1.1 It is a basic tenet of any business to know who its customers are. This helps us to protect ourselves from being used by unscrupulous and/or criminal elements. In this regard, INA Securities (Pvt.) Limited have to take all reasonable care to establish the true identity of customers. A minimum set of documents that need to be obtained from customers/potential customers at the time of opening their brokerage account has been prescribed by the SECP. To be prudent, INA Securities (Pvt.) Limited shall also obtain any other document from the account opener if it believes it will help in establishing the true identity of the customer and the real controlling person behind the account. The key point is that INA Securities (Pvt.) Limited must not open anonymous or obviously fictitious accounts.
1.2 It is important to recognize if a customer is acting on behalf of another person. If this is the case, than the identity of that person should be ascertained and relevant documents of that person needs to be obtained also.
1.3 For non-individual customers (e.g. companies, pension funds, government owned entities, non-profit organizations, foreign companies/ organizations) additional care has to be taken to establish the ownership and control structure of such an organization and who (i.e. person(s)) actually owns the organization and who manages it. INA Securities (Pvt.) Limited should verify that the person who represents himself as authorized signatory with powers to open and operate the brokerage account is actually authorized by the organization.
1.4 INA Securities (Pvt.) Limited has to make sure and be careful that accounts of Institutions/ organizations / corporate bodies are not opened in the name of employee(s)/official(s). Because of sensitive nature of public sector (government) entities and risk of potential conflict of interest, it is critical for INA Securities (Pvt.) Limited and its representatives to ensure that accounts of Govt. Institutions are not opened in the individual name of any employee/official. Any such account, which is to be operated by an officer of a govt. owned entity, is to be operated by an officer of the Federal/Provincial/Local Government in his/her official capacity, shall be opened only on production of a special resolution/authority from the concerned administrative department, duly endorsed by the Ministry of Finance or Finance Department of the concerned Provincial or Local Government.
1.5 When an individual or an organization/institution opens brokerage account with INA Securities (Pvt.) Limited, it is important to find out and document in broad terms what does the customer intend to do. For example, are there any specific sectors or stocks that the customer does not which to participate in; is the customer intending to invest for short-term only or is the customer intending to invest for longer term; will investment be only in liquid scrips or any scrip; or any other special needs or requirements of the customer. This, along with customer’s other information such as age, gender, occupation, knowledge of market, etc. will help you develop a sense of the risk taking capacity and profile of the customer and thus guide the customer in more effective manner. At the same time, it will also help INA Securities (Pvt) Limited to understand whether the customer should be classified as a low risk or a high risk customer from the KYC/CDD perspective. For example, a domestic customer working in a company with regular income would be low risk category; on the other hand, a government employee may be in a higher risk category because of the potential for conflict of interest; or a foreign organization having foreign currency sources would be in high risk category requiring more careful identification procedure and close monitoring of account operations. In the above context,
INA Securities (Pvt.) Limited has to carefully determine the source of funding especially if the customer is expected to receive/send funds in foreign currency.
1.6 In accordance with KSE regulations, INA Securities (Pvt.) Limited must follow the regulations that the all receipts/payments above Rs.25,000/= are made through cross – cheques, bank drafts, pay orders or other crossed banking instruments. Where any cash is accepted from a customer in an exceptional circumstance only, it has to be immediately reported to the Exchange with clear reasons as to why the cash receipt was accepted by the INA Securities (Pvt.) Limited.
1.7 In general, physical presence of the account opener/authorized representative is necessary at the time of opening brokerage account. In the case of non-resident/overseas customers or customers in other cities where the INA Securities (Pvt.) Limited does not have a branch/office, more strong identity verification procedures should be applied. These include verification by a reliable third party, reference of an existing customer of the INA Securities (Pvt.) Limited, confirmation from another broker with whom the customer had an account etc. Furthermore, it is important when obtaining confirmation from third parties in other jurisdictions, especially foreign, that company (INA Securities (Pvt.) Limited) consider whether that foreign jurisdiction is following the Financial Action Task Force (FATF) recommendations. The list of jurisdictions following FATF recommendations is available.