SBP launches crackdown against criminal activities

Sends questionnaire to all working individuals for scrutiny

KARACHI: The State Bank of Pakistan (SBP) has begun a crackdown against criminals working in the formal payment system at financial institutions including conventional and branchless banking systems to mitigate the risk of terror financing and money laundering.

“It is imperative that any person(s) linked to any criminal activities or affiliated to any terrorist organisation shall not become part of financial institutions as well as Payment System Operators and Payment Service Providers (PSOs/PSPs),” the central bank emphasised in a notification issued on Saturday.

The central bank has asked 25 questions from all the people serving in any capacity in the payment system to check whether they have any criminal record, are they beneficiaries or have conflict of interest in the payment system.

The questions include whether they have remained associated with a banned organisation, faced any criminal charges, held dual nationalities, defaulted on tax payments, served at exchange companies and/or possessed membership of the stock market. These individuals have to answer the questions in yes or no. If any answer comes in the affirmative, then the respondents will have to give details in writing.

Earlier, the authorities discovered numerous fake bank accounts which were suspected of having been used for money laundering amounting to billions of rupees. The authorities have taken into custody a couple of people allegedly associated with the fake accounts.

“The State Bank of Pakistan, from time to time, has been issuing instructions to strengthen the FPT (Fit and Proper Test) criteria in view of the potential risks arising from money laundering, terrorism financing and proliferation financing,” the central bank said. “Any person subject to FPT shall become disqualified if he/she is found to be designated/proscribed or associated directly or indirectly with designated/ proscribed entities/persons under the United Nations Security Council resolution or Anti-Terrorism Act 1997.”

The new instructions from the SBP came after recent warning from the Asia Pacific Group (APG), a subsidiary of the Financial Action Task Force (FATF), that Pakistan did not fully comply with 33 out of 40 regulations for improving the payment system.

First five questions out of 25

Have you ever been convicted/involved in any fraud/forgery, financial crime, etc in Pakistan or elsewhere, are subject to any pending proceedings leading to any conviction?

Are you a dual national? If yes, please specify the nationality other than Pakistani.

Have you ever been associated with any illegal activity concerning banking business, deposit-taking, financial dealing and other business?

Have you ever been subject to any adverse findings or any settlement in civil/ criminal proceedings particularly with regard to investments, financial/business, misconduct, fraud, formation or management of a corporate body, etc by the SBP, other regulators, professional bodies or government bodies/agencies?

Have you ever contravened any of the requirements and standards of the regulatory system or the equivalent standards or requirements of other regulatory authorities?