Drastic rise in the Suspicious Transactions Reports surface in Pakistan raising the alarm bells

Drastic rise in the Suspicious Transactions Reports surface in Pakistan raising the alarm bells

ISLAMABAD - Drastic rise in the Suspicious Transactions Reports surface in Pakistan raising the alarm bells for the policy makers.

A record increase in the Suspicious Transaction Reports (STRs) by September 2019 has been reported by Banks; increasing to 14,545.

The Suspicious Transaction Reports received from banks and financial institutions by Financial Monitoring Unit (FMU) have been registering a growth in each passing year due to the implementation of checks and balances on the directives of the central bank.

According to the report issued by FMU, STRs went up from 5,548 to 8,708 in 2018 and then to 14,545 till September 2019. The increase in STRs does not mean a rise in suspicious activities but it actually implies the strict monitoring of the banking system to curb the misuse at different organizations or its related functions.

Financial Monitoring Unit (FMU) is an autonomous body. The basic functions of FMU are to receive and analyze the Suspicious Transactions Reports (STRs) as well as Currency Transactions Reports (CTRs) from its designated reporting entities. The FMU may disseminate the Financial Intelligence to the concerned Law Enforcement Agencies (if required) for their further necessary action in this respect.

Another function of this specialized financial intelligence agency is to ensure compliance with Pakistan’s Financial Action Task Force (FATF)’s recommendations on Anti-Money laundering (AML) and terrorist financing.

Overall, the unit received a total of 41,255 STRs since 2004. Out of total STRs, 22% of them were marked as the high-risk STRs and referred to Law Enforcement Agencies for action. Besides, 42 percent of the STRs were disseminated to regulators such as State Bank of Pakistan (SBP) and Security and Exchange Commission of Pakistan (SECP) while 36% were identified to be low-risk STRs.

In the last couple of years, LEAs unearthed several cases of Benami accounts in which millions of Rupees were secured in the name of unknown people. Subsequently, the banking regulator has tightened the regulations and has started imposing heavy penalties on these institutions as a result of violations.

”I have been using banking facility for transferring money to our hometown every month but now few steps have been added in the process including the addition of new columns in deposit slips and the submission of CNIC copy on each transaction,” a customer told ProPakistani. Earlier, these things were ignored or accommodated by the bankers for loyal customers of the bank.

The major reporting sectors are commercial banks followed by Exchange Companies and Microfinance Banks. Top three STR reporting districts from 2015 to September 2019 are Karachi, Lahore and Islamabad with 9,214; 7,687 and 2,496 reported STRs respectively, the report added.