Governor State Bank of Pakistan, Dr. Reza Baqir, chaired a meeting today with Director General FIA Sanaullah Abbasi to strengthen and coordinate efforts of SBP, banks and Federal Investigation Agency (FIA) to fight money laundering, cyber-attacks and online frauds. The meeting was also attended by the Presidents of Banks and senior officers of FIA and SBP.
Governor SBP emphasized the need for close cooperation amongst banks, SBP, and FIA so those white-collar crimes are expeditiously investigated and fraudsters are apprehended and prosecuted.
SBP has taken several measures in the recent past to strengthen its work on Anti-money Laundering (AML) as well as taken regulatory and supervisory measures to improve banks’ controls to prevent digital and social engineering frauds.
In addition to better controls at the level of Financial Institutions and enhanced customers awareness, effective investigation and prosecution of criminals is needed to substantially reduce incidences of money laundering, digital frauds and cyber-attacks.
FIA team offered support in strengthening cyber security at banks and suggested banks carry out an Information Security (IS) audit of their systems. Welcoming the suggestion SBP informed that as per existing regulations banks are required to regularly carry out their information system audit and penetration testing, however, it would be reemphasized to the industry through PBA.
The meeting identified key follow-up areas and associated timelines for strengthening cooperation between SBP, FIA, and banks in these areas.
President Dr Arif Alvi has upheld two different decisions of the Banking Mohtasib (BM) ordering Al Baraka Bank Ltd (ABBL) and Habib Bank Ltd (HBL) to pay Rs9.145 million to Mrs. Zahida Naseem and Rs 5 million to Mushtaq Ahmed Bajwa, respectively, who had been swindled out of their money by the management of the banks.
The President rejected the appeals of both the banks against the decisions of the Banking Mohtasib.
He regretted that the victims of fraud, including an Overseas Pakistani, suffered a lot at the hands of the banks’ management and no relief was provided to them.
He urged the public to avail the services of the Banking Mohtasib to seek relief in fraud cases as well as against the maladministration of bank officials/officers.
According to details of both the cases, Mrs Zahida Naseem (complainant) opened her PKR Account on 03-03-2017 and British Pound Sterling on 28-03-2017 with Al Baraka Bank, at DHA Branch, Lahore. She applied for Term Deposit for an amount of Rs 10.7 million for one year after signing her cheque and TDR Application Form.
The then Branch Manager, Omer Ikram, provided her fake and fabricated Account Statement and TDR Certificates on bank’s Letter Head.
However, in July, she came to know that the given account statement and TDR certificates were fake and fabricated.
The Bank Manger had fraudulently used her cheque and requested for Real Time Gross Settlement instead of TDR. It was later revealed that Ikram had allegedly committed fraud of huge amount of Rs 125 million and was an expert in making and providing tampered and fake bank statements to his clients.
This was admitted by the bank which had cancelled the policies of clients and had refunded money to respective accounts in different cases. In this case, an amount of Rs 9 million was transferred to the bank account of Mr Ikram’s personal driver.
Mrs. Naseem requested ABBL to credit the lost funds to her account but without any result. Subsequently, she approached the Banking Mohtasib for the redressal of her grievance.
In a similar case, Mushtaq Ahmed Bajwa (complainant), an Overseas Pakistani living in Holland, was maintaining a PLS Saving Account with Habib Bank Ltd’s branch in Faisalabad.
He handed over cash of Rs 5 million to the then branch manager, Akhtar Hussain, on 14-04-2017.
Hussain filled in the deposit slip, and after signing and stamping it, handed over the counterfoil to the complainant. Later on, his brother informed him in Holland that an internal fraud had been perpetrated and funds deposited by several depositors had been embezzled by the ex-Branch Manager.
The manager had deceitfully mentioned some imaginary cheque numbers on his deposit slip instead of cash amount personally handed over to him.
Further, the bank lodged an FIR with FIA Faisalabad against the main accused and his accomplices. The bank did not pay Bajwa his claim despite acknowledging his complaint, after which, the complainant approached the Banking Mohtasib to seek justice.
The Banking Mohtasib investigated both the cases and, after perusal of facts, ordered that the complainants may be refunded their lost money by the respective banks.
Wafaqi Mohtasib held that the complainants had entrusted their hard earned money to the concerned banks and it was fiduciary duty of the banks to protect their customers.
It noted that the appointment of vigilant bank officials, honest and professional staff was the responsibility of the bank and not of the complainants.
The Ombudsman noted that the bank officials had been duly posted by the management of the banks and they were performing the employer’s business, when the complainants had suffered financial losses due to the unethical and fraudulent activities of the authorized bank officers.
The bank cannot escape the liability in such cases when the commission of fraud with the accountholder by its management is established and admitted, the BM held.
The Mohtasib ordered that both the banks were responsible to make good the loss of the complainants without further delay. Subsequently, the banks filed separate appeals against the decisions of the BM.
President Dr Arif Alvi upheld both the decisions of the Mohtasib on the grounds that banks were given ample opportunity by the Mohtasib to defend and controvert the claims of the complainants, however, banks had failed to discharge the burden and statutory liability cast upon them under the law.
“No justification has been made to upset the order of the learned Banking Mohtasib”, the President wrote while rejecting the representations of the banks.
ISLAMABAD: President Dr Arif Alvi on Friday rejected the representation of MCB Bank challenging the order of Banking Mohtasib to credit the lost money to its account holder, who had fallen victim to internet banking fraud.
The President said the bank’s argument on declaring the unauthorized funds transfer as the customer’s liability for divulging his personal information to an unknown caller, was “not tenable”.
“The ‘strange and evasive stance’ of the MCB that this being a matter of internet fraud and the Bank is not responsible for the loss of its customer’s money owing to compromised credentials by customer himself is just shrugging off Bank’s fiduciary responsibilities to an innocent account holder,” he wrote in his order.
The President, in his decision, pointed out that MCB failed to explain how an aggregate amount of Rs 497,600 was transferred in a day from the complainant’s account against the default per day limit of Rs.100,000 set on his Visa Debit Card.
“This is a serious gap where the system has allowed fund transfers beyond the assigned per day Internet Banking limit on a transaction,” he said, adding that had the internet banking system been properly functioning, it could have prevented transfer of funds.
A sum of Rs 497,600 was transferred from the account of Shaukat Ali, a bank account holder with MCB Karachi, after he received multiple calls on his mobile phone on October 28, 2018, posing to be from the Census Department and the bank.
The unknown callers sought from Shaukat Ali (complainant) the details of his bank account, which he admittedly shared assuming the calls were from the bank.
For retrieval of his lost funds, he filed several complaints with the bank, however on finding no redressal of his grievance, he approached the Banking Mohtasib.
The finding of the Banking Mohtasib revealed that the complainant had never requested for the Internet/Mobile Banking facility and also had no knowledge about its use. However, on his request to enhance the limit of his Debit Card in 2016, the bank activated the said feature without his consent.
It said that the bank gave no evidence on holding any consent from the account holder for registration of Mobile Banking/Internet Banking Applications under the Violation of State Bank of Pakistan Circular No. 3 of 2015 dated October 21, 2015.
The Banking Mohtasib in its order said no matter if the customer had divulged his personal information to an unknown caller, but had the “unsolicited facility not become functional automatically, that too without knowledge and consent of the complainant, the account holder would have been saved from the loss”.
It advised the bank to “make good the loss by crediting the complainant’s account with a sum of Rs 497,600 together with other charges and Withholding Tax on disputed fund transfers.
President Alvi, in response to the representation of MCB assailing the order of the Banking Mohtasib said that primarily, it was the responsibility of the bank to protect the interest of their depositors.
He stressed that the bank should have educated the accountholder about Electronic Fund Transfer before activating the channel by default.
Dr Alvi said there was no justification to upset the order of the Banking Mohtasib which had afforded the bank ample opportunity to defend and controvert the claim of the complainant. Despite this, he said, the bank “failed to discharge the burden and statutory liability cast upon it under the law”.
As digital banking becomes popular, he said, the banks must ensure that their clients thoroughly understand how to protect themselves from fraud.
“We must protect the interests of the people of Pakistan, banking clients, who have been sold products that can be used to scam them of their hard-earned money,” he wrote in his order.
The President, therefore, rejected the representation of the bank for being “devoid of any merit”, in favour of the complainant seeking refund of money fraudulently transferred from his account.
KARACHI: The office of Banking Mohtasib Pakistan has said that complaints against banking frauds, forgeries and other regularities were monthly highest received in March 2021 since the inception of Mohtasib office in 2005.
Complaints against banking frauds and forgeries registered massive increase of 135 percent during three months (January – March) of 2021 as compared with same period of the last year.
According to a statement issued on Friday, the office of the Banking Mohtasib Pakistan said that over 135 percent increase had been observed in the number of complaints lodged against alleged frauds, forgeries and other irregularities during the first quarter (January – March) of 2021 as compared to the same period of the last year 2020.
The office of the Banking Mohtasib Pakistan said that 11,732 complaints were received by the Banking Mohtasib Secretariat during the first quarter of 2021 as compared with 4,994 complaints received in the same period of the last year.
“These also include 7,595 complaints received on Prime Minister’s Portal relating to banking issues as compared to 1,411 complaints received during the first quarter of previous year.”
Out of total 11,732 complaints, 5,375 complaints were received in the month of March only, which is the highest figure of complaints recorded in a single month since the inception of Banking Mohtasib Pakistan Office in 2005.
“The increase in number of complaints indicates that the general public feels that their genuine grievances will be resolved amicably by the Banking Mohtasib office,” according to the statement.
The Banking Mohtasib Secretariat disposed of 4,672 complaints from January 01 to March 31, 2021 out of which only two percent of complaints were resolved through formal orders while remaining 98 percent of complaints were resolved amicably.
By disposing of these complaints, the Banking Mohtasib Office has provided monetary relief amounting to Rs132.62 million to the banking customers during the first quarter of 2021.
Banking Mohtasib Pakistan Muhammad Kamran Shehzad urged the general public not to disclose their personal and financial credential to any person in order to protect themselves from any fraud and forgeries.
KARACHI: The State Bank of Pakistan (SBP) on Friday taken measures for prevention of digital bank fraud and issued directions to stakeholders in this regards.
The central bank said that in collaboration with other stakeholders it had initiated various measures to curtail digital banking frauds, conducted by employing social engineering tactics including fake calls.
In order to successfully design and deploy additional measures, it is vital to have sufficient information about these frauds.
In this respect, two standardized formats have been developed to record information relating to attempted and committed fake call frauds.
At the time of receiving the calls from customers for reporting of these frauds, the agents at call centers of all Banks/MFBs will record the information, where available, as per the given formats.
Banks/MFBs will report data recorded as per the prescribed formats to the Offsite Supervision & Enforcement Department (OSED) of SBP on monthly basis.
The data will be reported to the SBP in soft copy in Microsoft Excel within 10 days from the close of every month.
The SBP directed banks/MFBs to ensure that the call center agents are sufficiently trained to handle calls received for reporting digital banking frauds.
They must be capable of identifying attempted digital banking frauds related calls when a naive customer unaware of fraudulent attempt reports such instances.
Banks/MFBs will report the relevant information to PTA for blocking SIM/Device of the fraudsters used for committed/attempted digital banking frauds as soon as identified.
As a control mechanism to avoid any further financial loss, the call agents upon receiving calls for blocking digital channels/cards in case of fraud will immediately block all channels temporarily, under intimation to the customer, before seeking detailed verification from the customer.
The verification required from the customer as per procedure will subsequently be acquired on the same call.
For blocking of digital channels, the requirement to call from registered numbers would not be necessary since the customer may not have access to his/her registered telephone number; however, the banks may conduct enhanced verification in cases where the request for blocking of channels was received from an unregistered number.
In order to unblock the account/continue services, the Banks/MFBs will guide the customers as per their relevant policies.
Banks/MFBs are advised to implement the above measures within 30 days from the issuance of this circular.
ISLAMABAD: The Banking Mohtasib (Ombudsman) has provided a relief to a person, who lost money through credit card transactions that were made fraudulently by a bank official.
