KARACHI: With aim to curb money laundering, the State Bank of Pakistan (SBP) has asked the banks to introduce an in-house price valuation of foreign goods.
SBP Governor Ashraf Mahmood Wathra, during a meeting with executives of banks, said that implement an in-house system to detect differences between the values declared in the documents and prevailing market prices. In addition, banks need to set out escalation procedures to manage transactions where significant differences in prices are identified.
The banks have also been advised to perform additional due diligence when international trade transactions involve any related parties. “The banks must put in place subjective and objective controls to identify related parties trade transactions,” the central bank said and added that in such cases if there are deviations then these should be brought to SBPs attention and/or STRs may be raised.
The banks must have more specific guidance, policies and procedures in place to address the overall risks of trade-based money laundering.
The SBP said that the banks should ensure that their transaction monitoring processes and systems are robust to flag suspicious transactions. Such transactions are properly investigated and escalated. “Regular compliance checks, especially on transactions that were not escalated, should be performed for quality assurance purposes,” the SBP said.
Earlier the meeting discussed trade based money laundering explaining that it is well known fact that trade transactions have the elements of under invoicing and over invoicing which facilitates transfer of value across the borders.
Primary responsibility in this regard lies with Pakistan Customs, however, since documents are negotiated and L/Cs are settled through formal banking sector, banks are required to enhance their capacity to process foreign trade transactions with extreme care and diligence.
Illegal forex operators may have accounts with banks through which they may be conducting illegal remittance business. “Banks are required to enhance their customer due diligence processes so that such relationships could be avoided. In this regards, banks should monitor the transaction patterns of their customers and report suspicious activities to FMU,” the SBP said.
