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To enhance anti-money laundering and counter-terrorist financing measures, the State Bank of Pakistan (SBP) has issued directives to banks and microfinance banks (MFBs) providing branchless banking (BB) services, which are referred to as Authorized Financial Institutions. In a circular released by the SBP’s Banking Policy & Regulations Department (BPRD) on Wednesday, they have instructed these institutions to conduct biometric verification (BV) of account and wallet holders for all “cash-in” and “cash-out” transactions at BB agents’ locations, starting from January 31, 2024. This BV requirement is in addition to the BV of transactions and customer categories already outlined in the BPRD Circular No. 10 from December 30, 2019.
The SBP has also emphasized the need to prioritize the deployment of new BV devices required to implement these instructions, initially in areas with high terrorist financing (TF) risks and subsequently in other regions across the country.
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Furthermore, the central bank has mandated that necessary measures and controls, including hardware and software upgrades, be taken to comply with these directives. Authorized Financial Institutions are also directed to bolster their automated transaction monitoring systems (ATMS) to ensure comprehensive tracking of all BB transactions, including those carried out at agents’ locations. The system should be capable of identifying suspicious, unusual, or out-of-pattern transactions, as well as accounts with an unusually high number of transactions, for further assessment and reporting through Suspicious Transaction Reports (STRs) as per the Anti-Money Laundering (AML) Act of 2010. Additionally, they are instructed to reconstruct individual BB transactions to facilitate the gathering of necessary evidence for potential use in criminal investigations under relevant laws.
Lastly, the central bank has urged the inclusion of BB operations in the Internal Risk Assessment Reports (IRARs) to ensure adequate and meaningful coverage, as required by the SBP’s AML (Anti-Money Laundering), CFT (Counter-Financing of Terrorism), and CPF (Countering the Proliferation of Weapons of Mass Destruction) Regulations.
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