Enforcement Action: SBP imposes penalties worth Rs525mn on 8 banks

August 06, 2021 (MLN): The State Bank of Pakistan (SBP) has imposed a monetary penalty of Rs525 million on eight banks that violated SBP’s rules and regulations during the quarter ended June 30, 2021.

According to a notice issued by SBP, the penalty was imposed for various indiscretions ranging from Violations in the areas of foreign exchange (FX) Operations to Violations in the areas of CDD/KYC/CFT/AML and general banking operations.

Among the banks, the highest penalty of Rs289mn was imposed on MCB Bank Limited on account of violations of regulatory instructions pertaining to AML/CFT & General Banking Operations.

Another major bank, Zarai Taraqiati Bank Limited was fined Rs75.759mn for the desecrations of regulatory directives related to AML/CFT, Asset Quality & General Banking Operations. Rs62.177mn was charged from Sindh Bank Limited for the same offence. However, the bank has also been fined for non-compliance of the regulatory instructions with regards to FX operations.

Likewise, the Punjab Provincial Cooperative Bank Limited was charged for Rs32.504mn for the violation of regulatory instructions of AML/CFT.  

In addition to penal action, the above stated banks have been advised to conduct an internal inquiry on breaches of regulatory instructions and take disciplinary action against the delinquent officials.

First Women bank, and Pak Brunai Investment Company were charged Rs31.577mn, and Rs10.44mn, respectively for violations of regulatory instructions pertaining to Asset Quality, CDD/KYC, & General Banking Operations. Soneri Bank was fined Rs12.59mn for the similar offense. However, the bank has been also charged for the non-compliance of directives related to FX operations.

Bank Alfalah was penalized Rs11.10mn on account of the violation of given instructions to maintain asset quality and conduct general banking operations.

These banks have been asked to strengthen its processes with respect to identified areas.

To note, SBP stated that these actions are based on deficiencies in the compliance of regulatory instructions and do not constitute a comment on the financial soundness of the entity.

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