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Anti Money Laundering / Counter

Terrorist Financing

Prepared by:
Kamran Shabbir

Table of Contents:


Executive summary


Compliance Division

Anti-Money Laundering

Suspicious Transaction
Money Laundering Related Laws/Rules etc.
Control of Narcotics Substances Ordinance 1995
Anti-Money Laundering Ordinance 2010



This report on Anti Money Laundering / Counter Terrorist Financing of KASB Bank Ltd which has been
prepared as a part of the course requirement for Prudential Regulations. The material compiled and presented in
this report is a result of hard work.
This report has proved to be a great experience. For this, I would like to thank our Almighty ALLAH who made
everything easier to me and then Our Instructor Sir. Irfan Hassan who provided us the path of knowledge and

Kamran Shabbir

Executive summary

The promotion of well-regulated financial systems and services is central to any effective and
comprehensive AML/CFT regime. However, applying an overly cautious approach to AML/CFT
safeguards can have the unintended consequence of excluding legitimate businesses and consumers
from the financial system.

An independent function that identifies, assesses, advises on, monitors and reports on the bank's
compliance risk, that is, the risk of legal or regulatory sanctions, financial loss, or loss to reputation a
bank may suffer as a result of its failure to comply with all applicable laws, regulations, codes of conduct
and standards of good practice (together "laws, rules and standards").

In this report we analysis function of the Compliance Division in KASB Bank Ltd (the Bank) is to ensure
compliance with laws, rules and standards set by regulatory authority and other agencies along with an
effective liaison with them as a focal point.
In this project we also learn about objectives roles and responsibilities, Methods and Internal Controls
and about Regulatory Compliance of KASB BANK Ltd

KASB Bank is now serve clients through 105 locations in 44 cities of Pakistan, offering only one of its kind
and innovative financial solutions to large portfolio of investment, corporate and consumer banking
customers. KASB Bank is regard as the flagship entity of the group with state of the art technology
providing wide scale financial services to a diversified client base. The Bank also provides a host of
financial services offered by the KASB set.

Compliance literally means obedience and dutifulness. Basel Committee on Banking Supervision,
Consultative Document (October 2003) on the Compliance functions in banks defines; Compliance as
To document compliance framework for the bank comprising of internal polices and procedure, local
laws and regulations, BCO 1962 , Companies Ordinance 1984, Code of Corporate Governance and
Prudential Regulation/ Circular of State Bank of Pakistan.
To elaborate on significant and serious impact on the bank for noncompliance.
To ensure that bank maintain its image as compliant and professional with regulatory authorities
To ensure Compliance risk of the bank is managed effectively.
To ensure independence of compliance function in the bank in line with guidelines principles set out in
BPD Circular 16 of May 3, 2003
To develop compliance culture in the bank and infuse it in the mind of all employees that compliance is
the responsibility of every employee.
To promote the culture and practice of compliance with legal and regulatory requirement.
To assist compliance officers in understanding of principle of conduct / core values i.e. public trust,
honesty commitment, and personal integrity / transparency in dealing observance of applicable laws
and regulations.
We have review the statement of compliance with the best practices contained in code of corporate
governance for the year ended prepared by board of director of KASB Bank LIMITED.
HR Finance Admininstration Audit
Branch Banking

The department or unit within a brokerage firm, bank or financial institution that ensures compliance with all
applicable laws, rules and regulations. The compliance department generally has a wide range of roles and
responsibilities within a firm. Depending on the business of the financial institution, these duties may range
from monitoring trading activity, preventing conflicts of interest and ensuring compliance with regulations at
brokerage firms, to preventing money laundering and potential tax evasion at large banks.
Compliance division ensures that policies and procedures are in place and support business divisions at
head office and branches in the interpretation of rules and regulations. Compliance Officers also provide
feedback relating to impact of rules and regulations on specific business transactions and business
situation for consideration of CEO. They would also inform respective Regional Heads/ Segment /
Divisional Heads, if necessary. COs will also monitor and evaluate on a regular and on a systematic basis
adherence to regulatory and other compliance requirements.

Anti-Money Laundering: One of the most important means by which banks/financial
institutions can avoid criminal exposure to institution by "customers" who use the resources of the institution for illicit
purposes, is to have a clear and concise understanding of the customers' practices. The adoption of "Know Your
Customer" (KYC) guidelines or procedures by banks/financial institutions has proven extremely effective in detecting
suspicious activity by such "customers" in a timely manner.
Bank's has issued policy document titled as AML/CFT Policy for strict adherence by all its employees. The policy
ensures strict compliance to all statutes and regulations and adheres to sound and recognized banking practices.
The AML/CFT Policy reduces the risk of the Bank becoming a victim of illegal activities perpetrated by its
"customers". The Policy will protect the good-name and reputation of the Bank and will not undermine the
relationship of the Bank with its good customers.
The purpose of this document is to assist in understanding
the subject of Money Laundering and to help in devising
such system / policies to curb money laundering in the
Anti Money Laundering Compliance Division

Suspicious Transaction:
Compliance Officers are required to examine unusual inward/outward remittances activity in the accounts with the
filter of Swift Screening Portal or any other dubious activity noticed by LTMU of Compliance Division.
The transactions which are suspected are thoroughly scrutinized at Principle Office and if suspicious is found to be
well substantiated, the same is reported to President/CEO through Chief Compliance Officer for onward reporting it to
Financial Monitoring Unit as required under the law.
However, this doesnt relieve Branch officials to monitor transactions that lead them to have reasonable grounds to
suspect that a transaction is related to the commission of a money laundering offence or to the commission of a
terrorist activity financing offence. Accounts wherein money laundering illegal activity is established should be closed
after seeking guidance / instructions from the Head Office. However as a reporting person or entity, Bank officials are
not allowed to inform anyone, including the client, about the contents of a suspicious transaction report.
Money Laundering Related Laws/Rules etc.
It is Banks responsibility to report all suspicious transactions, to the Director of Financial Monitoring Unit of
Government of Pakistan at SBP Building, KHI, as required under AML/CFT Policy.
NAB Ordinance 1999: Section-20. on Reporting of Suspicious Financial
Transactions read as under:
Notwithstanding anything contained in any law for the time being in force, it shall be the duty of all banks and
financial institutions to take prompt and immediate notice of all unusual or large transactions in an account, which
have no apparently genuine economic or lawful purpose and upon bonafide professional judgment of the bank of
financial institutions that such transactions could constitute or be related to an offence under this ordinance, the
manager or director of such Bank or financial institution shall report all such transactions to the chairman NAB
forthwith by the quickest possible mode of communication to be confirmed in writing. [sec.20 (c)]
Whosoever fails to supply the information shall be punishable with rigorous imprisonment, which may extend to 5
years, and with fine. [sec. 20 (d)]
Control of Narcotics Substances Ordinance 1995:
Section-56 Reporting of Suspicious financial Transactions read as under:
Notwithstanding anything contained, in any law for the time being in force, all banks and financial institution shall pay
special attention to all unusual patterns of transactions, which have no apparent economic or lawful purpose and
upon [the financial institutions] suspicion that such transactions could constitute, or be related to illicit narcotics
activities, the Manager or Director of such financial institution shall report the suspicious transactions to the Director

Whoever fails to supply the information in accordance with sub-section (1) shall be punishable with rigorous
imprisonment, which may extend to three years, or with fine, or both.
Anti-Money Laundering Ordinance 2010:
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 rupee and shall also be liable to forfeiture of property involved in money laundering.
In this study we learn about what is anti-money laundering Methods and Internal Controls, how it works in KASB
Bank Ltd. It is acknowledged that money laundering and anti-money laundering regime have evolved over time. The
study reveals that money laundering has been conducted in cross-border territories through various techniques and
methods. These phenomena have led the laundering techniques shift from conventional to more complicated and
professional means.