SBP imposes Rs1.68bn fine on 15 banks 

Twelve banks were fined for procedural violations pertaining specifically to Know Your Customer and Customer Due Diligence guidelines

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KARACHI: The State Bank of Pakistan (SBP) imposed a cumulative fine worth Rs1.68 billion on 15 commercial banks for violating its regulations during the period from March 2020 to June 2020, according to data released by the SBP on Saturday. 

These banks include United Bank Limited (UBL), JS Bank, Meezan Bank, Faysal Bank, Bank of Punjab (BoP), Habib Bank Limited (HBL), MCB Bank, National Bank of Pakistan (NBP), Bank Al Habib, Habib Metropolitan Bank, Bank Alfalah, Askari Bank, Bank Islami, Punjab Provincial Cooperative Bank and Zarai Taraqiati Bank. 

Out of these banks, 12 were fined for procedural violations pertaining specifically to Know Your Customer (KYC) and Customer Due Diligence (CDD). 

BoP faced the highest fine of Rs286.3 million for procedural violations pertaining to KYC, CDD, asset quality, foreign exchange operations and corporate governance. According to the SBP, the bank has been advised to strengthen its processes to avoid recurrence of such violations.

NBP faced the second highest fine of Rs269.8 million for procedural violations related to KYC, CDD, asset quality, and foreign exchange operations. 

Additionally, both HBL and MCB Bank were fined Rs204.2 million and Rs158.4 million respectively, for procedural violations in KYC and CDD. 

UBL was fined Rs137 million for procedural violations in KYC, CDD, asset quality, foreign exchange operations and corporate governance. 

JS Bank was fined Rs71.4 million for procedural violations in CDD, KYC, and foreign exchange operations; while Faysal Bank was fined Rs96.1 million for the same reasons along with violations in asset quality. 

Bank Al Habib was fined Rs 46.8 million, Habib Metropolitan Bank was fined Rs22.8 million, Bank Alfalah was fined Rs40.3 million, Askari Bank was fined Rs29.8 million, Meezan Bank was fined Rs81.1 million; all for procedural violations in CDD and KYC. 

Bank Islami was fined Rs11.5 million, for procedural violations in foreign exchange operations. 

Punjab Provincial Cooperative Bank and Zarai Taraqiati Bank were fined Rs81.5 million and Rs147.2 million respectively for violations in Combating the Financing of Terrorism (CFT) and Anti-Money Laundering (AML).

Both banks had penal and administrative action taken against them. Both banks were also advised to conduct an internal inquiry on breaches of regulatory instructions and take disciplinary action against the delinquent officials. 

Since the middle of 2019, the SBP has started making public the fines it imposes on commercial banks. The recent fines come after the central bank increased regulations in the last few months, through its off site supervision and enforcement department.

The SBP has also become more vigilant about complying with international standards due to Pakistan being included on the Financial Action Task Force’s (FATF) grey list. The deadline to meet the FATF’s 27 conditions has been extended to October 2020. 

Earlier in December 2019, the SBP imposed a cumulative fine worth Rs219.14 million on five commercial banks for violating its regulations including Bank Alfalah, NBP, MCB Bank, Habib Metropolitan Bank and Summit Bank.

In October 2019, SBP imposed a Rs35.6 million penalty on HBL “due to major flaws in the foreign trade operation services and CDD”.

In September 2019, the central bank fined Meezan Bank Limited, Askari Bank Limited and MCB Islamic Bank Limited a total of Rs133.3 million. The penalty was imposed on all three banks due to violations related to KYC and CDD.

In August 2019, the SBP imposed a total penalty of Rs805 million on 10 banks, including HBL, mostly for violating AML and CFT regulations.

 

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