Delinquent banks fined trivial Rs90mn over Rs300bn ‘money laundering', Senate body told

• SBP refuses to share names of banks involved in the activity.
• SBP official failed to provide details regarding Rs5,000 fake notes.
• Central bank accused of not giving information deliberately.

ISLAMABAD: The Senate body failed to reach a consensus on sending the money laundering scandal of up to Rs300 billion against banks to the Federal Investigation Agency (FIA) after the lawmakers were informed of a paltry fine imposed by the central bank, The News reported on Wednesday. 

The panel was told that banks were fined meagre Rs90 million for their alleged involvement in money laundering in the import of solar panels. 

Instead, the Senate Standing Committee on Finance and Revenues seems to have agreed to an in-camera session next time after the deputy governor of the State Bank of Pakistan (SBP) suggested sharing more details without allowing the participation of media. 

The SBP high-ups were supposed to share the names of banks along with other relevant details, including actions taken against bank officials involved in this scam.

The Senate Standing Committee also took up the issue of fake notes of Rs5,000 denomination but the deputy governor SBP failed to provide details.

Objecting to the role of SBP, Senator Mussadik Malik accused the central bank of not deliberately giving information while the FBR had precisely shared the details with the names of banks and individuals in this Trade-Based Money Laundering (TBML) of Rs200-300 billion. The SBP, he added, merely imposed a penalty of Rs90 million.

“Is it a good idea to launder money and get a clean chit by paying a meagre penalty,” he asked. Senator Mohsin Aziz asked how the banks deposited Rs42 billion from a company for the last so many years. This kind of negligence cannot be committed without the connivance of banks, he added.

The committee members grilled the SBP high-ups but the Senate panel failed to muster the required numerical strength for referring it to the FIA despite hints dropped by the panel chairman Saleem Mandviwalla. 

Senator Saadia Abbasi argued that it would not be good for the business environment to name the banks in the involvement of TBML, so this issue should be closed down at this stage as FIRs were registered against those involved in the case.

Finally, the Senate panel seemed to agree that they would hold an in-camera session next time when the SBP would share more details. The executive director of SBP, on some occasions, wanted to share more details but the deputy governor restrained him from sharing further information.

The panel expressed dissatisfaction with the SBP's response regarding the investigation into substantial money laundering by solar panel importers. During the deliberations, it was noted that the deputy governor failed to provide sufficient details on actions taken against the accused parties and banks involved in money laundering.

The committee learned that banks had filed 9,170 Cash Transaction Reports (CTSs) against importers flagged by the SBP, resulting in penalties totalling approximately 9 crore rupees for around 69 billion rupees of overpricing. Actions were taken against 17 bank officials. The committee argued that the imposed penalties did not align with the gravity of the crime and advocated for enhanced legislation with stricter penalties for offences impacting the country’s economy.

Additionally, the committee recommended further discussions on fortifying rules and regulations, requesting a comprehensive, tabulated report on the number of banks involved, the amount of money in laundering activities and the penalties imposed.

About the non-filing of returns by the FBR officers, Chairman FBR Amjad Zubair Taiwana said there were a total of 19,151 employees of the FBR of which 10,102 were return filers. He explained that there were 9,049 non-filers out of 8,503 who earned below Rs50,000 per month. As many as 325 officers are working on deputation and are not supposed to file the returns. There are only 209 officers whose income falls into the tax net but did not file their returns. Now there were reports that 186 had also filed their returns on Tuesday.