Karachi, January 29, 2024 – In a significant move to uphold regulatory compliance in the banking sector, Pakistan has imposed a substantial monetary penalty totaling Rs 465 million on 10 commercial banks.
The regulatory action was taken by the State Bank of Pakistan (SBP) during the quarter ending December 31, 2023, against institutions found in violation of various regulatory instructions.
The list of banks, along with the nature of the offence and the corresponding monetary penalty, is as follows:
1. United Bank Limited:
• Nature of Offence: Violation of regulatory instructions pertaining to CDD/KYC, Asset Quality, FX, and General Banking Operations.
• Action Taken: In addition to penal action, the bank has been advised to take remedial measures, including the implementation of necessary systems and controls to avoid the recurrence of such violations.
• Monetary Penalty: Rs 114.193 million.
2. Habib Bank Limited:
• Nature of Offence: Violation of regulatory instructions pertaining to AML/CFT, CDD/KYC, FX, and General Banking Operations.
• Action Taken: In addition to penal action, the bank has been advised to avoid the recurrence of such violations in the future.
• Monetary Penalty: Rs 113.367 million.
3. Standard Chartered Bank Pakistan Limited:
• Nature of Offence: Violation of regulatory instructions pertaining to CDD/KYC, FX, and General Banking Operations.
• Action Taken: In addition to penal action, the bank has been advised to improve its internal processes and controls to avoid similar instances in the future.
• Monetary Penalty: Rs 58.375 million.
The remaining banks on the list, including Meezan Bank Limited, Askari Bank Limited, JS Bank Limited, MCB Bank Limited, Dubai Islamic Bank Limited, Mobilink Microfinance Bank Limited, and Bank Alfalah Limited, also faced penalties ranging from Rs 10.730 million to Rs 44.705 million for various regulatory violations.
These regulatory breaches spanned areas such as Anti-Money Laundering/Counter Financing of Terrorism (AML/CFT), Customer Due Diligence/Know Your Customer (CDD/KYC), Foreign Exchange (FX), and General Banking Operations.
In addition to imposing monetary penalties, the State Bank of Pakistan has directed each penalized bank to take specific actions to rectify the regulatory violations. These actions include implementing necessary systems and controls, improving internal processes, ensuring meticulous compliance with regulatory instructions, and conducting internal inquiries in certain cases.
The SBP’s proactive approach in penalizing non-compliant banks underscores the importance of maintaining a robust regulatory framework within the financial sector. This move aims to enhance transparency, accountability, and adherence to regulatory standards, ultimately safeguarding the integrity of Pakistan’s banking system.
As the affected banks work towards rectifying their shortcomings, the regulatory measures are expected to contribute to a more resilient and trustworthy banking environment in Pakistan. The State Bank of Pakistan continues to play a pivotal role in ensuring the stability and integrity of the country’s financial system through effective regulatory oversight and enforcement.