Mandatory verification in process in bid to weed out fake bank accounts

By Javed Mahmood

Cars December 9 pass in front of the headquarters of three leading Pakistani banks -- United Bank Limited, Habib Bank Limited and MCB Bank -- in Karachi, the country's financial hub. [Javed Mahmood]

Cars December 9 pass in front of the headquarters of three leading Pakistani banks -- United Bank Limited, Habib Bank Limited and MCB Bank -- in Karachi, the country's financial hub. [Javed Mahmood]

ISLAMABAD -- Banks in Pakistan are in the process of biometrically verifying all account holders in a bid to weed out fake bank accounts and combat money laundering and terror financing in the country.

Effective December 1, banks and other financial institutions operating in Pakistan have started to verify account holders' identities biometrically, in order to discover the credentials of the real depositors.

Banks have been sending text messages about the process to their customers, who then visit their bank branches for verification.

"It is very troublesome for us to visit our bank branch just for biometric verification, but we are part of this nationwide campaign, which ensures the security of our accounts and strengthens the financial system in the country," Dr. Ramesh Bhervani, a resident of Defence Phase-V in Karachi, told Pakistan Forward December 9.

Recent reports about fake accounts and their misuse for nefarious purposes, including money laundering, are a matter of serious concern for every account holder and for policymakers. The verification process is meant to stamp out the problem.

Banks in Pakistan started biometrically verifying account holders in June 2016, so this new process affects all accounts opened before this date.

More than 13,000 branches have been verifying accounts daily since December began. Authorities have not disclosed the number of verified accounts.

"If anyone refuses to be part of biometric verification, we will block the individual's bank account until we complete verification," Syed Ibne Hasan, spokesman for the National Bank of Pakistan (NBP), told Pakistan Forward.

Mandatory verification

"The foremost advantage of the biometric process is that it will eliminate 'benami' (unknown) accounts that are being used for illegal transactions," Saad Bin Naseer, the executive director of Mettis Global, a Karachi-based supplier of financial data to banks, told Pakistan Forward.

"Once the verification ends, the account holders will not be able to say that they don't know anything about their accounts or about the related banking transactions," he said.

"We are hearing about transactions in the billions of rupees that are going through the bank accounts of poor rickshaw drivers and juice vendors that have damaged the reputation of the entire banking sector and have exposed flaws in the system," Ahmed Malik, president of the Karachi Press Club (KPC), told Pakistan Forward.

In some cases, criminals have registered accounts under the names of deceased individuals to enable illegal transactions, he said, adding that the practice is doomed once biometric verification takes place.

"This is a good exercise to identify the authenticity of millions of account holders with banks and other financial institutions," Hasan, the NBP spokesman, told Pakistan Forward.

Banks and financial institutions have more than 50 million account holders, including private and public sector companies, as well as small and medium-sized enterprises, he explained. Most depositors keep their money in seven major banks -- the NBP, Habib Bank Limited, MCB Bank, United Bank Limited, Allied Bank Limited, Standard Chartered Bank of Pakistan and Bank Al-Falah Limited, he added.

Obstacles to curbing terror financing

"The real issue is to properly implement the rules and regulations governing fake accounts that are being used for money laundering and terrorism financing," Manzar Naqvi, executive editor of the Karachi-based The Financial Daily, told Pakistan Forward.

The battle against misuse of accounts is confronting some deep-seated reluctance, he warned.

Bank officials often do not report misuse of accounts to their main office or to the State Bank of Pakistan (SBP) because of the perceived influence of the beneficiaries, he said.

The Federal Investigation Agency (FIA) a few weeks ago identified several fake accounts that money launderers were using, said Naqvi, adding that the affected banks and the SBP failed to act, yet again to avoid antagonising powerful individuals.

Nonetheless, the FIA does have orders from Prime Minister Imran Khan's government to crack down on corruption, he said.

Banks are not going to meet the government-set December 31 deadline to complete verification because the National Database & Registration Authority (NADRA)'s biometric system is unable to bear the workload, Hasan of the NBP told Pakistan Forward.

After 11am on workdays, the burden on the NADRA system becomes extraordinary as banks inundate it with data, he said.

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