FATF conditions-SECP directs companies to reveal names of real owners of all entities

The technical team of foreign experts observed that Pakistan’s anti-money laundering (AML) and counter-terrorism financing framework was not compliant with the standards set to ensure non-profit organisations were not used to finance terrorist activities, according to Pakistani officials.

The corporate-sector regulator on Thursday directed companies to collect information about their real owners within three months in a bid to address Financial Action Task Force’s (FATF) concerns about transparency in company ownership structures. The Securities and Exchange Commission of Pakistan (SECP) issued a circular that instructed companies to uncover the layers of secrecy that hide the ultimate beneficial owners.
The directive came about two weeks after the visit of a technical team of the Asia-Pacific Group (APG) that found deficiencies in Pakistan’s beneficial ownership structure which, according to it, was not fully transparent.
The technical team of foreign experts observed that Pakistan’s anti-money laundering (AML) and counter-terrorism financing framework was not compliant with the standards set to ensure non-profit organisations were not used to finance terrorist activities, according to Pakistani officials.
The SECP’s action will address the APG and FATF concerns about money laundering and terrorism financing under the garb of legal persons – individuals that have legal rights and obligations in a company on behalf of somebody else.
All the companies having legal persons as their members or shareholders are required to obtain and maintain information from their members and shareholders about the ultimate beneficial owners within 90 days, states the SECP circular.
The companies will also be required to obtain information within 30 days in case of any subsequent change in the ultimate beneficial ownership.
“The SECP’s circular is part of a larger agenda of the Organization for Economic Cooperation and Development that requires all beneficial ownership structures to be disclosed to the authorities concerned,” said Dr Ikramul Haq, an expert in international tax matters.
He added that very soon all foreign jurisdictions would disclose their beneficial ownership registers, which would make it impossible for the companies to hide ultimate ownership structures.
Haq emphasised that income splitting and base erosion would not be possible after the disclosure.
The circular has been issued to all companies, making it necessary for them to comply with Section 453 of the Companies Act 2017.
The minimum information required about the ultimate beneficial owner includes full name, father’s name or husband’s 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 the name was entered into the register and date on which the person ceased to be the beneficial owner along with reasons for that.
Section 453 of the Companies Act 2017 requires every officer of a company to endeavour to prevent commission of any fraud and offences of money laundering including predicated offences as provided in the Anti-Money Laundering Act 2010 with respect to affairs of the company.
The circular directed all the companies having legal persons as their members and shareholders to obtain and maintain up-to-date information related to their ultimate beneficial owners, ie, natural persons who ultimately own or control the company through direct or indirect ownership.
The information is required to be obtained and maintained irrespective of the number of levels of the ownership pattern, until the natural person exercising ultimate ownership or control and lying at the end of the ownership chain is revealed.
In case no natural persons are identified after having exhausted all possible means, or there is any doubt that the persons identified are the beneficial owners, the names of natural person(s) who hold the position of senior managing official(s) of the company shall be entered into the register of beneficial ownership, according to the circular.
The companies have also been directed to provide this information to any other authority or agency of the government that seeks the information.
The SECP warned that in case the companies failed to maintain the beneficial ownership register, penal action would be initiated against them.

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South Punjab News : FATF conditions-SECP directs companies to reveal names of real owners of all entities
FATF conditions-SECP directs companies to reveal names of real owners of all entities
The technical team of foreign experts observed that Pakistan’s anti-money laundering (AML) and counter-terrorism financing framework was not compliant with the standards set to ensure non-profit organisations were not used to finance terrorist activities, according to Pakistani officials.
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South Punjab News
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