Microfinance: Banks asked to maintain customer record

SBP moves to combat money-laundering.

KARACHI: The State Bank of Pakistan (SBP) has asked microfinance banks (MFBs) to maintain records of transactions and customer identification data for at least five years which will help in conducting investigations and criminal proceedings.

In this regard, the SBP has amended prudential regulation number 17 with immediate effect to introduce minimum requirements for maintaining records of transactions and identification data in a systematic manner.

According to a circular issued by the SBP on Saturday, MFBs will keep the identification data obtained through customer due diligence process, account files and business correspondence for at least five years following the termination of business relationship.

Moreover, MFBs will also maintain all necessary records of transactions, both domestic and international, for at least five years following completion of the transactions. “Such record must be sufficient for reconstruction of individual transactions so as to provide evidence for investigation or prosecution of criminal activity,” the SBP said.

Examples of necessary components of transaction record may include customer’s name (beneficiary’s name), address, nature and date of transaction, type and amount of transaction, currency involved, type and identification of any account involved in the transaction.

Previously, the prudential regulations for MFBs were silent on the record retention requirements. Now regulation 17 of MFBs has been strengthened in line with national and international practices, as a step towards strengthening regulations for anti-money laundering and combating financing for terrorism.

The SBP said MFBs will have to retain records for longer period, if required by any other law or where transactions and relationship relate to any investigation, litigation or required by the court of law or by any other competent authority.

Published in The Express Tribune, January 2^nd, 2011.