SBP fines bank Rs35.62m for violating laws

The State Bank of Pakistan (SBP) has imposed Rs35.620 million monetary penalty on a big prestigious bank in October for violating SBP's rules on foreign exchange operations and customer due diligence, the central bank said.

"Monetary penalty was imposed mainly on deficiencies in the areas of foreign trade operations and customer due diligence," the central bank said in a statement posted on its website.

"The bank has been advised timelines to bring improvements in its systems/controls to avoid recurrence of such lapses/violations in future," it added.

"The bank is aware of this case. It pertains to transactions executed during 2015-2017," the chief corporate communications officer (CCCO) at the bank said in an email when asked about the SBP's enforcement action.

He added that transactional irregularities were detected in a few branches of the bank in Lahore. Some bank staff, acting illegally, in their individual capacity, undertook transactions that negatively impacted the bank. The bank filed a complaint with the law enforcement agencies to investigate the matter and take action. FIR has been registered.

An investigation is under way by the law enforcement authorities, he said. "The bank endeavours to be compliant with all regulatory requirements. We take such matters very seriously," he said. About the bank's level of compliance with rules on foreign trade operations and Know Your Customer, he said the bank proactively initiated a business transformation program, in early 2018, around its control and compliance processes and systems to adhere to international standards.

For the bank, the CCCO said, adhering to the international compliance standard protocols is not a one-off project but the way we do business; our work ethos is centred around a culture of robust compliance and control processes, with our first line of defence taking the lead. The bank has made significant investments in management time and resources to strengthen compliance protocols by partnering with global experts in this field.

The bank's profit after tax fell by Rs1.1 billion to Rs8.8 billion in the nine months of 2019 due to the retrospective imposition of Rs1.9 billion of Super Tax on 2017 earnings, according to bank's quarterly report.