SBP directs banks to start customers’ due diligence for exchange of information under OCED agreement

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KARACHI: State Bank of Pakistan (SBP) has directed financial institutions to start due diligence of their customs from July 01, 2017 for the purpose of exchange of information under OECD convention.
The banks will be required to provide details of their account holders’ transactions and other details on annual basis. First reporting by the banks under exchange of information will be due on September 2018.
The SBP in a circular issued on Wednesday informed banks, Development Finance Institutions (DFAs) and Microfinance Banks (MFBs) that in September 2016 Pakistan signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters and became 104th signatory to the Convention.
The Convention provides for automatic exchange of information under the state’s own systems through standardized formats under the corresponding agreements with other jurisdictions.
The Federal Board of Revenue (FBR) has subsequently undertaken a Pilot Project on Automatic Exchange of Information (AEOI) in collaboration with different stakeholders.
The FBR has now finalized Common Reporting Rules and notified the same vide S.R.O. 166 (I)/2017 dated March 15, 2017. With this Pakistan has adopted the global Standard for Automatic Exchange of Financial Account Information in Tax Matters commonly known as the Common Reporting Standard (CRS) as developed by the Organization for Economic Cooperation and Development (OECD).
The CRS Rules interalia require financial institutions to start due diligence of customers from July 1, 2017.
Banks/DFIs/MFBs are therefore advised to ensure the compliance of the Rules for reporting under the CRS in accordance with relevant laws and take all necessary steps to put in place requisite systems/ mechanism in timely manner.

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