CDNS to be safeguarded against ill-gotten money, terror financing: MoF

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ISLAMABAD: The Finance Division, through the promulgation of National Savings Schemes (AML-CFT) Rules, 2019, has decided to engage an AML-CFT compliant bank to put in place the requirement and necessary training of employees of the Central Directorate of National Savings (CDNS).

Accordingly, an Expression of Interest, in consultation with SBP, has been sought from the interested bank to conduct KYC (Know Your Customer) and another requirement of new as well as an existing client of the CDNS.

“This will include the biometric verification and screening of potential clients in UN Proscribed Person List. All these screenings are meant to stop any ill-gotten money to become part of the financial system and to safeguard the valued investor from the menace of money laundering and terrorist financing,” said a statement issued by the Finance Division.

Being a symbol of unshakable public trust, CDNS is one of the longstanding institutions in the country with a legacy of more than 140 years. National Savings is playing its pivotal role to inculcate the culture of savings, facilitate financial inclusion and extending social security net to the deserving sections of the society. Around 33 per cent of CDNS deposits are in welfare schemes which attribute around 2pc incremental rate of profit over and above other regular savings schemes.

Currently, CDNS manages portfolio of Rs4,038 billion (as of Nov 2019) of more than 7 million investors. National Savings Schemes (NSS) provide risk-free and competitive avenue to all segments of society especially the most vulnerable i.e. senior citizens, pensioners, widows, physically challenged persons and family members of martyred.

It provides a non-inflationary and cost-effective borrowing to GoP to bridge the overall fiscal deficit which ultimately reduces dependency on external borrowing. 19pc of domestic debt consists of NSS while these deposits are equal to 28pc of total deposit of scheduled bank.

One of the main challenges to CDNS was its manual operations, therefore, CDNS began its journey of automation in 2009 and successfully completed PSDP-funded Automation Project Phases I & II in 2013 and 2017. Through the project, 223 National Savings Centre (NSC) i.e. (60pc out of total 376) have been successfully automated. Automation of remaining 153 is in active process with the support of Department for International Development (DFID), UK.

Meanwhile, the CDNS has upgraded its core business solution from decentralized to centralized architecture. As many 144 branches have already been shifted to upgraded solution where customer transaction time has significantly reduced. Also, the provision of Alternate Delivery Channels (ATM) is in final stages which will further improve the service delivery.

Introduction of technology has provided the CDNS the opportunity to modernize its process which includes swift data reporting, reconciliation with other departments, budgeting and forecasting, customer database etc.

In this context, Asia Pacific Group in its recently published Mutual Evaluation Report (MER 2019), has pointed out a number of deficiencies on the part of CDNS in terms of compliance to FATF recommendations, which has negatively affected the overall grading of different recommendations especially the recommendations 10, 11, 12 and 15.

The CDNS is committed to mitigating the deficiency to improve customer service delivery and to comply with the FATF recommendation to safeguard the interest of the investors. Banks under the supervision of SBP have already put in place all the required systems and KYC processes to comply with the FATF recommendation.

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