Chapter #12 anti money laundering and electronic payments

Question 1

Financial Institutions:?

Answer 1

Financial Institutions:
Persons doing activities of:
1. Deposits, and Lending.
2. Leasing.
3. Insurance.
4. Money or value Transfers.
5. Managing means of payments.
6. financial guarrentees and commitment
7. Business trading in:
           1 portfolio management
           2 money and market instruments
           3 transferrable secuirities
           4 investing AND managing fund on behalf of other person
           5 safeguarding and administrating cash OR liquid secuirtes on behalf of other person
           6 foriegn exchange 
           7 money AND currency changing
           8 exchange,interest rate and index instrument
           9 commidity future trading
           10 shareissue services
            11 intermediaries

Question 2

Role of Financial Institutions:?

Answer 2

To monitor customers’ transactions

To report large and suspecious transactions

Question 3

who is guilty of offence?

Answer 3

a person guilty of offence of money laundering if he knows (or reasos to believe) that a property is proceeds of crime and still:

1. Acquire, converts, possess, use or transfer such property.
2. Conceals the true nature, origin, location, ownership, movement of such property.
3. Holds or possess such property on behalf of any other person.
4. Aids, or counsels to commit above acts

Question 4

Evidence of offence of money laundering and predicate offence?

Answer 4

Knowledge inferred from factual circumstances. on basis of QANUN E SHADAT 1984
conviction of accussed for RESPECTIVE “predicate offence” shall not be required
predicate offence is crime (eg oppening bank account with fake name) taht is bass of large crime (eg money laundering)

Question 5

punishment for indiviual and legal person (company)?/

Answer 5

For Individuals: (i.e. natural person)
>imprisonment upto 10 yeare (not less than 1 year)
>Fine upto Rs. 25 million
> Forfeiture of property

For Legal Persons: (i.e. company)
> liable to fine Fine upto Rs. 100 million
> if director, officer or employees of LEGAL PERSON is found guilty of offence he is liable as same penalty as for indivivual

Question 6

define PS and how is DPS formed? and define OPERATOR?

Answer 6

Payment System:
System used to settle financial transactions through transfer of money

Designation of Payment System
State Bank designates, after inspection of premises, equipment ,books accounts and transactions relating to PS
Financial Institution, who is authorized to operate a DPS is called “Operator”.

Question 7

opperational arrangements?

Answer 7

Operate shall make:

1. Criteria for participation as PS.
2. rules and procedures setting out Rights and liabilities of Operator and Participant.
3. Measures to ensure safety,secuirty, operational reliability and contingency arrangements.
4. rules and Procedures for management of credit, liquidity and settlement risk(including time when payment is instructed and settlement is final)

Question 8

Revocation of Designated Payment System (DPS):?

Answer 8

Revocation of Designated Payment System (DPS):
State Bank may revoke if:
1. DPS ceases to operate effectively.
2. Operator submitted false information to SBP.
3. Operator is in winding up.
4. violation of T&C.
5. SBP consider It is in public interest to revoke designation

Designation can be suspended (without notice), or revoked (with notice and hearing opportuinty)

Question 9

Electronic Fund Transfer?

Answer 9

> Transfer of funds, other than by cheque ,draft or any toher similiar instrument
who is initiated by electronic terminal ,ATM,telephone instrument,coputer, magnetic medium or any other electronic devices
to order,instruct or authorize an financial institution to debit or cedit an account

EFT work without direct intervention of bank staff

Question 10

Electronic Fund” or “Electronic Money?

Answer 10

it means:

> who is initiated by electronic terminal ,ATM,telephone instrument,coputer, magnetic medium or any other electronic devices
to order,instruct or authorize an financial institution to debit or cedit an account

and:
>include monetary value which represent claim on its issuer and is stored in electronic device or pone instrument. Such monetary value is issued on receipt of fund(not less than monetary value issued ) and is accepted as payment by undertaking other than the issuer
>and include electronic store of monetory value in any electronic device that may be used for making payment or as may prescribed by SBP