State Bank eases norms; NTN not mandatory to open bank account

KARACHI: The State Bank of Pakistan (SBP) on Monday relaxed norms to open new bank accounts, directing banks to accept business individuals’ applications even without the national tax numbers (NTN).

“The requirement of NTN should not be the reason for refusal of banking services to the customers, especially, where bank account is a prerequisite for obtaining NTN as per Federal Board of Revenue (FBR) criteria,” the central bank said in a circular.

The SBP explained a circular related to anti-money laundering (AML)/combating the financing of terrorism (CFT) regulations, which requires commercial banks to obtain NTN in case of establishing banking relationship with sole proprietors.

The SBP said the requirement of NTN for opening up of new bank accounts depends upon the availability or issuance of NTN by the tax authorities.

“The banks/DFIs should facilitate their customers in opening bank accounts and subsequently obtain NTN when issued by the FBR,” the central bank said.

Under the updated AML/CFT regulations, issued by the central bank, a sole proprietor required registration certificate and obtain sales tax registration or NTN, which is the minimum documents to be submitted to the banks for a new account.

The requirement of NTN is part of customers due diligence (CDD) by the bank. However, as per the regulations, the banks should verify identities of the customs and in case of legal persons, identities of their natural persons from relevant authorities or using other reliable or independent source.

“The verification shall be responsibility of concerned bank/DFI for which the customers should neither be obliged nor the cost of such verification be passed on to the customs,” it added.

The SBP, however said in case banks are not able to satisfactorily complete required CDD measures, account should not be opened.

 “If CDD of an existing customer is found unsatisfactory, the relationship should be treated as high risk and reporting of suspicious transaction be considered as per law and circumstances of the case,” it said.

The regulations emphasized the banks should monitor all business relations with customs to ensure that the transactions are consistent with banks’ knowledge. “Banks shall obtain information and examine unusual large transactions, which have no apparent economic or visible lawful purpose,” the central bank said.

The SBP also advised the banks to monitor and examine other suspicious activities including large sums deposited through cheques or otherwise in newly opened accounts

The banks are further advised to monitor customers who were operating accounts in the name of offshore company with frequent movement of funds. The SBP also stressed the need to monitor those dormant accounts which suddenly receive deposits or series of deposits followed by daily cash withdrawal that continue until the sum so received has been removed.

The SBP, in 2012 issued tough regulations to stop money-laundering and combat terrorism financing by making the regulations up to international standards. The bank made anti-money laundering and combating the financing of terrorism regulations more comprehensive by revising the existing regulations of Prudential Regulations on Corporate and Commercial Banking.

Those regulations were issued to introduce a comprehensive regulatory framework in line with international standards to mitigate various risks arising from money laundering and terrorist financing. The AML/CFT regulations provide a system of risk-based approach under which customers would be profiled as per risk involved.