Recently, SBP has announced to disclose significant enforcement actions against all banks, DFIs, Micro Finance Banks (MFBs) and Exchange Companies (ECs) through SBP Website aimed to bring more transparency and strengthen the market discipline. As per announcement, the State Bank, on Thursday, for the first time has officially disclosed the significant enforcement actions taken in July 2019 against the banks involved in violation of SBP's rules and regulation.
According to details issued by State Bank, cumulatively Rs 184.645 million fines were imposed on four banks during last month in violations of laws, rules, regulations, guidelines or directives. Among four banks, Soneri Bank Limited faced the highest penalty of Rs 55.483 million on July 25, in violations in areas of Anti Money Laundering (AML), Know Your Customer (KYC), Asset Quality and foreign exchange operations. In addition to penal action, the bank has been advised for improvements in the areas of AML/KYC and credit risk monitoring.
On July 15, Rs 13.072 million fine was imposed on The Bank of Punjab in violations in areas of foreign exchange operations. The bank has also been advised to improve the internal processes. Another penalty of Rs 16.119 million was imposed on The Bank of Punjab on July 18, 2019 for violations in areas of AML/KYC and unclaimed deposits. In addition to penal action, SBP has advised the bank for improvements in the areas of AML/KYC.
SBP, on July 23, 2019, imposed a fine of Rs 48.221 million on JS Bank Limited in violations in areas of AML/KYC. In addition to penal action, the bank has been advised to conduct a thorough review of relationship accounts. On July 25, Bank Al-Habib Limited faced a penalty of Rs 51.75 million for violations in areas of AML/KYC and foreign exchange operations. SBP has also advised the bank to update its systems and processes, and provide appropriate trainings to the concerned officials.
The enforcement actions are an integral part of regulatory regime which involves imposition of monetary penalties and other actions against institutions and individuals for violations of laws, rules, regulations, guidelines or directives issued by SBP from time to time. The enforcement actions depend upon the nature, severity and continuity of regulatory breaches and risks posed to the institution and may range from mild to severe.