing remittance instruments e.g. POs, DDs and MTs etc.

(b) obtain copy of CNIC (regardless of threshold) while conducting online transactions by
occasional customers/walk-in- customers8 (except deposits through Cash Deposit Machines
or cash collection/management services). If transaction exceeds Rs. 100,000 the name and
CNIC No. shall be captured in system and made accessible along with transaction details at
beneficiarys branch.

Instruction Circular No. 093 of 2012 (Occasional Customer or Walk-in Customer (AML/CFT) Regulations)

25

KYC/ AML/ CFT PROCEDURE MANUAL

III.

Wire Transfer/Fund Transfer

Wire Transfer/Funds Transfer means any transaction carried out by financial institution on
behalf of originator person by way of electronic means or otherwise to make an amount of
money available to beneficiary person at another beneficiary institution, irrespective of
whether the originator and the beneficiary are the same person.
NBP will ensure that funds transfers which are out of character/ inconsistent with the history,
pattern, source of earnings and purpose, shall be viewed with suspicion and properly
investigated for appropriate action, as per law. Special attention should be paid to
geographical factors/locations for movement funds.
Steps have been taken by NBP to comply with SBPs AML/CFT Regulations. During the
procedure, It should be ensured that following fields containing in Remittance/Fund Transfer
Application (F-117-Revised) have been properly filled-in by the applicant;
Beneficiary Details

Name
Address
Contact No.

Applicants Details

Name
Address
CNIC/Passport No.
Line of Business/Occupation Source of
Funds
Purpose of Remittance
Relationship with Beneficiary

In the cases of cash deposit and fund transfer, another window would pop-in reflecting
additional fields which are required to be filled on the basis of information / documents
offered by the originator. Once all fields, have been filled, the transaction will be executed
with generation of computerized generated receipt (showing Reference/IBT-FT Number besides
other information). The Reference / IBT-FT Number should also be recorded on IBT Pay in Slip
Form (IBT-02) and kept in records along with IBT Pay-in-Slip Form (IBT-02) and copies of
identification documents offered by the cash depositor or originator of fund transfer
transactions.

In case the originator information is incomplete, it may be considered as a factor in assessing

whether the transaction is suspicious and whether it merits reporting to FMU or termination
thereof is necessary. The bank shall remain cautious when entering into relationship or
transactions with institutions which do not comply with the standard requirements set out for
wire transfers by limiting or even terminating business relationship.
This development will assure that information about the originator remains available
throughout the payment chain ending at beneficiary's (responding) branch end - as per
regulatory framework. The Responding Branch of cash deposit and fund transfer transaction

26

KYC/ AML/ CFT PROCEDURE MANUAL

will have the option to print every transaction executed with Reference/IBT-FT Number, for
any future reference.
All information fed into the system has a link with CNIC number offered and becomes
retrievable for any subsequent transactions executed by same originator i.e., the system
operator is not required to enter data next time but has the option to update/overwrite
information field such as name, address, phone numbers and email ID's, if so required. 9
IV.

Proprietors Individual Accounts

Branch shall not allow personal accounts to be used as business purposes except
proprietorships. Where business transactions in personal accounts of proprietors exceeds
monthly credit turnover of Rs. 5 million, a separate account for business related transactions
should be opened with proper title of the business. 10
Main responsibility to ensure that personal account is not being used for business purpose will
be of the Branch Manager and relationship Manager.
Compliance Officer while reviewing the high value transactions will also review that personal
accounts are not being used for business purposes and will send an Alert to Branch Management
to persuade such customers to open separate business accounts for such purposes.
Compliance will also generate a report of personal accounts showing Monthly turnover of 5
million and above that will be used to analyze that personal accounts are not being used for
business purpose.
In order to verify the physical existence of business or self-employment status, NBP will
conduct physical verification within 05 working days of the opening of account and document
the results thereof on account opening form. In case of unsatisfactory verification, the bank
may consider reporting it to FMU and/or may change risk profile, as appropriate.
For physical verification, a format for Physical Verification of Business /Visitor Report is
included in the Manual as Annexure X.

V.

Accounts Operated by Third Parties

All accounts operated by third party need to be handled very carefully. Customer shall be
interviewed and reasons for such delegation of authority, full particulars of the attorney /
agent and their relationship shall be conclusively established as fair and legally defendable, to
the satisfaction of the bank. All the information / reasons for delegation shall be updated in
the customers profile in CAOP.

Instruction Circular No.33 of 2013 - Prudential Regulations Module (PRM) on Cash Deposits and Fund
Transfer Under Inter Branch Transaction Module (I.B.T.M)
10
Instruction Circular No. 102 of 2012 (CDD Measures for Establishing Business Relationship)

27

KYC/ AML/ CFT PROCEDURE MANUAL

Attorney / third party information shall be scanned through negative lists. In case of a positive
match matter shall be referred to Compliance Group immediately.
VI.

Prize Bonds
Cash transactions involving sale or encashment (purchase) of prize bonds exceeding Rs
2,500,000 shall be reported to FMU as per AML Act 2010. Therefore, the dealing Branch is
required to obtain personal information of the prize bond holder (seller) or purchaser (buyer)
on the format given hereunder and retain the same for reporting purposes.
Concerned personnel shall ensure that application form duly filled-in by the purchaser/seller of
Prize Bonds involving a cash sum of Rs. 2,500,000 has been obtained along with copy of CNIC
and report the transaction to Respective Regional Compliance Officer, for onward reporting to
FMU as Currency Transaction Report (CTR).11

VII.

Dormant Accounts
Generally, Dormant Accounts means the account in which no transaction has been taken place
from last one year. However, if Current Account remains non operative for the period of six
months and PLS Account remains so for one year then NBP would treat these as dormant
accounts.12
For customers whose accounts are either dormant as per banks Procedure Manual or an
attested copy of account holders CNIC is not available in banks records, the bank may allow
credit entries in such accounts. Debit transactions/withdrawals shall not be allowed until the
account holder produces an attested copy of his/her CNIC if already not available and fulfills
all other formalities for activation of the account. However, transactions e.g. debit under the
recovery of loans and markup etc., any permissible bank charges, government duties or levies
and instructions issued under any law or from the court will not be subject to debit or
withdrawal restriction. All inoperative/dormant accounts will be made operative after
completion of customer profile in CAOP.

Bank Managers/Operation Managers shall ensure that all of their non-compliant

customers/clients who have not yet offered copy of CNICs have been served with the Final
Notice as stipulated under Instruction Circular No. 169 of 2009 dated December 31, 2009 and
with the exception of exempted category of accounts, Debit Block option has been exercised
after expiry of period of Final Notice. This restriction should remain enforced against noncompliant accounts, until subject regulatory requirement is fulfilled by the account holder. 13
Special Convertible Rupee Accounts (SCRAs)
11
12
13

(BPRD Circular Letter No. 07 of 2014 Dated 12 Feb 2014)

Instruction Circular No. 15 of 2013 (Amendment in Prize Bonds Rules, 1999)

Instruction Circular No. 122 of 2007 (Dormant and Inoperative Deposit Accounts)
Instruction Circular No. 175 of 2010 (Prudential Regulation M1 Customer Due Diligence)

28

KYC/ AML/ CFT PROCEDURE MANUAL

With a view to facilitate timely settlement of transactions by Foreign Portfolio Investors (FPIs),
in their Special Convertible Rupee Accounts (SCRAs), NBP will reactivate dormant SCRAs upon
receipt of authenticated instructions from the concerned FPI/account holder.
VIII.

Non-Resident Accounts
While dealing in Non-Resident accounts i.e. Accounts of customers residing in foreign countries,
bank should carry out the scrutiny of non-resident accounts travel documents (i.e. entry / exit
details on passport / visa) shall be conducted thoroughly to ensure that they are valid.
Nationality of these customers shall be checked / verified by obtaining the required documents
as mentioned in Customer Due Diligence heading of the Manual.

IX.

Government Accounts
Government accounts shall not be opened in the personal names of the government official(s).
Government 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 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, NBP
may open bank accounts on the basis of special resolution/authority from the concerned
administrative department or highest executive committee of that entity duly endorsed by
their respective unit of finance. The bank 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.

X.

NGOs/NPOs/Trusts/Madrassas/Charities Accounts
All accounts of any NGO / NPO / Trust / Politically Exposed Person (PEP) / Madrassa / Charity /
Hospital / Welfare Association are high Risk accounts and can only be opened with the prior
approval of Compliance Group Head office. Compliance Group Head office will consider the
case on the recommendations of the Regional Head and Branch Manager) (Business Head in case
of Islamic Banking Branches). (Written approval can be sought through letter, official email ID
and/or on the AOF printout)14
Following minimum documents are required to be obtained from NGOs/NPOs/Charities/Trust/
Clubs/Societies/Associations etc. Under AML/CFT Regulations issued by SBP:

14

Instruction Circular No. 25 of 2012

29

KYC/ AML/ CFT PROCEDURE MANUAL

i. Certified copies of:

a. Registration documents/certificate (In case of NGOs, NPOs and Charities)
b. Certificate of Registration/Instrument of Trust (In case of Trust, Clubs, Societies
and Associations etc.)
c. By-laws/Rules & Regulations
ii.

Resolution of the Governing Body/Board of Trustees/Executive Committee, if it is

ultimate governing body, for opening of account authorizing the person(s) to operate
the account.

iii.

Photocopy of identity document as per (i) above of the authorized person(s) and of the
members of Governing Body/Board of Trustees /Executive Committee, if it is ultimate
governing body.

iv.

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 in order to assess the risk profile of the
prospective customer.

Account
opening
of
NGOs/NPOs/Trusts/PEPs/Madrassas/Charities/Hospitals/Welfare
Associations/Accounts for collection of donations will be subject to enhanced due diligence by
scrutinizing thoroughly all the supporting documents. Enhanced Due Diligence (EDD) of the
entity, its signatories and members of the governing body will also be conducted. Additionally,
under enhanced due diligence, all associates/members will also be subject to scrutiny through
negative lists linked with CAOP to assure that these persons are not affiliated with any
proscribed entity/entities.
As recommended by AML/CFT Regulations, to exercise Enhanced Due Diligence in relation to
these customers, NBP shall:
1. Obtain
a
declaration
from
Governing
Body/Board
of
Trustees/Executive
Committee/sponsors on ultimate control, purpose and source of funds etc;
2. Obtain an undertaking from Governing Body/Board of Trustees/Executive Committee
/sponsors to inform the Bank about any change of control or ownership during operation of
the account; and
3. Obtain a fresh Resolution of the Governing Body/Executive Committee of the entity in case
of change in person(s) authorized to operate the account.
Format for the declaration and undertaking is attached to the Manual as Annexure IX
Field functionaries shall remain vigilant about the usage of accounts of their customers and
make sure that the personal accounts are not being used for collections of donations/charity.

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KYC/ AML/ CFT PROCEDURE MANUAL

If they find any personal account being used for collection of donation/charity purpose,
Suspicious Transaction Report (STR) must be raised to Compliance Group immediately.
If any branch finds that any advertisement in print/electronic media has been made for
collection of donations, the Branch Manager should have a close review of the same to satisfy
that Branch Name and Account number appearing therein are unerringly referred to and in
instances where any difference/mismatch is noticed, the matter needs to be reported to
Branch Compliance Officer/Regional Compliance Officer besides immediate caution mark on
such account. The Branch Compliance Officer/Regional Compliance Officer will have a close
look for filing Suspicious Transaction Report (STR) to Group Chief, Compliance Group; for
onward reporting to FMU.15
5.2.2.4. Customer Identity Verification
FATF Recommendations make it clear that financial institutions should verify the identity of
the customer and beneficial owner before or during the course of establishing a business
relationship or conducting transactions for occasional customers. Also, AML/CFT Regulations
issued by SBP give customer identity verification the utmost importance.
The Bank/ DFI shall verify identities of the customers (natural persons) and in case of legal
persons, identities of their natural persons from relevant authorities or where necessary using
other reliable, independent sources and retain on record copies of all reference documents
used for identification and verification. The verification includes CNIC verification from
NADRA, for which no cost is to be passed on to intending account holders.16
1.

Identification and Verification of Natural Persons Acting on Customers Behalf

Where one or more natural persons are acting on behalf of a customer or where customer is
legal person, Branch shall identify the natural persons who act on behalf of the customer and
verify the identity of such persons.
Authority of such person to act on behalf of the customer needs to be verified through
documentary evidence including specimen signature of the persons so authorized.

2.

Identification and Verification of Identity of Beneficial Owners

In case of beneficial owner(s) in relation to a customer, reasonable measures are to be taken to
obtain information to identify and verify the identities of beneficial owner(s).
Where the customer is not a natural person, Branch need to (i) take reasonable measures to
understand the ownership and control structure of the customer for obtaining information
required and (ii) determine that the natural persons who ultimately own or control the
customer.

15
16

Instruction Circular No. 25 of 2012

Instruction Circular No. 102 of 2012 (CDD Measures for Establishing Business Relationship)

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KYC/ AML/ CFT PROCEDURE MANUAL

3.

Information on the Purpose and Intended Nature of Business Relations

Branch needs to obtain from customers information as to purpose and intended nature of
business relations.

5.2.2.5. Timing of Verification

Verification of the identity of the customers and beneficial owners should be completed
before business relations are established including verification of CNIC/NICOP/POC from
NADRA.
5.2.2.6. Discrepancies Uncovered During Identity Verification
Discrepancies (such as issuance of more than one CNIC to one individual, mismatch between
particulars in the NADRA database and customer provided CNIC) uncovered by bank official
during CNIC verification should be reported to NADRA17.
In case the person is detected as suspect by NADRA because of holding more than one identity
card, his account should not be opened unless letter of clearance from NADRA is obtained.
Branches are allowed to use alternate sources for confirmation of bonafide customers whose
verification sheet prompts the remarks like requires further verification where there are
reasons to believe that true identity of customer cannot be determined through verification
process. Such customer account should only be opened after Branch officials have satisfied
that the customer is genuine CNIC card holder and customer account has been opened after
his meeting of KYC/CDD and AML/CTF requirements 18.
5.2.3.

Ongoing Monitoring of Accounts

All business relations with customers shall be monitored on an ongoing basis to ensure that the
transactions are consistent with the banks knowledge of the customer, its business and risk
profile and where appropriate, the sources of funds. Special attention shall be paid on cash
based transactions considering examples of Red Alerts given in Annexure-III to the Manual.
Bank shall obtain information and examine, as far as possible the background and purpose of
all complex, unusual large transactions, and all unusual patterns of transactions, which have
no apparent economic or visible lawful purpose. The background and purpose of these
transactions shall be inquired and findings shall be documented with a view to making this
information available to the relevant competent authorities when required.

17
18

Instruction Circular No. 105/2007 dated October 10, 2007.

Instruction Circular No. 48/2007 dated May 31, 2007.

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KYC/ AML/ CFT PROCEDURE MANUAL

Bank shall periodically review the adequacy of customer information obtained in respect of
customers and beneficial owners and ensure that the information is kept up to date,
particularly for higher risk categories of customers. Customers profiles should be revised
keeping in view the spirit of KYC/CDD and basis of revision shall be documented and customers
may be consulted, if necessary.
All High Risk Accounts must be reviewed on annual basis and other accounts on three year
basis.
All existing and future relationships/ Accounts of NGOs / NPOs / Trusts / PEPs / Madrassas /
Charities / Hospitals / Welfare Associations / Accounts for collection of donations (High Risk
Category accounts) must be reviewed and monitored 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. In case of any positive match, Branch will immediately refer the case to Compliance to
take action as per law.
Instructions Circular No.113/2013 Dated October 14, 2013 will be read as part of this Manual.
5.2.4.

Record Keeping
To be compliant with AML/CFT Regulations issued by SBP,NBP shall maintain all 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.
The 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 transactions records may be
maintained in paper or electronic form or on microfilm, provided it is admissible as evidence
in a court of law.
The records of identification data obtained through CDD process like copies of identification
documents, account opening forms, CIF, 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 banks attestation.
The bank shall, however, retain those records for longer period where transactions, customers
or accounts involve litigation or it is required by court or other competent authority. It must be
ensured that NBP shall always be in a position to satisfy, on timely basis, any enquiry or order
from the relevant competent authorities including law enforcement agencies and FMU for
supply of information and records as per law.

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KYC/ AML/ CFT PROCEDURE MANUAL

6.

TRANSACTION MONITORING
Branches should pay special attention to all complex, unusually large transactions and all
unusual patterns, which have no apparent economic or visible lawful purpose. The branches
should pay particular attention to the transactions which exceed prescribed threshold limits for
a particular category of account. Transactions that involve large amount of cash inconsistent
with the normal and expected activity of the customer or very high account turnover
inconsistent with the size of the balance maintained should particularly attract the attention of
the bank. High risk accounts have to be subjected to intensified monitoring and bank should set
key indicators for such accounts, keeping in view the background of the customer, country of
origin, sources of funds and types of transactions involved.
The Manuals objective of such procedures shall be to enable the bank to predict with relative
certainty the types of transactions in which a customer is likely to be engaged.
Till the TMS (transactions Monitoring system is not in place, the following process will be
adopted to review the transaction from AML perspective:
1. Review of Large Transactions
It is obligatory for Incharge Deposits / Branch Operations Manager / Branch Manager to;
a) review transactions involving an amount of Rs. 500,000/- or more
b) scrutinize them in order to screen out suspicious ones / unusual movements in the
customer accounts
c) report suspicious transactions directly or through Branch Compliance Officer (where
available) or to Regional Compliance Officer.
For the purpose, the Incharge Deposits / Head Cashier on daily basis, will list down transactions
involving an amount of Rs. 500,000/- or more in Large Transactions Activity Report, to be
prepared as per following format:LARGE TRANSACTIONS ACTIVITY REPORT
For Rs. 500,000/- & Above
Branch _________
Date
__________
A/c#

Title

Amount

DR./CR.

Remarks
C Cleared
S Suspicious

__________
_______________
Prepared by:
Reviewed by:
Incharge Deposits/Head Cashier Branch Manager (Category-I)
Operations
Manager
Compliance Officer (Category-III)

(Category-II)

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KYC/ AML/ CFT PROCEDURE MANUAL

The Reviewing Officer is responsible to scrutinize large transactions of the day vis--vis nature
of business of the account holder and movements in the account. If nothing suspicious is found
he will record Cleared in the Remarks column and put his initials. Where he is not satisfied
he will record Suspicious in the Remarks column and will then enter details of such
transactions in Suspicious Transactions Register for the purpose of carrying out further
probe, investigations and to seek clarification from the account holders concerned, before
reporting of transaction to Regional Compliance Officer.

In order to further strengthen the CDD regime, SBP vide BPRD AML-01/2014-2001 dated Feb
6, 2014 has advised to follow minimum set of instructions as under: a. The Compliance Department of each bank shall maintain data of top 100 regular deposit
accounts of its each branch as per attached format Annexure XI which should be updated
half-yearly as of 30th June and 31st December within one month of close of each halfyear. (This information is to be provided by the respective Branches)
b. The branches of bank shall carry out assessment of such accounts regarding Compliance
of the CDD requirements and identify any deviations/deficiencies.
c. The Compliance Department shall monitor the assessment made by branches and
regularly follow-up with the relevant branches for rectification of the issues identified
during the assessment process.
d. The bank shall keep record of correspondence and other documentation of the assessment
process for review during the course of SBP Inspection.
e. The data of accounts closed during each preceding half-year shall also be maintained
within one month of close of each half-year as per attached format (Annexure-XII).
To facilitate the Branches:
o IT data centres will email the branch wise statement to the respective branches with a CC
to respective RCO, GM Business and Operations.
Branches are required to:
1. Review the data in detail; make correction if required and fill-in the empty fields in the
system as well as in the report.
2. Fill in Debit & Credit Turnover columns as per customer profile. (These fields will be
filled in by the BM/BOMs as per their personal assessment of the customer in
consideration of his/her status/profile. Same fields must also be updated in customers
profile in CAOP.
3. Branches must ensure submission of this data through email to RCO, GM Business and
GM operations within 30 days of close of each half year.
Responsibility of completion of this assignment will rest on the Regional Heads. Accordingly
The Compliance Department shall monitor the assessment made by branches and regularly
follow-up with the relevant branches for rectification of the issues identified during the
assessment process.

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KYC/ AML/ CFT PROCEDURE MANUAL

RCOs/ BCOs will also review the above reports with respect to:

Does the sources of

income of the customer
justify this transaction

AML / Transaction review

What is customers line
of business/sources of
income?

with respect to profile of the customer

Customers KYC/CDD form is
Is he/she the beneficial owner of
updated and that the transaction
this account?
justifies and is as per details
mentioned in the KYC-CDD form
or not.

RCOs will be responsible to review these transactions from AML perspective, hold Q&A with the
respective Branch Manager and if they find any suspicion should recommend the case to
AML/KYC Wing of compliance Group to file STR. RCOs are required to maintain this statement
on Branch wise and date wise basis.
RCOs will also be responsible to review the high risk account of their respective regions on
quarterly basis with respective to their annual review and to seek Branch Managers comments
on the conduct and transactions patterns of these High Risk Accounts of their respective
regions.
7.

TRANSACTION REPORTING

7.1.

Suspicious Transactions Defined

Under AML Act 2010, a transaction is a suspicious transaction if the transaction (or a pattern of
transactions of which the transaction is part):
a) involves funds derived from illegal activities or is intended /conducted in order to hide or
disguise proceeds of crime;
b) is designed to evade any requirements of Section-7 of AML Act 2010;
c) has no apparent lawful purpose after examining the available facts including the
background and possible purpose of the transaction; or
d) involves financing of terrorism.

7.2.

Maintenance of Suspicious Transactions Register

The Suspicious Transactions Register is required to be maintained at all branches to offer
proper record of all those transactions that have been screened out as Suspicious.
Where the Reviewing Officer after his probe / clarification given by the customer/account
officer is satisfied that suspicion has since been cleared, he will record his remark against such
transactions as Suspicion Cleared. In case the Reviewing Officer is not satisfied with the
given explanation he will record his remark as Suspicion Upheld.

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KYC/ AML/ CFT PROCEDURE MANUAL

Suspicious Transactions Register opened for the purpose will have the following format:Date

Amount

Type of A/c
Brief
Explanation
of the
customer /
account
holder

A/c #

Title

Remarks
Suspicion
cleared (SC)
/ Suspicion
upheld (SU)

Initials

The review and reporting of large transactions involving Rs. 500,000/- and above do not in any
way means that any transaction of smaller amount which is inconsistent with the normal
movement / activity of an Account may not be taken exception of.
7.3.

Reporting Of Suspicious Transactions

Branch Dealing Officials must report any reasonable suspicions that they have noted about a
customer or a transaction to Branch Anti Money Laundering Supervisory Officer.
When a suspicious transaction has been identified, following should be taken care of:
the suspected customer is not alerted
the matter is dealt with quickly and professionally.
Report suspicions with supporting information as Suspicious Transaction Report containing all
relevant details and information leading to suspicion as per prescribed format provided as
Annexure-V to the Manual. STR shall be filed with FMU immediately but not later than seven
working days after forming suspicion.

7.4.

Suspicious Transaction Report Flow

All transactions where the Reviewing Officer has recorded his remarks as Suspicion upheld
will be reported on the prescribed format to ensure that all necessary details have been
conveyed to him for onward reporting to Group Chief Compliance, Head Office, Karachi.
Reporting shall be made by as follows:

Branch Manager
Operations Manager
Branch Compliance Officer

In case of Category I Branch.

In case of Category II Branch.
In case of Category III Branch.

The Regional Compliance Officer is required to report the transactions under Exceptional
Report to Compliance Group, Head Office, Karachi for their onward reporting to Financial
Monitoring Unit (FMU).

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KYC/ AML/ CFT PROCEDURE MANUAL

Members of Regional Management Team, Regional Inspectors, and Internal Auditors have the
directives to review the Branch Large Transactions Activity Report and Suspicious
Transactions Register upon their visits to the Branch.
7.5.

Liability for Failure to File Suspicious Transaction Report

Failure to file Suspicious Transaction Report or giving false information would make the
concerned person liable for imprisonment for a term which may extend to three years or with
fine which may extend to one hundred thousand rupees or both.

7.6.

Currency Transaction Reporting

Cash based transaction involving payment, receipt or transfer of an amount exceeding the
minimum threshold (Rs. 2.5 million) specified by the National Executive Committee (NEC)
formed under AML Act, 2010.

7.7.

Filing of Currency Transaction Report

CTR shall be filed with FMU within seven working days after the respective currency
transaction. The Currency Transaction Reporting Form is attached as Annexure-I to the
Manual.

7.8.

Confidentiality of STR and CTR / Tipping Off

Any STR (from the stage of initiation till reporting to FMU) or CTR does not require that
customer is denied the banking facility. However, details of any STR or CTR should be kept
confidential and should not be shared at all with the customer or any irrelevant bank staff or
anyone outside the bank. Informing the customer about the STR or CTR (i.e. Tipping off) is a
criminal offense.

7.9.

Retention of Records Related to STR and CTR

NBP shall keep and maintain all records related to Suspicious Transaction Reports and Currency
Transaction Reports filed by it for a period of at least five years after reporting of transaction
to FMU.
However, such records will be retained by the bank, even after the lapse of the period
prescribed above, till such time the bank gets permission from State Bank of Pakistan to
destroy such record.

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KYC/ AML/ CFT PROCEDURE MANUAL

8.

REMITTANCE TRANSACTIONS (INWARD/OUTWARD)

The major portion of foreign trade and foreign remittances including export, import, home
remittances of Pakistan are denominated in US Dollars. All international transactions
denominated in US Dollars are routed through United States of America either by direct
instructions to Banks in USA to make payments or by providing cover through Banks located in
USA. All these payments and receipts are subject to scrutiny with the list provided by Office of
the Foreign Assets Control (OFAC) of the US Department of Treasury. The OFAC administers and
enforce economic and trade sanctions based on US foreign Policy Manual and national security
goals. The updated OFAC list is available at US Treasury website address mentioned below:
http://www.treas.gov/offices/enforcement/ofac/sdn/t11sdn.pdf
This list contains the names and other details of terrorists, international narcotics traffickers,
targeted foreign countries and those engaged in activities related to the proliferation of
weapons of mass destruction.
Bank has prescribed screening of all foreign exchange related transactions at SWIFT Center
according to the list maintained by OFAC. European Union has also been maintaining a separate
list to ensure that persons, individuals, groups and entities under financial sanction imposed by
European Union are not dealt with, under any circumstances. European Union list web link is:
http://ec.europa.eu/external_relations/cfsp/sanctions/list/version4/global/e_ctlview.html
All FE dealing branches now have to route their foreign exchange related transactions through
SWIFT Centers instead of traditional communication means such as mail, fax or telex etc. The
procedure which the Bank has prescribed to be adopted by SWIFT Centers is appended below:
All FE dealing branches will route their foreign exchange related transactions through
SWIFT Centers instead of traditional communication means such as mail, fax or telex etc.
At SWIFT Centre there will be a dedicated Screening Officer to perform the job of
screening of intended foreign exchange transaction with OFAC list / European list before its
execution.
The Screening Officer will search the name of the Beneficiary and Remitter on the OFAC
List / European list for the SWIFT Message received from a Branch.
After assuring that the name has not been found the Screening Officer will relay / transmit
the message to its destination and will make a screen print out of windows. A copy of it
along with the SWIFT message sent will later be delivered to the concerned branch for
their record.
The Screening Officer will ensure that he has downloaded any updated list before beginning
his job in a given day.

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KYC/ AML/ CFT PROCEDURE MANUAL

This screening of transactions to determine whether there is any OFAC related effects that may
lead to transaction blocking or rejection by OFAC will reduce institution exposure to penalty
and save time and efforts19.
8.1. SWIFT Message Type for Handling Outward Remittances20
The business that has drawn most attention from US bank regulators in the recent past is the
correspondent banking business in general and the payment business in particular. Keeping in
view the risk of blocking of transaction by US Regulators and loss of reputation besides heavy
fines, SWIFT message type MT 202 should exclusively be used for the purpose of bank-to-bank
transactions only i.e., no customer payments are to be made using MT 202.
8.2. SWIFT Message MT103
For payments to be affected on behalf of customer via Swift, Message Type MT 103 is to be
used to ensure conveying of clear information on the originator and beneficiary including the
purpose of transaction. For example foreign exchange remittances transactions involving US
dollar values should be sent to Wall Street Branch, New York, USA via Swift Message MT 103.
Many commercial banks have prescribed internal controls and procedures whereby they have
declared themselves neither liable nor responsible for their non-acceptance or non-processing
of any incoming Wire Transfer in favor of any person or entity unless the following information
is provided:
Remitters Full Name,
Address and the name of the Remitters Bank and Branch.
The purpose of the payment.
The Beneficiarys Full Name, Account Number, Address and Branch Code/Name.
The provision of the above information would ensure that transactions are carried out in a
timely fashion by the correspondent bank. Branch officials should therefore ensure that they
have offered complete information in their SWIFT Message to avoid delayed / holding of
beneficiary funds by correspondent bank.
8.3. SWIFT Message for Cover Payments (MT 202 COV) 21
The international regulatory environment has become increasingly strict globally after Global
Finance Crisis 2008. In wake of this changing scenario, SWIFT in collaboration with US
Regulators has introduced a new SWIFT message format for cover payments known as MT 202
COV to ensure transparency and prevention of Money Laundering/Terrorist Financing through
use of international payment systems and wire transfer services.

19

Instruction Circular No. 113/2007 dated July 20, 2007.

Instruction Circular No. 114 of 2006 - Swift Message Type for Handling Outward Remittances
21
Instruction Circular No. 119 of 2011 - Introduction of New SWIFT Message Format for Cover Payments (MT-202
COV)
20

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KYC/ AML/ CFT PROCEDURE MANUAL

Following points need to be taken into account to have better understanding of new SWIFT
message format:
This new format will be used as cover message for transfer of credit to beneficiarys bank
to which direct MT 103, Client Credit Information has already been sent from the
originating bank.
The MT 202 COV will carry additional mandatory fields requiring detail of ordering party
and beneficiary information.
It must be noted that the US-Clearing House Inter-Bank Payment System (CHIPS) and
FEDWIRE Transfer Systems also comply with MT 202 COV requirements.
SWIFT messages with missing mandatory fields or containing incomplete information in
mandatory fields will be rejected by the SWIFT.
It is worth mentioning that the regular MT 202 for bank to bank transfers will continue to
be in use for Treasury related settlements i.e., fund placements or Foreign Exchange Deals
where both originator and beneficiary are financial institutions.
Directives for SWIFT Centers and Authorized Foreign Exchange Branches
Adequate attention should be paid by all SWIFT Centers and authorized Foreign Exchange
branches before making payments.
a) Appropriate SWIFT messages formats are to be used to transmit payment instructions,
depending on the type of transactions as provided in the SWIFT user handbook, particularly
the ones pertaining to cover payments against a direct MT 103 message.
b) All qualifying wire transfers must accompany complete mandatory originator and
beneficiary information as under:
Originator
Name:
Address:
Account No.:
Phone No./E-mail:
Purpose of Remittance:

Beneficiary
Name:
Address:
Account No.:
Phone No./E-mail:
Purpose of Remittance:

c) No information should be omitted, deleted or altered in a payment message for the

purpose of avoiding detection of that information by the intermediary and final beneficiary
banks.
The incharges SWIFT Centers and Foreign Exchange Desk at FX branches must understand
that NBP New York is playing central role in providing the services of US Dollar
international wire transfer to NBP Head Office and domestic branches. NBP New York will
have to comply with all the US Regulatory requirements. Therefore, NBP New York is bound
to comply with the above standards and has the right to decline/reject the handling of any
transaction which does not fulfill the stated requirements. Failure to abide by these
standards may also cause payments system, SWIFT/FEDWIRE to reject the payment.

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KYC/ AML/ CFT PROCEDURE MANUAL

9.

CORRESPONDENT BANKING
1. In addition to the enhanced due diligence measures (as deemed necessary by the bank),
NBP shall take the following measures for providing correspondent banking services
(a) Assess the suitability of the respondent bank by taking the following steps:
(i) Gather adequate information about the respondent bank to understand fully the nature
of the respondent banks business, including the following, where applicable;
Correspondent Banks Know Your Customer (KYC) policy
Information about the respondent banks management and ownership
Major business activities
Their geographical presence/jurisdiction (country) of correspondence
Money Laundering prevention and detection measures/AML/CFT Regulations in
place.
Money laundering prevention and detection measures.
Condition of the bank regulations and supervision in the correspondents country.
The purpose of the account or service
Undertaking that correspondent banking services will not be used for payable
through accounts
The identity of any third party that will use the correspondent banking services will
be disclosed and detailed information of the sender/receiver/beneficiary will be
provided.
Condition of the bank regulation and supervision in the respondents country
(ii) Determine from any available sources the reputation of the respondent bank and, as
far as practicable, the quality of supervision over the respondent bank, including where
possible whether it has been the subject of money laundering or financing of terrorism
investigation or regulatory action; and
(iii) Assess the respondent bank in the context of sanctions/embargoes and Advisories about
risks.
(b) Clearly understand and document the respective AML/CFT responsibilities of each bank;
(c) Obtain approval of senior management, before establishing new correspondent banking
relationship.
2. Where the cross-border banking services involve a payable-through account, the
correspondent bank shall be satisfied that (a) the respondent bank has performed appropriate CDD measures at least equivalent to
those specified in of SBP AML/CFT regulations on the third party having direct access to
the payable-through account; and
(b) The respondent bank is able to perform ongoing monitoring of its business relations
with that third party and is willing and able to provide customer identification
information to the correspondent bank/ DFI upon request.
3. Bank shall pay special attention when establishing or continuing correspondent relationship
with banks/ financial institutions which are located in jurisdictions that have been
identified or called for by FATF for inadequate and poor AML/CFT standards in the fight
against money laundering and financing of terrorism.

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KYC/ AML/ CFT PROCEDURE MANUAL

4. NBP shall NOT enter into or continue correspondent banking relations with a shell bank and
shall take appropriate measures when establishing correspondent banking relations, to
satisfy them that their respondent banks do not permit their accounts to be used by shell
banks.
5. In case where NBP is availing correspondent banking services from a bank/financial
institution abroad, the CDD measures specified in SBP AML/CFT regulations should be
applied, as considered necessary to mitigate ML/TF risks.
9.1.

Correspondent Banking Clients Domicile

Country risk shall be assessed with respect to a Correspondent to determine if there is a
potential for money laundering because of factors that relate to a particular country. Factors
that would result in a determination that a country poses a higher money laundering risk
include whether a country:
is subject to sanctions, embargoes or similar measures issued by, for example, the United
Nations or otherwise where national laws apply;
has significant levels of corruption, other criminal activity or is politically unstable as
identified by credible sources;
Lacks appropriate anti-money laundering laws and regulations, or the laws and regulations
are inadequately implemented, as identified by credible sources.
NBP shall consider the domicile and residence of the Correspondent, as well as the country
where the Correspondent's ultimate parent is headquartered. Certain jurisdictions are
internationally recognized as having inadequate anti-money laundering standards, insufficient
regulatory supervision, or presenting greater risk for crime, corruption or terrorist financing.
Therefore, the jurisdiction where the Correspondent Banking Client is based and/or where its
ultimate parent is headquartered may present greater risk. Bank should refuse to enter into or
continue a correspondent banking relationship with a bank present in such jurisdictions or
incorporated in the jurisdiction in which it has no physical presence and which is unaffiliated
with a regulated financial group (i.e., shell banks). Bank should also guard against establishing
relations with correspondent foreign financial institutions that permit their accounts to be used
by shell banks.

9.2.

Correspondent Banking Clients Business and Customer Base

Correspondent relationships should only be established with those foreign banks that have
effective customer acceptance and KYC policies and are effectively supervised by the relevant
authorities. Customer risk factors relate either to the organization and set-up of the
correspondent, or the nature and scope of its business activities. Factors to be considered
which could pose a higher money laundering risk include whether a Correspondent:

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KYC/ AML/ CFT PROCEDURE MANUAL

Is an Offshore Correspondent;
Has a significant Politically Exposed Persons (PEP) involvement in the management or
ownership of certain Correspondent Banking Clients;
Is not state owned or publicly owned (or part of group of companies that are state owned or
publicly owned), although the nature and extent of state ownership, or the conditions under
which the Correspondent is listed and trades on a Stock Market may also be considered relevant.
Is providing higher risk correspondent services to its own customers;
Is licensed and regulated non-banking financial institution such as a remittance or, exchange
house, and money transfer agents;
Is conducting higher risk transactions via the Institution;
If answer to any of the above is yes then NBP shall mark the correspondent relationship as high
risk.
All Correspondence relationships are subject to approval from Operations Committee subject to
fulfillment of all the regulatory KYC/AML /CFT & sanctions regulations and policies.
All of NBP overseas Branches and subsidiaries need to get approval of the Operations Committee
Head office, Karachi-Pakistan to establish correspondent Banking relationships.
Country Head and Compliance Officer of overseas Branches and NBP Subsidiaries will be
responsible to carry out KYC and enhanced due diligence of their correspondent FIs at the time
of on boarding and on annul basis and or whenever there is negative NEWS about the respective
FI.
OBG (FI Department) will be responsible to carry out KYC and enhanced due diligence of FIs at
the time of on boarding and on annul basis and or whenever there is negative NEWS about the
respective FI.
A complete detail of all Correspondence FIs of all the NBP operations (Local as well overseas)
with the KYC/EDD will be maintained and monitored by OBG (FI Department Head office
Karachi)
10.

Global Home Remittances:

All new relationships with the Home Remittance service companies/Tie-ups will be jointly
approved by the Group Chief GHRM and Compliance Group based on:
SBP approval to establish the relationship
Proper Due diligence of Company/its directors and shareholders holding 5% and above
share holdings through (World check/Accuity check/news feeds through web)

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KYC/ AML/ CFT PROCEDURE MANUAL

Submission of NBP-KYC-CDD questionnaire

(compliance Group may also set
skype/telephonic meeting with the compliance head of the respective company/Bank
before approval of establishment.(GHRMG to arrange such meetings)

GHRMG will be responsible to conduct the yearly KYC review of all the tie-ups in consultation with
compliance Group and keep record of reviewed KYC-CDD forms.

Cash Payments of Home Remittances:

AML Filtering system will filter the names of

beneficiaries before uploading the transactions in the NBP remittance system.
Compliance group will take a decision on the fate of the transaction in case of positive match and
forward Clarence or requirement on the same day.
Suspicious scenarios: Till the enterprise wise AML system is not in place, IT section of GHRMG will
generate monthly reports based on the following scenarios:
1. A single Entity/ Person receiving money transfers from multiple senders (3 and more)
2. A single Entity/ Person receiving money transfers from multiple countries (2 and more)
3. Same sender sending remittances to more than 5 persons a month
3. Entities (Senders/ Receivers) sharing the same address/ Contact No./ IDs.
Compliance group will review these reports to ascertain that no Money laundering or CFT is taking
place.
11.

FOREIGN BRANCHES AND SUBSIDIARIES

NBP shall pay particular attention to its branches and subsidiaries located in countries which do
not or insufficiently comply with FATF Recommendations (as determined by FATF or identified
by State Bank of Pakistan) and ensure that the AML/KYC/CFT Policy is observed by branches
and subsidiaries in those countries.

AML/KYC/CFT Policy and the Procedure Manual shall be applicable to all of their branches and
subsidiaries outside Pakistan to the extent that laws and regulations of the host country
permit. Where the AML/KYC/CFT requirements in the host country or jurisdiction differ from
those in Pakistan, NBP shall require its overseas branches or subsidiaries to apply the higher of
the two standards, to the extent that the law of the host country or jurisdiction so permits.
Where the law of the host country conflicts with the AML/KYC/CFT requirements of Pakistan so
that the overseas branch or subsidiary is unable to fully observe the higher standards, NBP
through its head office shall report this to the State Bank of Pakistan and comply with such
further directions as may be issued.
Country heads and respective Compliance officers of overseas branches will be responsible to
comply above or get SBPs direction through Compliance Group Head office.

12.

STAFF TRAINING

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KYC/ AML/ CFT PROCEDURE MANUAL

State Bank of Pakistan has directed the banks to chalk out and implement suitable training
program for relevant employees on annual basis, in order to effectively implement the
regulatory requirements and banks own policies and procedures relating to AML/KYC/CFT.
With this view NBP Training Group shall conduct employee awareness and training programs
featuring AML/KYC/CFT to:
a) Enable them to understand new developments, money laundering and financing of
terrorism techniques, methods and trends.
b) Inform them of their responsibilities relating to AML/KYC/CFT especially requirements
relating to CDD and analysis of abnormal/out of pattern transactions and alerts generated
thereof for possible reporting of suspicious transactions.
c) Develop and conduct the role based Relevant AML/KYC/CFT training for
1.
2.
3.
4.
5.

Front end staff

Branch Management
Regional Management Teams
Middle Management
Senior Management

Further, NBP Training Group to use technology for:

Testing the capacity and knowledge of staff.
To provide on line training on relevant AML/KYC/CFT due to ever changing nature of
methods and trends in illicit activities.

13.

NBP Training Group shall either purchase or internally develop comprehensive AML/KYC/CFT
Computer-based/online Training Programs and Tests under a comprehensive plan with clear
timelines for its implementation.
EFFECTIVE DATE
This KYC/AML/CFT Manual is effective from the date of approval from Operations Committee
Meeting no. _____ Dated: __________.

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KYC/ AML/ CFT PROCEDURE MANUAL

ANNEXURES

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KYC/ AML/ CFT PROCEDURE MANUAL

ANNEXURE-I
CURRENCY TRANSACTION REPORT

(Check appropriate box)

1. Date

____ / ____ / _______ dd/mm/yyyy

Initial Report
2.

Corrected Report

Part I
Person(s) Involved in Transaction(s)
Section A --Person(s) on Whose Behalf Transaction(s) Is Conducted
3.

Name:

4.

Father / Husbands Name:

5.

Address (Permanent):

6.

Address (Present):

7.

Other Known Address:

8.

Phone Number - Residence (include area code)

9.

Phone Number - Office (include area code)

10.

Fax Number

11.

Cell Number

12.

CNIC Number

13.

Any other Identification Number

15.

National Tax Number (NTN), if available

16.Date of Birth:
17.

Nationality

___ /___ /______

(dd/mm/yyyy)

Supplemental
Report

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KYC/ AML/ CFT PROCEDURE MANUAL

18.
19.

Occupation/Type
of Business
Relationship with Financial Institution

CustomerEmployeeAgentWalk in Customer
Other (Please specify)

________________________________

20. Business Relation with Customer (if any)

Section BIndividuals Conducting Transaction(s) (If other than above)

21.

Name:

22.

Father / Husbands Name:

23.

24.

__________________________________________________________________________

Address (Permanent):

Address (Present):

25.

Contact Numbers (including area code)

26.

CNIC Number

27.

Any Other Identification Number

28.

Date of Birth:

29.

Nationality

30.

Occupation/Type of
Business

___ /___ /_____

(dd/mm/yyyy)

31. Relationship with Financial Institution

CustomerEmployeeAgentWalk in Customer
Others (Please Specify)

__________________________________

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KYC/ AML/ CFT PROCEDURE MANUAL

Part II
Amount and Type of Transaction(s) Check all boxes that apply.
32. Date of Transaction

___ /___ /______

(dd/mm/yyyy)

(In Case of Local Currency)

33.Total Cash in

34.Total Cash out

(In Case of Foreign Currency)

35. Foreign Cash in

36. Foreign Cash out

37. Name of Foreign Country

Type of Transaction
Negotiable Instrument(s)Negotiable Instrument(s)
38)Purchased
39)Cashed
40)Currency Exchange(s)
Account Number(s)
42)Affected (if any)

41)Deposit / Withdrawal

43)Wire Transfer(s)

44)Others (specify)
_________________________________

______________________________

_________________________________

______________________________

_________________________________

______________________________

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KYC/ AML/ CFT PROCEDURE MANUAL

Part III
Financial Institution Where Transaction(s) Takes Place
45. Name of Institution ____________________________________________________________
46. NIFT Code
47. Branch Code
48. Address of Financial Institution:
_____________________________________________________________________________
_____________________________________________________________________________
49. Name of Branch where transaction / activity occurred: ______________________________
50. Address of Branch:______________________________________________________________
______________________________________________________________________________
Reporting Officer
51.

53.

55.

Name

Phone Number(s) (Include area code)

Email Address

52.

Designation

54.

Fax Number(s) (Include area code)

56.

Cell Number(s)

58.

Phone Number(s)

Contact Person
57. Name

(Seal & Signature of Reporting

Officer)

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KYC/ AML/ CFT PROCEDURE MANUAL

ANNEXURE-II
NBP INSTRUCTION CIRCULARS INDEX
(Relevant to AML-KYC)
S.NO.

CIRCULAR

Instruction Circular No. 36 of 2013

Instruction Circular No. 33 of 2013

Instruction Circular No. 15 of 2013

Instruction Circular No. 112 of 2012

Instruction Circular No. 102 of 2012

Instruction Circular No. 098 of 2012

Instruction Circular No. 093 of 2012

Instruction Circular No. 088 of 2012

Instruction Circular No. 042 of 2012

10

Instruction Circular No. 034 of 2012

11

Instruction Circular No. 025 of 2012

12

Instruction Circular No. 004 of 2012

13

Instruction Circular No. 119 of 2011

14

Instruction Circular No. 106 of 2011

15

Instruction Circular No. 095 of 2011

16

Instruction Circular No. 175 of 2010

17

Instruction Circular No. 171 of 2010

18

Instruction Circular No. 074 of 2010

19

Instruction Circular No. 022 of 2010

DESCRIPTION
EBS Based Account Opening Data Migration to CAOP
After Required Data Cleansing Exercise
Prudential Regulations Module (PRM) on Cash Deposits
and Fund Transfer Under Inter Branch Transaction
Module (I.B.T.M)
Amendment in Prize Bonds Rules, 1999
Mandatory NADRA Verisys Test for CNICs and SNICs
Offered for Account Opening
CDD Measures for Establishing Business Relationship
CDD Measures for Establishing Business Relationship
Ranking of Accounts Opened on the basis of KYC Risk
Based Approach
Occasional Customer or Walk-in-Customer (AML-CFT)
Regulations
Constituents Accounts General Instructions
AML-CFT Regulations
Zero Tolerance on Violations of the Account Opening
Procedures in Centralized Account Opening Portal
Review/Customer Due Diligence Accounts of
NGOs/NPOs/Trusts
Prudential Regulations M1 to M5 (NGOs/NPOs/Trusts)
Prudential Regulations M1 to M5 (Emphasizing
implementation of certain critical areas)
Introduction of New SWIFT Message Format for Cover
Payments (MT-202 COV)
Centralized Account Opening Portal (CAOP)
Opening of Accounts on the basis of NADRA
Receipt/Token in case of Expired CNICs
Prudential Regulation M1 (Customer Due Diligence)
Prudential Regulation M1 Obtaining CNIC from all the
Banks/DFIs Customers/Clients
Prudential Regulations M1 and M2 (CNIC Verification)
Banking System of Accounts Issuance of Rupee
Traveler Cheques

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ANNEXUREIII
EXAMPLES OR CHARACTERISTICS OF SUSPICIOUS TRANSACTIONS (RED ALERTS)
THAT MAY BE A CAUSE FOR INCREASED SCRUTINY FOR AML/CFT PURPOSES

1. GENERAL COMMENTS
The following are examples or characteristics of possible suspicious transactions for money
laundering or financing of terrorism. This list of situations may be taken as a means of highlighting
the basic ways in which money may be laundered. The examples provided are not exhaustive and
may serve only as guidance of banks/DFIs to recognize suspicious activities.
While each individual situation may not be sufficient to suggest that money laundering is taking
place, a combination of such situations may be indicative of such a transaction. A customers
declarations regarding the background of such transactions shall be checked for plausibility and
explanation offered by the customer may be accepted after reasonable scrutiny.
2. TRANSACTIONS WHICH DO NOT MAKE ECONOMIC SENSE OR INCONSISTENT WITH CUSTOMERS
BUSINESS OR PROFILE
I.
II.
III.

IV.

A customers relationship having a large number of accounts with the same bank, frequent
transfers between different accounts or exaggeratedly high liquidity;
Transactions in which assets are withdrawn immediately after being deposited, unless the
customers business activities furnish a plausible reason for immediate withdrawal;
Transactions that cannot be reconciled with the usual activities of the customer, for
example, the use of Letters of Credit and other methods of trade finance to move money
between countries where such trade is not consistent with the customer's usual business;
Provision of bank guarantees or indemnities as collateral for loans between third parties that
are not in conformity with market conditions;

V.
VI.
VII.
VIII.

Unexpected repayment of an overdue credit without any plausible explanation;

Back-to-back loans without any identifiable and legally admissible purpose;
Paying in large third party cheques endorsed in favour of the customer;
Substantial increases in deposits of cash or negotiable instruments by a professional firm or
company, using client accounts or in-house company or trust accounts, especially if the
deposits are promptly transferred between other client company and trust accounts;

IX.

High velocity of funds through an account, i.e., low beginning and ending daily balances,
which do not reflect the large volume of funds flowing through an account;
Mixing of cash deposits and monetary instruments in an account in which such transactions do
not appear to have any relation to the normal use of the account;
Multiple transactions carried out on the same day at the same branch of a financial
institution but with an apparent attempt to use different tellers;

X.
XI.

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KYC/ AML/ CFT PROCEDURE MANUAL

XII.
XIII.
XIV.

XV.
XVI.
XVII.
XVIII.
XIX.
XX.
XXI.
XXII.

The structuring of deposits through multiple branches of the same bank or by groups of
individuals who enter a single branch at the same time;
The deposit or withdrawal of cash in amounts which fall consistently just below
identification or reporting thresholds;
The deposit or withdrawal of multiple monetary instruments at amounts which consistently
fall just below identification or reporting thresholds, if any, particularly if the instruments
are sequentially numbered;
Customers making large and frequent deposits but cheques drawn on the accounts are
mostly to counter-parties not normally associated with customers business;
Extensive or increased use of safe deposit facilities that do not appear to be justified by
the customer's personal or business activities;
Goods or services purchased by the business do not match the customer's stated line of
business;
A retail business has dramatically different patterns of currency deposits from similar
businesses in the same general location;
Loans are made for, or are paid on behalf of, a third party with no reasonable explanation;
Suspicious movements of funds occur from one financial institution to another, and then
funds are moved back to the first financial institution.
The deposit of excess balance in the accounts linked to credit cards/store value cards.
Unusual pattern of purchase through credit cards/store value cards etc.

3. TRANSACTIONS INVOLVING LARGE AMOUNTS OF CASH

I.
II.
III.
IV.
V.
VI.

VII.
VIII.
IX.
X.

Exchanging an unusually large amount of small-denominated notes for those of higher

denomination;
Purchasing or selling of foreign currencies in substantial amounts by cash settlement despite
the customer having an account with the bank;
Frequent withdrawal of large amounts by means of cheques, including travelers cheques;
Large cash withdrawals from a previously dormant/inactive account, or from an account
which has just received an unexpected large credit locally or from abroad;
Large cash withdrawals made from a personal or business account not normally associated
with customers profile;
Company transactions, both deposits and withdrawals, that are denominated by unusually
large amounts of cash, rather than by way of debits and credits normally associated with the
normal commercial operations of the company, e.g. cheques, letters of credit, bills of
exchange, etc;
Depositing cash by means of numerous credit slips by a customer such that the amount of
each deposit is not substantial, but the total of which is substantial;
The deposit of unusually large amounts of cash by a customer to cover requests for bankers'
drafts, money transfers or other negotiable and readily marketable money instruments;
Customers who together, and simultaneously, use separate tellers to conduct large cash
transactions or foreign exchange transactions;
Large cash deposits made to the account of an individual or legal entity when the apparent
business activity of the individual or entity would normally be conducted in cheques or other
payment instruments.

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4. TRANSACTIONS INVOLVING LOCATIONS OF CONCERN & WIRE TRANSFERS

i.

ii.

iii.

i.

ii.
iii.
iv.

I.

II.
III.
IV.

V.

Transactions involving foreign currency exchanges or deposits that are followed within a
short time by wire transfers to locations of specific concern (for example, countries
identified by national authorities/international bodies, UN or FATF etc.);
A personal or business account through which a large number of incoming or outgoing wire
transfers take place without logical business or other economic purpose, particularly when
this activity is to, through or from locations of specific concern (as mentioned above);
The use of multiple accounts to collect and then funnel funds to a small number of foreign
beneficiaries, both individuals and businesses, particularly when these are in locations of
specific concern (as mentioned above);
Obtaining credit instruments or engaging in commercial financial transactions involving
movement of funds to or from locations of specific concern when there appears to be no
logical business reasons for dealing with those locations (as mentioned above);
The opening of accounts of financial institutions from locations of specific concern (as
mentioned above);
The business relationships conducted in unusual circumstances e.g. significant unexplained
geographic distance between the bank and the customer;
The receipt of small or large amounts (in cash, using online or otherwise) from various
locations from within the country especially if such deposits are subsequently transferred
within a short period out of the account and/or to a destination not normally associated with
the customer;
Substantial increase in cash deposits by a customer without apparent cause, especially if such
deposits are subsequently transferred within a short period out of the account and/or to a
destination not normally associated with the customer;
Building up large balances, not consistent with the known turnover of the customer's
business, and subsequent transfer to account(s) held overseas;
Transfer of money abroad by an interim customer in the absence of any legitimate reason;
Repeated transfers of large amounts of money abroad accompanied by the instruction to pay
the beneficiary in cash;
Large and regular payments that cannot be clearly identified as bona fide transactions, from
and to countries or geographic areas identified by credible sources;
as having significant levels of corruption, or other criminal activity
as providing funding or support for terrorism activities
as associated with the production, processing or marketing of narcotics or other illegal
drugs etc.

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KYC/ AML/ CFT PROCEDURE MANUAL

VI.
VII.

VIII.

IX.

Wire transfers ordered in small amounts in an apparent effort to avoid triggering

identification or reporting requirements;
Wire transfers to or for an individual where information on the originator, or the person on
whose behalf the transaction is conducted, is not provided with the wire transfer, when the
inclusion of such information would be expected;
Use of multiple personal and business accounts or the accounts of non-profit organizations or
charities to collect and then funnel funds immediately or after a short time to a small
number of foreign beneficiaries.
Customer who generally use credit cards/store value cards out of their defined geographical
location or locations prone to money laundering and terrorist financing.

5. TRANSACTIONS INVOLVING UNIDENTIFIED PARTIES

I.

II.
III.
IV.
V.
VI.

Provision of collateral by way of pledge or guarantee without any discernible plausible reason
by third parties unknown to the bank and who have no identifiable close relationship with the
customer;
Transfer of money to another bank without indication of the beneficiary;
Payment orders with inaccurate information concerning the person placing the orders;
Use of pseudonyms or numbered accounts for effecting commercial transactions by
enterprises active in trade and industry;
Customers holding in trust of shares in an unlisted company whose activities cannot be
ascertained by the bank;
Customers who wish to maintain a number of trustee or clients' accounts that do not appear
consistent with their type of business, including transactions that involve nominee names.

6. OTHER SUSPICIOUS ACCOUNTS OR CUSTOMERS

I.
II.

III.
IV.
V.
VI.

VII.

VIII.

Large sums deposited through cheques or otherwise in newly opened accounts which may be
suspicious;
The customers who are reluctant to provide minimal information or provide false or
misleading information or, when applying to open an account, provide information that is
difficult or expensive for the bank to verify;
An account opened in the name of a moneychanger that receives structured deposits;
Customers whose deposits contain counterfeit notes or forged instruments;
An account operated in the name of an offshore company with structured movement of
funds;
Accounts that receive relevant periodical deposits and are dormant at other periods. These
accounts are then used in creating a legitimate appearing financial background through
which additional fraudulent activities may be carried out;
A dormant account containing a minimal sum suddenly receives a deposit or series of deposits
followed by daily cash withdrawals that continue until the sum so received has been
removed;
An account for which several persons have signature authority, yet these persons appear to
have no relation among each other (either family ties or business relationship);

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IX.

X.

XI.

XII.

XIII.

XIV.

XV.

XVI.

XVII.
XVIII.

XIX.
XX.
XXI.

An account opened by a legal entity or an organization that has the same address as other
legal entities or organizations but for which the same person or persons have signature
authority, when there is no apparent economic or legal reason for such an arrangement (for
example, individuals serving as company directors for multiple companies headquartered at
the same location, etc.)
An account opened in the name of a recently formed legal entity and in which a higher than
expected level of deposits are made in comparison with the income of the promoter of the
entity;
An account opened in the name of a legal entity that is believed to be involved in the
activities of an association or foundation whose aims are related to the claims or demands of
a terrorism organization;
An account opened in the name of a legal entity, a foundation or an association, which may
be linked to a terrorism organization and that shows movements of funds above the expected
level of income;
Shared address for individuals involved in cash transactions, particularly when the address is
also a business location and/or does not seem to correspond to the stated occupation (for
example student, unemployed, self-employed, etc.);
Stated occupation of the customer is not commensurate with the level or type of activity (for
example, a student or an unemployed individual who receives or sends large numbers of wire
transfers, or who makes daily maximum cash withdrawals at multiple locations over a wide
geographic area);
Regarding non-profit or charitable organizations, financial transactions for which there
appears to be no logical economic purpose or in which there appears to be no link between
the stated activity of the organization and the other parties in the transaction;
A safe deposit box is opened on behalf of a commercial entity when the business activity of
the customer is unknown or such activity does not appear to justify the use of a safe deposit
box;
Safe deposit boxes are used by individuals who do not reside or work in the institution's
service area despite the availability of such services at an institution closer to them;
Unexplained inconsistencies arising from the process of identifying or verifying the customer
(for example, regarding previous or current country of residence, country of issue of the
passport, countries visited according to the passport, and documents furnished to confirm
name, address and date of birth);
Official embassy business is conducted through personal accounts.
Large deposits on pretext of transfer/disposition of property.
Frequent and unusual advance payments against imports.

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ANNEXURE-IV
(Annexure-X of BPD Circular 05 of 2006 issued by State Bank of Pakistan)
This is also annexed to Guidance for Financial Institutions in Detecting Terrorist Financing as
Annex-1 provided by FATF
CHARACTERISTICS OF FINANCIAL TRANSACTIONS THAT MAY BE A CAUSE FOR INCREASED SCRUTINY
A. Accounts:
(1)

Accounts that receive relevant periodical deposits and are dormant at other periods. These
accounts are then used in creating a legitimate appearing financial background through which
additional fraudulent activities may be carried out.

(2)

A dormant account containing a minimal sum suddenly receives a deposit or series of deposits
followed by daily cash withdrawals that continue until the sum so received has been removed.

(3)

When opening an account, the customer refuses to provide information required by the
financial institution, attempts to reduce the level of information provided to the minimum or
provides information that is misleading or difficult to verify.

(4)

An account for which several persons have signature authority, yet these persons appear to
have no relation among each other (either family ties or business relationship).

(5)

An account opened by a legal entity or an organization that has the same address as other legal
entities or organizations but for which the same person or persons have signature authority,
when there is no apparent economic or legal reason for such an arrangement (for example,
individuals serving as company directors for multiple companies headquartered at the same
location, etc.).

(6)

An account opened in the name of a recently formed legal entity and in which a higher than
expected level of deposits are made in comparison with the income of the promoter of the
entity.

(7)

The opening by the same person of multiple accounts into which numerous small deposits are
made that in aggregate are not commensurate with the expected income of the customer.

(8)

An account opened in the name of a legal entity that is involved in the activities of an
associate ion or foundation whose aims are related to the claims or demands of a terrorist
organization.

(9)

An account opened in the name of a legal entity, a foundation or an association, which may be
linked to a terrorist organization and that shows movements of funds above the expected level
of income.

B. Deposits and Withdrawals:

(1)

Deposits for a business entity in combinations of monetary instruments that are a typical of the
activity normally associated with such a business.

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(2)

Large cash withdrawals made from a business account not normally associated with cash
transactions.

(3)

Large cash deposits made to the account of an individual or legal entity when the apparent
business activity of the individual or entity would normally be conducted in cheques or other
payment instruments.

(4)

Mixing of cash deposits and monetary instruments in an account in which such transactions do
not appear to have any relation to the normal use of the account.

(5)

Multiple transactions carried out on the same day at the same branch of a financial institution
but with an apparent attempt to use different tellers.

(6)

The structuring of deposits through multiple branches of the same financial institution or by
groups of individuals who enter a single branch at the same time.

(7)

The deposit or withdrawal of cash in amounts which fall consistently just below identification
or reporting thresholds.

(8)

The presentation of uncounted funds for a transaction. Upon counting, the transaction is
reduced to an amount just below that which would trigger reporting or identification
requirements.

(9)

The deposit or withdrawal of multiple monetary instruments at amounts which fall consistently
just below identification or reporting thresholds, if any, particularly if the instruments are
sequentially numbered.

C. Wire Transfers:
(1)

Wire transfers ordered in small amounts in an apparent effort to avoid triggering identification
or reporting requirements.

(2)

Wire transfers to or for an individual where information on the originator, or the person on
whose behalf the transaction is conducted, is not provided with the wire transfer, when the
inclusion of such information would be expected.

(3)

Use of multiple personal and business accounts or the accounts of non-profit organizations or
charities to collect and then funnel funds immediately or after a short time to a small number
of foreign beneficiaries.

(4)

Foreign exchange transactions that are performed on behalf of a customer by a third party
followed by wire transfers of the funds to locations having no apparent business connection
with the customer or to countries of specific concern.

D. Characteristics of the Customer or His/Her Business Activity:

(1)

Funds generated by a business owned by individuals of the same origin or involvement of

multiple individuals of the same origin from countries of specific concern acting on behalf of
similar business types.

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(2)

Shared address for individuals involved in cash transactions, particularly when the address is
also a business location and/or does not seem to correspond to the stated occupation (for
example student, unemployed, self-employed, etc.).

(3)

Stated occupation of the transactor is not commensurate with the level or type of activity (for
example, a student or an unemployed individual who receives or sends large numbers of wire
transfers, or who makes daily maximum cash withdrawals at multiple locations over a wide
geographic area).

(4)

Regarding non-profit or charitable organizations, financial transactions for which there appears
to be no logical economic purpose or in which there appears to be no link between the stated
activity of the organization and the other parties in the transaction.

(5)

A safe deposit box is opened on behalf of a commercial entity when the business activity of the
customer is unknown or such activity does not appear to justify the use of a safe deposit box.

(6)

Unexplained inconsistencies arising from the process of identifying or verifying the customer
(for example, regarding previous or current country of residence, country of issue of the
passport, countries visited according to the passport, and documents furnished to confirm
name, address and date of birth).

E. Transactions Linked to Locations of Concern:

(1)

Transactions involving foreign currency exchanges that are followed within a short time by wire
transfers to locations of specific concern (for example, countries designated by national
authorities, FATF non-cooperative countries and territories, etc.).

(2)

Deposits are followed within a short time by wire transfers of funds, particularly to or through
a location of specific concern (for example, countries designated by national authorities, FATF
non-cooperative countries and territories, etc.).

(3)

A business account through which a large number of incoming or outgoing wire transfers take
place and for which there appears to be no logical business or other economic purpose,
particularly when this activity is to, through or from locations of specific concern.

(4)

The use of multiple accounts to collect and then funnel funds to a small number of foreign
beneficiaries, both individuals and businesses, particularly when these are in locations of
specific concern.

(5)

A customer obtains a credit instrument or engages in commercial financial transactions

involving movement of funds to or from locations of specific concern when there appears to be
no logical business reasons for dealing with those locations.

(6)

The opening of accounts of financial institutions from locations of specific concern.

(7)

Sending or receiving funds by international transfers from and/or to locations of specific

concern.

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ANNEXURE-V
SUSPICIOUS TRANSACTION REPORT (CIRCULATED VIDE INSTRUCTION CIRCULAR NO. 31/2009 DATED
MARCH 25, 2009)
(Check appropriate box)
Date (____/ __ / ______)
dd/mm/yy
Initial Report

Part 1Reporting Branch Information

Branch Code
NIFT Code
Branch Name
Branch Address
Branch Contact No.
Tel.

Corrected Report

Supplemental Report

Region

Fax

Reporting Officer
Name __________________________________________________________________
Designation ______________
Phone Number (s)
Fax Number (s)

Email Address

Cell Number (s)

Contact for Assistance (if different from Reporting Officer)

Name __________________________________________________________________
Designation ______________
Phone Number (s)
Fax Number (s)

Email Address

Cell Number (s)

Part 2Suspect Information

Name __________________________________________________________________
Father Name: __________________________________________________________
Address (permanent)

Address (present)

Other known Address

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Phone Number(s) Residence

Phone Number(s) Office
Fax Number(s)
Cell Number(s)
CNIC Number
NIC Number*
*In case CNIC number is not available
Any other Identification Number
National Tax Number (if available)
Date of Birth: _____ / _____ / ________ (dd/mm/yy)
Nationality
Occupation / Type of
Business
Relationship with Bank
Accountholder
Other (please specify)

Employee

Agent

Walk in Customer

_____________________________________

Business Relation with Suspect (if any)

Is Relationship still Maintained with the Person?

YES

NO**

**In case NO, mention Date of Termination of relationship ____ / ____ / ______ (dd/mm/yy)
Capacity in which the person is performing the transactions / acts
Individual
Company
Agent
Other (please specify)

_____________________________________

Identities of other persons known to be involved in reported activity

Part 3Suspicious Transaction Information

Date of Suspicious Transaction ____ / ____ / ______ (dd/ mm / yy)
Amount involved (please specify Currency)

Broker

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Suspicious Transactions
Date

Amount

Description of Transaction

Brief Narrative (Reasons for Suspicion)

(use separate sheet if so required)

Characterization of Suspicious Transaction (i.e., nature of suspected predicate schedule offence)

(use separate sheet if so required)

Has the transaction already been reported to any Law Enforcement Agency? If so, list the agency.
a.
b.
c.
d.
Part 4Account Information
Account number(s)
a)
b)

c)

d)

Account(s) opened on (dd/mm/yy)

a)
b)

c)

d)

Current Status of the Account(s)

a)
b)

c)

d)

Purpose of Account(s)
a)
b)

c)

d)

Average Monthly Turnover of Account(s)

a)
b)

c)

d)

Aggregate Credits/Debits for last 3 Years

a)
b)

c)

d)

Peak Balance(s) of last 3 Years

a)
b)

c)

d)

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Nature of Account(s)
Individual
Other (please specify)
Transaction Mean / Method
Cash
Credit Card
Draft
Other (please specify)

Partnership

Company

Trust

_____________________________________

Cheque

Remittance

Pay Order

Debit Card

Deposits

Fixed Deposit

Transfer

L/C

Online Transfer

_____________________________________

Copies of following Documents are attached:

Customer Identification documents / Account Opening Form
KYC/CDD of Customer or Suspect
Other Documents obtained at the time of opening of account/relationship
Relevant documents supporting the STR
Other Relevant Information (information linked to STR or action taken by the reporting entity)

Seal & Signature of Reporting Officer

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ANNEXURE-VI
Undertaking for Difference in Signature on CNIC and AOF
(Issued vide Instruction Circular No. 88 of 2012)
Date: _____________
The Manager
National Bank of Pakistan
_____________________ (Branch)
Undertaking for Difference in Signature on CNIC and AOF
Dear Sir,
I, ______________________________________ S/O, W/O, D/O ___________________________________
resident of _______________________________________________________________________________
_________________________________________________________________________________________
do hereby solemnly affirm and undertake as follows:
1. That I am the holder of Computerized National Identity Card (CNIC) bearing No.
____________________________.
2. That I have applied for opening of an Individual account in my name or an account to be opened
jointly with _______________________________.
3. That I have signed the Account Opening Form (AOF) and Specimen Signature Card (SSC) in a form
and manner other than the one appearing on my CNIC.
4. That I do hereby confirm and state on oath that the signature appearing on my CNIC No.
_________________________ and on the Account Opening Form (AOF) and Signature Specimen
Card (SSC) are both mine and have been signed by me.
5. That I do hereby undertake and bind myself to be responsible and liable for any and all
consequences including but not limited to losses and claims which the Bank may face or that may
arise as a result of the aforesaid difference in my signature.
6. That whatever is stated herein above is true and correct to best of my knowledge and belief.
________________________________
__________________________________
Signature as per AOF and SSC Card
Signature as per CNIC
Witnesses
1. Signature: ________________________
Name: ___________________________
CNIC No. _________________________

2. Signature: _______________________
Name: ___________________________
CNIC No. _________________________

For Office Use:

I confirm both signatures were obtained in my presence and this is the best customer can do as of
CNICs signatures. Based upon NADRA Verisys I am comfortable with Photo Identity of this customer.
_________________________________________________________________
Name & Signature of Branch Authorized Official

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ANNEXURE-VII

Undertaking by Branch Manager

I, Mr/Ms/ Mrs ___________________________, being the Manager of _____________________________

(branch) of National Bank of Pakistan, hereby;
acknowledge that a letter of thanks bearing reference number _____________________ was sent to
the holder of account having title Mr./ Ms./ Mrs.______________________________

at his/her

following correspondence/ mailing address on _____/______/_____:

1. Mailing Address:
_______________________________________________________________
_______________________________________________________________
2. Permanent Address:-----------------------------------------------------------------3. Address as per CNIC (in case it differs from Mailing Address):
_______________________________________________________________
_______________________________________________________________
against which no confirmation is received.
I undertake that I am personally satisfied with the credentials/ details of the account holder and
about his/her mailing addresses mentioned in the AOF and CNIC.
Since, the customer is well known to me, therefore, a cheque book is being issued even though the
couriers confirmation has not been received.

___________________________________
Branch Manager (Signature with stamp)

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ANNEXURE-VIII
Self-declaration by Housewife / Student
Date: _____________
The Manager
National Bank of Pakistan
_____________________ (Branch)
Self-declaration for Source and Beneficial Ownership of Funds
Account Title: _________________________________
Account Number: _________________________________
Dear Sir,
I, ______________________________________ Wife of / Student at ______________________________
_____________________, resident of _________________________________________________________
_________________________________________________________________________________________
________________ do hereby solemnly declare that:
(Whichever applicable)

my source of funds are _________________________________________________________________

_____________________________________________________________________________________
(and / or)
I do not have any employment and the transactions through this account would be carried out using funds
obtained from my ------------------------------in the capacity of -------------------------------.
Name of the Funds provider: ____________________________ CNIC No of the Funds Provider
Relationship: ____________________________
Address of the Funds Provider: _____________________________________________________________
_____________________________________________________________________________________

Customers Signature:___________________________

Signature of Branch Manager/Operations Manager

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KYC/ AML/ CFT PROCEDURE MANUAL

ANNEXURE-IX
Declaration on Ultimate Control, Purpose and Source of Funds
Date: _____________

The Manager
National Bank of Pakistan
_____________________ (Branch)

Declaration on Ultimate Control, Purpose and Source of Funds

Account Title: _________________________________
Account Number: _________________________________
Dear Sir,
We the members of Governing Body/Board of Trustees/Executive Committee / the Sponsors of
________________________________________________________________________________
(NGO/NPO/Trust/Charity/Club/Society/Association) do hereby declare that:
the above entity is ultimately owned by:
Name

CNIC/Registration No.

Country/Country of
Incorporation

% of Shares/Interest

Ownership and control structure:

Please clarify complicated ownership and/or control structure. Also, clarify if the ownership or
control is exercised via legal entities.

Following shall be the source(s) of funds (attach separate sheet if necessary):

_________________________________________________________________________________________
_________________________________________________________________________________________
_________________________________________________________________________________________
_________________________________________________________________________________________
_________________________________________________________________________________________

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The funds shall be utilized for following purposes (attach separate sheet if necessary):
_________________________________________________________________________________________
_________________________________________________________________________________________
_________________________________________________________________________________________
_________________________________________________________________________________________
_________________________________________________________________________________________
We certify and confirm that the above stated information is true and complete and undertake to
inform the Bank immediately of any changes whatsoever to the information given herein.
Authorized Signatory(ies)
Name:

Signature:

Official Stamp

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KYC/ AML/ CFT PROCEDURE MANUAL

ANNEXURE-X
NATIONAL BANK OF PAKISTAN
Physical Verification of Business /Visit Report
Name of Business
Complete Address

Name of Proprietors/Self Employed Persons

Date of visit:

Time:

Purpose:

Observations:
Business Name (board) available/Not available
Nature of business (Items dealing in/type of business)
Neighborhood :( Names of businesses in the neighborhood)
Business age: (Since how long this business is operational)
Business condition/Remarks. (What should be the tentative volume of business)

Result:
Satisfactory

(Name and Signature of Branch Official who visited

the business site to ensure the proof of business)

Unsatisfactory

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KYC/ AML/ CFT PROCEDURE MANUAL

ANNEXURE-XI

National Bank Of Pakistan

Particulars of 100 Depositors of Each Branch as on June30,-----/31 December ,---Sr. Name of Br.
Title of A/C No. A/C
Nature of Name of A/C CNIC No. NTN No. Address
No. Branch
Code A/C
Category A/C
Holders
If any

A/C opening
Date

Profession For Dormant A/C Credit Turnover Debit Turnover Actual Credit Actual Debit A/C Balance
/Nature of (Date Since A/C is as per Current as per Current Turnover
Turnover
as on end
Bussiness Doramant)
Profile (Annual) Profile (Annual) (Annual)
(Annual)
June/Dec.

1
2
Notes: 1. While preparing list of top 100 depositors,Public sector Entities and listed companies will not be included.
2. Name of Accountholders will include names of all accountholders in case account is opened/operated by more than ope person.
3. Account category means current saving, fixed/Term Deposit, etc.
4. Nature of account means Personal, Business, Salary, etc.
5. In case of FCY Account (A/C) the equivalent amount in PKR should be mentioned.

ANNEXURE-XII

National Bank Of Pakistan

Particulars of Accounts Closed of Each Branch as on June30,-----/31 December ,---Sr. Name of Br.
Title of A/C No. A/C
Nature of Name of A/C CNIC No. NTN No. Address
No. Branch
Code A/C
Category A/C
Holders
If any

A/C opening
Date

Profession Date A/C was

/Nature of Closed
Bussiness
M
N

1
2
3
4
5
Notes:
1. Name of Accountholders will include names of all accountholders in case account is opened/operated by more than one person.
2. Account category means current saving, fixed/Term Deposit, etc.
3. Nature of account means Personal, Business, Salary, etc.
4. In case of FCY Account (A/C) the equivalent amount in PKR should be mentioned.

Credit Turnover
as per Last
Profile (Annual)
O

Debit Turnover
as per Last
Profile (Annual)
P

Actual Credit
Turnover
(Annual)
Q

Actual Debit
Turnover
(Annual)
R

71