Islamabad, January 21, 2024 – President Dr. Arif Alvi has taken a firm stand against banking fraud, ordering the blocking of banking services to fraudsters.
The move comes in response to the rising incidence of online banking frauds affecting innocent customers, prompting the president to intervene and safeguard the interests of those who have fallen victim to such scams.
President Alvi has directed the Banking Mohtasib to address the issue of banking frauds with the State Bank of Pakistan (SBP) and formulate essential standard operating procedures (SOPs). These SOPs aim to blocking the CNICs of proven fraudulent individuals, placing them on a central negative list. The directive also ensures that the banking industry refrains from extending any financial facility to these individuals.
The president’s decision came after rejecting two separate representations filed by United Bank Ltd (UBL) and Bank Alfalah Ltd (BAL). These representations sought to overturn the decisions of the Banking Ombudsman, who had directed the banks to reimburse Rs 1.9 million and Rs 0.744 million, respectively, to customers who had fallen victim to online banking fraud orchestrated by fraudsters.
The case of Qaiser Mehmood, a UBL account holder, involved a fraudulent call impersonating the bank’s helpline. The caller convinced him to activate his disabled digital banking app, leading to the unauthorized transfer of Rs 2 million from his account. Similarly, Brigadier (retd) Muhammad Arif Shaikh received a call from fraudsters seeking his banking credentials to rectify alleged technical flaws in his account. Subsequently, Rs 994,000 was transferred from his account through 19 unauthorized transactions.
Despite approaching their respective banks for refunds, both victims faced resistance. Seeking relief, they separately approached the Banking Ombudsman, who ruled in favor of the customers. Dissatisfied with this decision, UBL and BAL filed representations against the Ombudsman’s rulings with the President.
President Alvi personally heard the cases, noting the banks’ non-compliance with SBP directives regarding the implementation of monitoring systems to detect fraudulent transactions. He highlighted that the banks failed to raise alerts despite multiple consecutive fraudulent transactions and neglected to establish the legitimacy of transactions under Section 41 of the Payment System and Electronic Fund Transfers Act, 2007.
Emphasizing the gravity of the situation, President Alvi concluded that malpractice and maladministration were evident on the part of the banks. Consequently, he rejected UBL and BAL’s representations and directed them to compensate the complainants. The president ordered UBL to pay Rs 1,998,500 and BAL to pay Rs 744,000 to the victims, holding the banks accountable for the financial losses incurred by the defrauded customers.
This decisive move by President Alvi underscores the commitment to protect consumers from fraudulent activities and signals a renewed focus on ensuring accountability within the banking sector. The measures taken are expected to serve as a deterrent to potential fraudsters and strengthen the overall security of online banking transactions.
