State Bank of Pakistan (SBP) has introduced new stringent regulations for Branchless Banking (BB) companies, asking them to conduct biometric verification of customers maintaining Level-1 accounts by March 2020.
The regulations were revised in order to accelerate the outreach of BB operations for financial inclusion and strengthening the controls related to Money Laundering (ML)/Terrorist Financing (TF) risks.
The revised regulations shall be applicable on all Authorized Financial Institutions (AFIs) providing BB services. AFIs providing BB services are advised to streamline their existing operations/processes (where applicable) as per revised regulations and submit a compliance report to SBP by 31st January 2020.
Accordingly, BB service providers shall not increase the limit of existing Level-1 accounts, which are operating without Biometric Verification.
In case the process is not completed by the deadline, Level-1 accounts shall be downgraded to Level-0 with effect from 1st April 2020.
It is pertinent to mention that 40 percent of mobile-wallet accounts were closed by different BB companies recently due to zero activity in the last 90 days. The stringent regulations may further decrease the userbase if the companies do not actively complete the biometric verification in the next quarter.
There are nearly 19 million wallets being maintained by 11 different operators.
Revised Branchless Banking Regulations
According to the revised regulations, the companies were asked to maintain all necessary records on transactions for at least ten years, following the completion of the transaction.
BB companies shall maintain sufficient transaction record that can facilitate the reconstruction of individual transactions so as to provide – if required – evidence of prosecution of criminal activity. These companies shall keep a record of all attempted transactions for at least ten years from the date of the transaction.
Transaction limits for persons will be Rs. 25,000/- per month, separately for sender and receiver, with effect from February 01, 2020. BB companies will also gradually phase out Person-to-Person fund transfers by June 30, 2020.
BB operators shall extend services to Afghan refugees holding Proof of Registration (PoR) after Biometric verification or NADRA Verisys as per the Branchless Banking Regulations.
For this purpose, the operators may accept a valid PoR Card issued by NADRA as an identity document card. BB operators shall maintain/open remunerative as well as non-remunerative accounts as per customer’s request. BB operators may open accounts for minors provided that their parent/guardian submit a written undertaking to accept any liability arising out of the action(s) of the minors.
BB operators shall integrate their transaction processing system with the Fraud Detection System for early detection of fraud through BB channels by June 30, 2020, according to the revised regulations of SBP stated.