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Tuesday March 19, 2024

‘Biometric authentication of bank accounts to help curb money laundering and terrorist financing’

By Erum Zaidi
January 15, 2019

KARACHI: Prime Minister’s Advisor on Institutional Reforms and Austerity Dr Ishrat Husain on Monday said biometric verification of all bank accounts will help improve control of financial crime, as banks can weed out potentially risky customers from their books very effectively.

Know your customers using biometric technology was a good way towards identifying potential money laundering and terrorist financing risks, Husain said at the first international anti-money laundering and countering financing for terrorism conference.

“There will be no fake and unknown accounts after the State Bank of Pakistan (SBP) will complete the procedure of biometric verification of bank accounts till June 2019,” he said.

Pakistan’s banks corresponding banking relationships could be affected if the financial institutions were not well-compliant with anti-money laundering (AML) and combating the financing of terrorism (CFT) laws, he added.

Tariq Bajwa, governor, SBP, said Pakistan was under the FATF action plan. One of the actions requires the financial institutions to have a clear understanding on money laundering (ML) and terrorist financing (TF) risks and AML/CFT obligations to mitigate these risks, he noted.

“The SBP is pursuing its outreach programme on money laundering and terrorist financing risks for its regulated entities through compliance forums, including Institute of Bankers Pakistan, and Pakistan Banks Association,” he said.

“Further, the SBP, in collaboration with other authorities like SECP (Securities and Exchange Commission of Pakistan), FMU (Financial Monitoring Unit) and NACTA (National Counter Terrorism Authority) has conducted joint outreach sessions for its internal and external stakeholders, including law enforcement agencies.”

Bajwa said the SBP has always encouraged interactive mode of exploring solutions to new challenges being faced in this area.

The objective of these efforts was to enhance the effectiveness of financial intelligence, investigation, and prosecution of ML and TF offences.

Strong AML/CFT controls should be at the heart of all financial institutions. However, breaches of these AML/CFT controls might force the regulators to take appropriate steps for initiating enforcement actions against the institutions, including but not limited to imposition of fines, sanctions, discontinuation of certain operations of law enforcement agencies initiating criminal charges on non-compliance with AML’ CFT obligations.

He also said, “Pakistan has undergone three mutual evaluations by Asia Pacific Group (APG) in the years 2005, 2009, and lately in 2018. With every mutual evaluation, Pakistan has improved its legal and regulatory regimes. However, the evaluation standards have also improved over the years.”

Dr Shamshad Akhtar, the former interim finance minister, said money laundering and terrorist

financing were posing risks to trade, investment, and security of the country.

“A close coordination with the stakeholders such as regulators and law enforcement agencies is very important to combat the danger of money laundering and other financial frauds,” she added.

Addressing the conference, Dr Waqar Masood Khan, former finance secretary, expressed hope that Pakistan would be removed from the FATF grey list in May due to the country’s efforts and action plan to combat money laundering and terrorist financing.

Sagheer Mufti, HBL’s chief operating officer, said, “I think Pakistan has been working on the issues for a few years, and Pakistan has been making progress, as can be seen by the various updates we have had on FATF discussions.”

He pointed out that the recent news coming out of Sydney was heartening and showed that Pakistan’s trajectory was positive, and the country was getting recognition for its work with institutions, be they public sector institutions or regulatory institutions or private sector institutions.

“I think in Pakistani banks are spending more and more on their compliance programme. In HBL, we have talked about it in our earnings release that we are undertaking a business transformation programme,” Mufti said.

“That programme is (an) investment. And we strongly believe in this investment. And we are going to continue making this investment to make sure that HBL is able to grow its business on strong foundations and good compliance,” he added.

Other speakers at the conference said trade based money laundering (TMBL) was one of the most sophisticated methods of clearing dirty money and trade based money laundering red flags were among the hardest to detect. Hundreds of billions of dollars pass through TMBL scheme every year, speakers told the audiences.