CDNS receives bid from bank to comply with FATF’s requirements

ISLAMABAD: The Central Directorate of National Savings has received single bidding for hiring services of a bank to comply with FATF’s anti-money laundering/counter financing terrorism requirements under the third party arrangement with a whopping cost of Rs5.3 billion, it was learnt.

The CDNS is used to generate requisite funds for the government to finance the budgetary deficit and infrastructure projects.

As a custodian of the nation’s savings, the National Savings is the largest investment and financial institution in Pakistan with a portfolio of over Rs3.4 trillion and more than 7 million customers are being served through a large network of 376 branches nationwide controlled by 12 regional directorates of national savings and four zones.

According to an evaluation report of the bidding process available with The News, the sole bidder applied for this project and submitted its technical and financial bid with attached cost of Rs5.3 billion.

Sources said this kind of third party arrangement is costing heavily to the CDNS for meeting FATF compliance requirements. Total expenditure of this entity’s total branches including salaries, pension and other expenditures stood at Rs3.5 billion but the bidder of this project asked for hiring services as third party sought Rs5.3 billion from national exchequer.

The government has constituted National Savings AML and CFT Supervisory Board to provide independent oversight of implementation of rules and take necessary enforcement actions against violation of rules.

The board comprises of Additional Secretary Finance as Chairman and its members will comprise of representatives of SBP not below grade 20 or equivalent officer, representative of SECP, representative of Financial Monitoring Unit and joint secretary Finance Division. Now the board took decision to seek guidance from Public Procurement Regulatory Authority on this sole bidding process for hiring services for CDNS for ensuring compliance on AML/CFT requirements.

National Savings Scheme AML-CFT Supervisory Board accepted the bid (vide number F.16 (1)-GS-1/2019-738) dated 6th July 2020. Furthermore, the supervisory board said any ambiguity in interpretation of request for proposal, execution, implementation, operational and any other matters during the agreement between the bank and CDNS will be resolved mutually under the supervision of supervision board, ministry of finance and State Bank of Pakistan.

However, detailed operational modalities on the following points would be incorporated in the agreement in consultation with NSS-AML/CFT Supervisory board, finance ministry and SBP, including routing of funds (new investment, principal payment and profit disbursement) through the bank’s accounts, time limit of fund holding by the bank, real time settlement of the funds, know your customer of client of manual branches, system to system integration and fund settlement by SBP.

As per PPRA rule (36(C)), there is two stage bidding procedure. The proposals will be evaluated technically first. The technical and financial proposals will allocate 60 and 40 marks, respectively. In evaluation of technical bids, 36 out of 60 marks are the qualifying marks.

Financial bids of only qualified bidders will be opened. The distribution of 100 marks and formulae of financial bids evaluations will be with technical proposal having 60 marks and financial proposal 40 so there will be total 100 marks.

The official sources said the government could create third party mechanism for complying with FATF requirements with much meager amount instead of providing over Rs5 billion only for just FATF requirements.

The routing out of funds of over Rs3.,000 billion through any other commercial entity will also benefit it manifold as it is normal routine among NSS customers that more than 20 percent customers do not get profits on monthly basis. So availability of Rs3 trillion funds will also benefit the hired commercial bank, they said.