Stock Brokers in Karachi unable to comply with AML regulation

Recently, stock brokers in Pakistan have expressed concerns to the Security and Exchange Commission of Pakistan (SECP) about their inability to dedicate sufficient resources to meet financial reporting requirements, develop a sound compliance system and meet FATF standards.

A recent article in the Business Recorder explains that, “the AML/CFT requirements have evolved over time and now form a major part of the compliance system of financial institutions. Due to Pakistan’s placement in the grey list by FATF, there is a more pronounced need to upgrade the compliance system of brokerage houses, including the appropriate human resource and the specialized software to demonstrate adherence with the risk-based approach prescribed under the FATF recommendations and to implement sound KYC/CDD policies and procedures.”

Such commentary is far from unusual. The high cost of many AML solutions creates barriers not only for smaller players looking to meet regulatory obligations, but can also create an unfair disadvantage on those firms that do invest.

The Idenfo KYC solution is a tool appropriate for any sized institution, including stock brokers. Our simple yet sophisticated data and risk factor model can be tailored to properly assess customer risk for brokers, just as it can for banks, insurance companies or any other institution. We provide holistic KYC coverage, providing functionality on risk rating, name screening, document verification and biometric authentication.

Our solution is built on the latest technology – cloud based and very scalable architecture, meaning we can offer a very flexible services for boutique brokers with no expensive IT overhead – the only IT requirement is a web browser. For Pakistan based brokers, we provide the added assurance of hosting all the data within Pakistan on our trusted partner’s cloud service.

To particularly assist smaller players we moreover have built our solution so that the data can be logically segmented. This means that groups of different stockbrokers are able to come together and take advantage of economies of scale by utilising the same cloud infrastructure and name screening list data while ensuring that their own customer data is viewable only by themselves.

We believe this service will act as a game-changer in Pakistan. The Idenfo platform will allow Pakistani brokers to meet their compliance obligations at a reasonable cost, thereby levelling up the playing field for all.