All commercial banks including microfinance and Development Finance Institutions (DFIs) have been notified by the State Bank of Pakistan to verify bank accounts of customers including individuals, corporations and associations with biometric data and proper submission of documents starting from 30th November 2018.
The drive will take place in various phases with respect to different categories of customers’ account till 30th June 2019 throughout the country in all branches and sub-branches of banking companies. The call for the re-verification of bank accounts came after fake accounts with suspicious transactions were surfaced by intelligence agencies recently.
SBP has provided a schedule for different categories of bank accounts made or maintained by public listed companies, private and multinational corporations, and individuals. For high priority accounts, the timeline is 30th November; for medium priority accounts, the timeline is January 31st 2019; and Normal with a timeline of 30th June 2019.
The central bank has provided guidelines for all banks/DFIs and that they must ensure strict observance of all applicable instructions including identification and verification of customers and their beneficial owners and obtain information on the purpose and intended nature of a business relationship.
Furthermore, it has also been stated that the monitoring mechanism at banks/DFIs should be resourced and strengthened to ensure that the transactions being conducted in the accounts are consistent with the banks/DFIs’ knowledge of their customer, business, risk profile and the source of funds.
The banks/DFIs are to enhance their efforts to obtain relevant information, examine background and purpose of all complex and unusually large transactions and unusual patterns of transactions, which do not commensurate with customer profile or have no apparent economic or visible lawful purpose. They have also been advised to enhance their efforts to obtain and maintain up-to-date information relating to their ultimate beneficial owners, i.e. natural persons or individuals who ultimately own or control the company. It is said that the banks/ DFIs may seek such ultimate beneficial ownership information from their relevant customers during the Customer Due Diligence (CDD) process.
The banks/DFIs have been advised by the SBP to immediately take the following steps: Ensure optimal utilization of biometric technology and carry out biometric verification of the existing customers (if already not done) as per thresholds given in the above table. Biometric verification of persons authorized to open and operate the account of legal entities or legal arrangements shall be conducted.
In case of customers whose eligible identity documents are other than biometrically verifiable documents, re-validation/ verification of identity shall be done based on documents, data or information obtained from the customer and/or from reliable and independent sources having regard to bank/DFI’s own assessment of materiality and risk.
Confirm compliance status of their internal risk review of remaining legacy portfolio of customers, as required vide BPRD Circular Letter No. 20 dated June 14, 2017 latest by October 31, 2018.
The Sate Bank also calls the attention of all banks/DFIs towards Regulation-1 (Customer Due Diligence – CDD) of AML/CFT Regulations that requires banks/DFIs, on on-going basis, to perform such CDD measures that are appropriate to its existing customers having regard to their own assessment of materiality and risk but without compromise on identity and verification requirements.
SBP will be assessing the compliance of the above requirements throughout the process and non-compliance will result in appropriate enforcement action in accordance with relevant laws.