This blog is written by Mr. Mohsin Alizai, Assistant Manager, Taxation and Corporate Services. Please read this blog and provide your valued comments.

Practical problems as regards obtaining and maintaining up-to-date information relating to the ultimate beneficial owners where the companies having legal persons as members or shareholders in pursuance of Circular # 16 of 2018 issued by SECP

Background

  • Pakistan is a member of the Asia Pacific Group on Money Laundering, a FATF-style regional body. The country is required to adopt the Financial Action Task Force (FATF) standards as per membership obligations, and must comply with the UN resolution.

 

  • This circular has been issued in pursuance of making Pakistan compliant with 40 recommendations which serve as international standards for combating money laundering and terror financing issued by Financial Action Task Force (FATF).

 

  • The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 by the Ministers of its Member jurisdictions. The mandate of the FATF is to set standards and to promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and the financing of proliferation, and other related threats to the integrity of the international financial system. In collaboration with other international stakeholders, the FATF also works to identify national-level vulnerabilities with the aim of protecting the international financial system from misuse.

 

  • SECP issued a circular # 16 of 2018 with reference to the above agreement imposing the minimum information of ultimate beneficial owner that is required to maintained in the register including name, father’s name/husband name, NIC/NICOP/passport number, nationality, country of origin (in case of foreign national or dual national), email address (if available), usual residential address, date on which name was entered in the register and the date when the person ceased to be a beneficial owner along with reasons of cessation.

 

Where no natural person can be identified

There was an inherent limitation as regards maintaining compliance to the aforementioned Circular e.g where the parent company has thousands of owners spread worldwide, it is nearly impossible for the subsidiary company to maintain particulars in respect of each natural person having shares in the parent company. This problem has been resolved by the circular itself as below:

 

  • In exceptional case where no natural persons are identified, there shall be entered in the register the names of the natural person(s) who hold the position of senior managing official(s) of the legal person. (Including their date of birth, NIC/NICOP/passport number, nationality, and residential address).

 

Mohsin Alizai