SBP spells out steps to check money laundering through banking channels


-File photo —File Photo

KARACHI: The State Bank of Pakistan (SBP) Monday spelled out a number of steps to minimise money laundering through banking channels, and advised banks to monitor transaction patterns of customers and report suspicious activities.

SBP Governor Ashraf Mahmood Wathra addressed CEOs of commercial banks at SBP headquarters here on Monday, according to a SBP statement issued here.

The SBP advised banks to take the following measures to minimise money laundering through banking channels: Implement an in-house system to detect differences between the values declared in the documents and prevailing market prices.

In addition, banks need to set out escalation procedures to manage transactions where significant differences in prices are identified; Perform additional due diligence when international trade transactions involve any related parties.

The banks must put in place subjective and objective controls to identify related parties trade transactions.

In such cases if there are deviations then these should be brought to SBP’s attention and/or STRs may be raised; Must have more specific guidance, policies and procedures in place to address the overall risks of trade-based money laundering; Ensure that their transaction monitoring processes and systems are robust to flag suspicious transactions.

Such transactions are properly investigated and escalated.

Regular compliance checks, especially on transactions that were not escalated, should be performed for quality assurance purposes; Provide adequate and specific trainings on the financial crime risks prevalent in the trade financing and forex operations to relevant staff.

It was stated that SBP/SBP-BSC will support and guide any exercises by banks/financial institutions to achieve this objective.

The SBP took electronic and print media onboard after SBP Governor Ashraf Mahmood Wathra addressed CEOs of commercial banks at SBP headquarters here on Monday.

The SBP Governor said this is the first time that they have invited media as a follow on to such a meeting with the presidents and CEOs of banks.

“The reason being there have been so many rumors for the last few days regarding one important measure taken by the State Bank over unnecessary foreign travel of the banks’ staff,” said the Governor adding, “Somehow this was linked to one particular bank causing panic like situation over the weekend.

The SBP Governor said the SBP wished to clear the air with these rumors by sharing their conversation with the media.

The Governor added that Monday’s meeting, however, was not limited to that issue only but was called to discuss many important issues faced by the economy in general and the financial sector, in particular.

A SBP statement said that the main issues discussed during the meeting also pertained to “Trade Based Money Laundering” and elaborated that it is well known fact that trade transactions have the elements of under invoicing and over invoicing which facilitates transfer of value across the borders.

Primary responsibility in this regard lies with Pakistan Customs, however, since documents are negotiated and L/Cs are settled through formal banking sector, banks are required to enhance their capacity to process foreign trade transactions with extreme care and diligence.

Regarding banking services to unlicensed forex operators, it was stated that “Illegal forex operators may have accounts with banks through which they may be conducting illegal remittance business”.

It stated that banks are required to enhance their customer due diligence processes so that such relationships could be avoided.

In this regards, banks should monitor the transaction patterns of their customers and report suspicious activities to FMU, it added.

The Governor reiterated SBP’s resolve that it will continue to encourage banks to send their staff abroad for advanced trainings, technology cquisition and occasional board of directors meetings or to manage their overseas networks.

“We will give banks 90 days to submit their foreign travel policy,” he added.—APP