Banks stopped from opening anonymous accounts

State Bank asks them to conduct due diligence before opening an account.

KARACHI: The State Bank of Pakistan (SBP) has asked banks and development finance institutions (DFIs) to check thoroughly the credentials of customers before opening a new account and refrain from opening and maintaining anonymous accounts. It also barred them from providing banking services to proscribed entities and persons.

In a circular letter issued to banks and DFIs on Friday, the SBP said “before opening any account, the banks and DFIs should conduct thorough customer due diligence as per requirements of prudential regulations for corporate and commercial banking and monitor the account activities to ensure that the transactions in the accounts remain in line with the overall profile of the customer.”

It also quoted paragraph 5(a) of Regulation M-1, which states, “Banks and DFIs should not open and maintain anonymous accounts or accounts in the name of fictitious persons.”

The central bank said banks and DFIs should not provide any services to proscribed entities and persons or those who are associated with such entities and persons, whether under the proscribed name or with a different name.

“Banks and DFIs should monitor their relationships on a continuous basis and if any such relationship is found, the same should be immediately reported to the Financial Monitoring Unit (FMU).”

The SBP cautioned that some of the banks had not yet installed a suitable system or some had installed the systems which lacked necessary capabilities to perform the desired level of monitoring. In this regard, it asked the financial institutions to implement the software monitoring systems by June 30.

“Prudential regulations are binding under the Banking Companies Ordinance 1962 and failure to comply with them will attract severe penalties,” it said.

Published in The Express Tribune, January 7^th, 2012.