KARACHI: The State Bank of Pakistan (SBP), which is trying hard to ensure compliance with international banking regulations to avoid the blacklisting of the country in October, has become strict on a few commercial banks for compromising rules related to anti-money laundering and foreign currency exchange operations.
The central bank imposed monetary penalty worth close to Rs185 million on four banks for violating the rules, the SBP notified under the title “Details of Significant Enforcement Actions by SBP in July 2019”.
The central bank imposed five monetary penalties on four banks in the range of Rs13 million to Rs55.5 million during July.
They allegedly violated rules related to foreign currency exchange operations, anti-money laundering (AML), client scrutiny at the time of opening bank accounts, which is better known as know your client (KYC), unclaimed deposits and asset quality, the central bank reported.
In addition to the penal action, the SBP advised the banks to improve their internal processes, improve working on AML and KYC fronts, conduct a thorough review of relationship accounts, provide appropriate training to the officers concerned and improve credit risk monitoring systems.
The Financial Action Task Force (FATF) has placed Pakistan on the grey list of countries whose terrorism financing and anti-money laundering laws are described as deficient with effect from June 2018. It has given a set of 27-point action plan that the country is supposed to implement by September 2019.
Earlier, two leading banks of Pakistan closed their branches in New York after they allegedly compromised rules related to combating terror financing and money laundering in 2017 and 2018. One of them also paid $225 million in penalty to the US.
Published in The Express Tribune, August 10th, 2019.