Mohsin Siddiqui (Chief Reporter)
State Bank of Pakistan (SBP) has levied a Rs90 million penalty on five commercial banks for their involvement in a Rs70 billion money laundering case. Despite the discovery of serious violations, the penalty has raised concerns among members of the Senate Standing Committee on Finance.
During Tuesday’s proceedings, committee members expressed shock at the central bank’s apparent protection of banks rather than penalizing them. Led by Senator Saleem Mandviwalla, the committee observed potential withholding of crucial details by the SBP, prompting the decision to hold the next meeting in-camera.
The committee convened to seek a report on the SBP’s investigation into the Rs70 billion money laundering case. Central bank officials, under scrutiny, disclosed that only a paltry Rs90 million penalty was imposed on commercial banks for their role in the illicit funds transfer.
Dr. Musadiq Malik, a committee member, criticized the penalty as inadequate, considering the estimated money laundering amount of Rs300 billion to Rs400 billion. SBP Deputy Governor Dr. Inayat Hussain defended the banks, attributing the wrongdoing to importers who engaged in over-invoicing.
Last month, Pakistan’s tax chief revealed that two solar panel importers were involved in the Rs70 billion money laundering, implicating five commercial banks. The funds were transferred to Switzerland, Singapore, and the UAE, with over Rs16.5 billion sent to the UAE and Singapore alone.
The committee expressed dissatisfaction with the SBP’s presentation, accusing it of protecting banks’ interests. Despite acknowledging some wrongdoing by the banks, the central bank faced criticism for vague and cosmetic actions.
The SBP admitted that some banks failed to update customers’ risk profiles, neglected enhanced due diligence, and allowed improper fund transfers abroad. Standing Committee Chairman Saleem Mandviwalla suggested criminal investigations if the regulator failed in its functions.
The committee argued that penalties did not align with the gravity of the crime and recommended stricter legislation. It called for comprehensive reports on the number of banks involved, the extent of money laundering, and imposed penalties.
The Federal Board of Revenue (FBR) registered eight FIRs against dummy companies, covering Rs41 billion. The committee urged discussions on fortifying rules, regulations, and legislative measures to combat economic offenses in Pakistan’s cash-based economy. SBP’s Inayat Hussain emphasized the need for parliamentary legislation to address the issue.
