Bank to scrutinise CDNS deposits

ISLAMABAD: The government has decided to hire a commercial bank to scrutinise Rs4 trillion deposits of four million Pakistanis placed with the Central Directorate of National Savings (CDNS) after the Financial Action Task Force (FATF) pointed out glaring deficiencies in its regulatory frameworks.

The Ministry of Finance has floated expression of interests, inviting bids from the interested commercial banks to enter into a third party agreement to enforce Anti-Money Laundering and Combating Financing of Terrorism regulations in the CNDS, according to the finance ministry.

The government is aiming to scrutinise all the existing accountholders within six months and complete the risk profiling by December next year aimed at meeting the FATF requirements.

The move will, for the

first time, open four million accounts having Rs4 trillion deposits as of end of October for the scrutiny of a private party. The prospective third party will screen these accounts and make their risk profile on the basis of Anti-Money Laundering Act (AMLA) of 2010, Anti-Terrorism Act 1997 and the United Nations Security Council Act 1948.

The FATF has placed Pakistan on its grey list with effect from June 2018 and the next review on the implementation of the FATF Action Plan will take place in February next year. Before that, the Joint Review Group of the Asia Pacific Group will review Pakistan’s compliance in the third week of January.

The government’s decision to engage a private party to perform the task underscores that it lacks the capacity and planning despite the country being on the grey list for the last almost one and a half year. Instead of building in-house capacity, the finance ministry has decided to involve a third party to perform the critical task.

The director general of the CDNS refused to comment on the decision of engaging the third party.

The CDNS is an attached department of the Ministry of Finance and responsible to sell approved government debt securities to the general public. The CDNS collects proceeds of these securities through physical sale points ie National Savings Centres and deposit into the federal government’s SBP account. CDNS also offers some financial products including saving and pensioner accounts.

Out of the total 376 National Savings Centres, 154 are still operated manually from across the country. The finance ministry undertook the project to computerise all the 376 centres 10 years ago, which still remains a work in progress.