HBL

1 AML/CDD/CFT POLICY. For Prevention of Money Laundering/Terrorist Financing HBL. Owner: GLOBAL COMPLIANCE. Revision Date: September, 2013. HBL AML/CDD/CFT Policy AML/CDD/CFT POLICY. APPROVAL SHEET. Policy Owner: Global Compliance Implementation Responsibility: Chief Compliance Officer Custodian: Anti Money Laundering Department, Global Compliance Operating Jurisdiction: All Domestic and International HBL Operations Review Frequency: 3 years or earlier if required Review Responsibility: Anti Money Laundering Department, Global Compliance Approval Date: October 25, 2013.

2 Effective Date: November 01, 2013. Next Review Date: October 31, 2016. Recommended by: Concurred by: _____ _____. Jamil Iqbal Nauman K. Dar Chief Compliance Officer President & CEO. Approved By: _____ _____. Board Audit Committee Board of Directors ---------------------------------------- ---------------------------------------- ---------------------------------------- ---------------------------------------- --------------- Global Compliance 2. HBL AML/CDD/CFT Policy Slogan for HBL. Compliance is My Responsibility'. ---------------------------------------- ---------------------------------------- ---------------------------------------- ---------------------------------------- --------------- Global Compliance 3.

3 HBL AML/CDD/CFT Policy ABBREVIATIONS USED IN AML/CDD/CFT POLICY. CFT Combating Financing of Terrorism TF Terrorist Financing FATF Financial Action Task Force CCO Chief Compliance Officer MLRO Money Laundering Reporting Officer ML Money Laundering PEPs Politically Exposed Person BOD Board of Directors OFAC Office of Foreign Assets Control MSB Money Service Business CDD Customer Due Diligence EDD Enhanced Due Diligence SDD Simplified Due Diligence ---------------------------------------- ---------------------------------------- ---------------------------------------- ---------------------------------------- --------------- Global Compliance 4.

4 HBL AML/CDD/CFT Policy TABLE OF CONTENTS. Abbreviations used in AML/CDD/CFT Policy .. 4. Introduction .. 7. 1 METHODOLOGY .. 9. OBJECTIVES OF AML/CDD/CFT POLICY .. 9. scope .. 9. Amendment and Updates .. 9. Deferral .. 9. Money Laundering .. 10. Stages of Money Laundering .. 10. Sources of money laundering: .. 13. Terrorist Financing .. 13. the need to combat MONEY LAUNDERING (mL) and TERRORIST FINANCING (tF) .. 13. REGULATORY OVERSIGHT & COMPLIANCE RISKS .. 14. 2 Legal/ Regulatory obligations .. 17. LEGAL Obligations .. 17. REGULATORY OBLIGATIONS .. 17. Offences and Penalties (Key elements).

5 18. AML ACT 2010 .. 18. NAB Ordinance 1999 .. 19. Control of Narcotic Substances Act 1997 .. 19. Anti Terrorism Act 1997 .. 19. 3 THE BANK'S POLICY for AML/CDD/CFT .. 22. 22. CUSTOMER DUE DILIGENCE (CDD).. 23. AML/ CDD/CFT ASSOCIATED POLICIES .. 26. Internal control Compliance and Audit .. 26. Recognition and reporting of suspicion .. 26. Awareness raising and training .. 27. Record keeping .. 27. Bank's' policy on politically exposed persons (PEPs) .. 28. ---------------------------------------- ---------------------------------------- ---------------------------------------- ---------------------------------------- --------------- Global Compliance 5.

6 HBL AML/CDD/CFT Policy Definition .. 28. Policy Rationale .. 29. Non Compliance with Bank's AML/CDD/CFT 30. accountabilities and responsibilities .. 31. The Board is Responsible for:.. 31. Management is Responsible for: .. 31. Global Compliance / MLRO are Responsible for: .. 32. All Employees are Responsible for: .. 32. ---------------------------------------- ---------------------------------------- ---------------------------------------- ---------------------------------------- --------------- Global Compliance 6. HBL AML/CDD/CFT Policy INTRODUCTION. Habib Bank ( the Bank') is a pioneer financial institution of Pakistan, having largest domestic network of branches, a well-known brand locally with a substantial international presence.

7 To protect itself from the increasing danger of organized criminal activity, money laundering and Terrorist Financing, it is essential for the Bank to have a clearly laid down Anti-Money Laundering . (AML)/ Customer Due Diligence (CDD)/' Combating the Financing of Terrorism (CFT) Policy to ensure that the Bank remains protected from the menace of money laundering and is not used by existing &/or prospective customers for any criminal activity. ---------------------------------------- ---------------------------------------- ---------------------------------------- ---------------------------------------- --------------- Global Compliance 7.

8 HBL AML/CDD/CFT Policy METHODOLOGY. ---------------------------------------- ---------------------------------------- ---------------------------------------- ---------------------------------------- --------------- Global Compliance 8. HBL AML/CDD/CFT Policy 1 METHODOLOGY. OBJECTIVES OF AML/CDD/CFT POLICY. The objective of this policy is to ensure that the products and services of the Bank are not used to launder the proceeds of crime and that all of the Bank's staff is aware of their obligations and the need to remain vigilant in the fight against money laundering/terrorist financing.

9 The document also provides a framework to comply with applicable laws, Regulatory guidelines specially related with detection and reporting of suspicious activities. In case of any clarification contact AML Department of Global Compliance at HOK or MLROs in respective countries. SCOPE. This policy is applicable to the All Domestic and International HBL Operations including bank's subsidiaries, representative offices where it has majority ownership. Particular attention shall be paid to overseas branches and subsidiaries located in countries which do not or insufficiently comply with FATF recommendations (as determined by FATF or identified by State Bank of Pakistan time to time).

10 Furthermore, HBL AML/ CFT policies shall be applied to all branches and subsidiaries outside Pakistan to the extent that laws and regulations of the host country permit. Where the AML/CFT requirements in the host country or jurisdiction differ from those in Pakistan, overseas branches or subsidiaries shall apply the higher of the two standards, to the extent that the law of the host country or jurisdiction so permits. AMENDMENT AND UPDATES. Amendment and updates to Policy shall be approved by the President on pre-facto basis on the recommendation of Chief Compliance Officer.