Some fake account and dubious transactions of billions of rupees were recently unearthed by an intelligence agency. The agency also revealed that the owners of the accounts were people who had never opened open a bank account in their lives. This raised a serious question over the banks’ involvement in the transactions of illegal money from the fake accounts.
A falooda seller in Karachi, a female employee of Sindh Government, a jobless man with no salary account and a labourer of Sialkot are some of the unfortunate people with fortunes who have recently been approached the authorities for maintaining accounts with billions or millions of rupees.
How Can Banks Accounts of These People be Created?
A Falooda seller, seeking to open a bank account, needs to submit a source of income first and then an NTN (being a businessman) and utility bills of the place where he works and his CNIC. However, if he cannot submit these details, a branch manager at any bank will refuse to open his account as per SBP’s guidelines.
It means that a bank’s branch manager has to arrange fake documents on behalf of the Falooda seller, Abdul Qadir, using his CNIC as the main identity. The purpose is simply to protect an amount of Rs. 2.5 billion belonging to someone else.
Sarvat Zehra, a female employee at a department of Sindh Government, has never walked in at any bank’s branch as an account holder.
Then it begs the question, how was her account created in any bank?
An employee needs to show a source of income to the bank, which is either a salary slip of her employer or a letter from an organization where she works at or service card besides CNIC. Now, the bank manager needs a fake letter in order to complete the procedure of opening an account on her name at his bank branch.
In another instance, a middle-class student was reported to have an amount of Rs. 170 million in his bank account. The kid is under 18 years of age, he does not have a CNIC and he can’t open a normal bank account. The specialized kids’ accounts at various banks demand credentials of parents or guardians. Now, the bank’s officials must have gone an extra mile to create this fake account.
Similarly, a laborer from Sialkot went to a bank’s branch to open an account and he found that a bank account with an amount of Rs. 70 million already existed in his name.
These are the few cases that were recently unearthed. Federal Investigative Agency (FIA) believes that there are more than 150 fake accounts with the sume of amounts exceeding Rs. 200 billion. According to the agency. these accounts are being maintained at different banks mainly for the purpose of money laundering and tax evasion. The agency claims to have identified more than 30 accounts so far.
Who is Responsible for Creating Fake Accounts?
Who should be blamed for it? Bank officials working at different branches? Or banks having these fake accounts?
According to the State Bank of Pakistan’s rule, a bank account is never opened by a branch manager until it is submitted and approved by the head office of the same bank even if it is situated in a different city.
The head office of any bank does not approve a bank account form if there is a mismatch of any information in the details provided in the form and the documents provided by a customer.
For example, if an employer writes a letter to a branch manager informing him that a person seeking to open a salaried account is an assistant manager and his information in the form mentioned him as only a manager; his application is refused and he is asked to resubmit the account form.
The bank branches and head office are instructed to perform strict due diligence of new customers under Know Your Customers (KYC) rules.
Banks Directed To Report Suspicious Transaction to SBP
The central bank has also directed all commercial banks to monitor bank accounts and to report immediately in case of a suspicious transaction. The central bank issued a complete guideline for banks to measure suspicious transactions, which are referred to the FIA.
Accordingly, banks/DFIs shall pay special attention to all complex, unusually large transactions, and all unusual patterns of transactions, which have no apparent economic or visible lawful purpose. The background and purpose of such transactions need to be examined, the findings established in writing, and be available to assist the relevant authorities in inspection and investigation.
Regulations and guidelines, with respect to account eligibility and suspicious accounts, can be read in detail here.
Why Banks Create Fake Accounts?
Bank officials are assigned a target to maintain a certain amount of money reserves at their branches, which can only be done through rich customers who deposit their savings at their branches. These big fishes are important for bank managers, who not only offer them good saving rates, but also serve them as a priority client when it comes to services.
A small example of their privileged treatment is that these blue-eyed customers are given bundles of new currency beyond the per person quota ahead of Eids. If these customers are not happy with the bank’s services, they could switch to other banks.
Hence, bank officials are involved in such malpractices to protect their blue-eyed customers mainly from Federal Board of Revenue (FBR). This is one of the reasons reported by a few sources, but there could be more.
Logically, if the procedural rules and regulations pertaining to open an account are not adopted then a serious violation is observed. Therefore, a heavy penalty should be imposed on every bank, which is involved in this scam. Besides, officials involved in forgery should also be punished after a complete investigation of these cases. These bank officials are the people who can identify the real person behind the fake accounts and the cause behind these massive suspicious transactions.