ISLAMABAD – State Bank of Pakistan (SBP) has imposed heavy penalties onfour commercial banks in November 2019 due to the violation of variousrules and regulations related to operations and services.
SBP’s enforcement order states that MCB Bank, Habib Bank Limited, AlliedBank Limited and Bank of Punjab were inspected by the central bank’s teamwhich led to the imposition of penalties on these banks.MCB Bank
MCB Bank has been penalized with a penalty of Rs. 91.85 million forviolating Customer Due Diligence/Know Your Customer (CDD/KYC) regulations.
In addition to penal action, the bank has been advised to conduct aninternal inquiry on certain breaches/violation of regulatory requirements.
The bank has also been advised to strengthen its KYC/CDD processes to avoidsuch violations in the future.Allied Bank Limited
Allied Bank Limited (ABL) has been slapped with a penalty of Rs. 60.79million in November for the violation of procedures under CDD/KYC, same asMCB Bank.
ABL has also been advised to conduct an internal inquiry on breaches ofregulatory requirements and take disciplinary action against the officialsresponsible for the violations.Habib Bank Limited
Habib Bank has been fined Rs. 25.98 million in November 2019 for violatingCDD/KYC procedures as well.
The bank has been given a timeline to improve its systems/controls to avoidthe recurrence of these violations.Bank of Punjab
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Bank of Punjab was caught again by the inspection team for violating theareas of CDD/KYC.
In addition to penal action, the bank has been advised to improve KYC/CDD.
The central bank has enforced stringent rules and regulations regardingCustomer Due Diligence/Know Your Customer as this ultimately caused thenotorious Benami accounts in the banking system.
Bankers usually provide services to their customers without completing therequisite procedures including submissions of the required documents on theassurance of later submissions. This practice is common as bankers aresupposed to reach massive targets from their management.
The central bank should look into the matter and also trace the roots ofthe violations which have become frequent in the banking industry.
Overall, the central bank has imposed penalties of Rs. 1.34 billion in thefive months since July 2019. Several banks were penalized multiple times.
