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CTD fears branchless banking may be misused by criminal, militant groups

CTD fears branchless banking may be misused by criminal, militant groups

KARACHI: The Counter-Terrorism Department (CTD) of Sindh police has expressed concern regarding the use of branchless banking facility through which money can be transferred with the help of mobile phones, suggesting that criminal and militant groups might misuse the facility for terror financing, particularly in remote areas.

However, mobile firms which provide this facility, insist that they are following the regulations concerned by verifying every transaction, and had not received any complaint from the regulator or law-enforcement agencies in this regard.

The CTD has asked the federal government to issue directions to the State Bank of Pakistan (SBP) so that franchise facilities should undertake measures about such financial transactions, particularly in remote areas, and provide data to counterterrorism agencies when required for investigation purposes.

The federal govt has also been asked to provide training to Sindh police in order to properly understand how to trace financial crimes.

Informed sources told Dawn that these issues have been highlighted in a recent letter written by Additional Inspector General of Police, CTD Sindh, Dr Sanaullah Abbasi, to the interior ministry.

“The key risk is that while the existing SBP regulations are fairly comprehensive, the fact that money can be transferred to individuals without their having a bank account will remain a cause for concern, because this facility can be misused by criminals and terrorist groups,” says the letter, a copy of which was obtained by Dawn.

The letter noted that branchless banking represented a significantly cheaper alternative to conventional branch-based banking that allowed financial institutions and other commercial players to offer financial services outside a traditional bank premises by using delivery channels like retail agents and mobile phones.

At the moment, Mobicash (Mobilink) and Easypaisa (Telenor) were offering these services across the country including in remote areas.

“The most significant and important part of this financial service is money transactions from a person to any other person without having any account.”

It has been pointed out that the upper limit of the amount being transferred at a time was Rs50,000, which could be sent from any registered agent having a biometric system to the same facility located in any part of the country within a few minutes.

The CTD had admitted that so far no evidence had emerged that this facility of branchless banking has been used ‘extensively’ by terrorist groups.

Nonetheless, the police apprehended that the ease of conducting branchless transactions meant that it could be “a tool that can be used to facilitate terror financing.”

The CTD Sindh has suggested that in order to prevent the misuse of branchless banking by militant groups, the National Counter Terrorism Authority (Nacta) should recommend that the SBP “ensure that franchise facilities in remote areas in particular should be made to maintain extremely accurate and comprehensive records of all individuals who avail this facility.”

It has been recommended that copies of CNIC or BISP cards of individuals who receive larger amounts (Rs50,000) should be kept by franchises and details of these transmitted via mobile service providers to the SBP.

Counterterrorism agencies should have access to these records as and when required for the purpose of investigation.

“The SBP should flag any transaction where the funds have been sent using an account maintained by an individual placed on the Fourth Schedule of the Anti-Terrorism Act (ATA),” according to the CTD Sindh chief’s letter.

It added that for this purpose, the SBP should have a list of all persons placed on the Fourth Schedule at hand and all bank accounts held by such individuals should be on record.

It was pointed out that the CTD Sindh was launching a new initiative whereby the SBP will be asked to provide information of all bank accounts held by individuals arrested by CTD, as well as individuals currently placed on the Fourth Schedule of the ATA by the Sindh government.

The CTD Sindh planned to share this information with Nacta as well as the FIA for the purpose of further investigation.

Besides, the CTD police were also contemplating to ask the SBP for details of accounts of seminaries that have been highlighted as having links with proscribed organisations.

Meanwhile, Umer Manzoor of Mobilink told Dawn that they were following the set rules which already have been defined by the regulators. He added that so far, they have not received any complaint from the regulator and law-enforcement agencies. Mr Manzoor believed that under the rules, they verify every transaction through the defined mechanism.

Dr Sanaullah Abbasi’s letter to the interior ministry had also drawn attention towards providing proper training to the police for tracing financial crimes.

“The officers currently working in CTD Sindh do not have the requisite training or understanding to be able to accurately trace terrorism financial networks,” admitted the head of the counterterrorism force in Sindh.

Realising that the CTD personnel lacked understanding of tracing financial crimes, the AIG CTD, Mr Abbasi has proposed to Nacta to arrange experienced professionals in the relevant field to train and run refresher courses for CTD Sindh officers.

It has also been proposed that if Nacta has any case study at hand that provides details about the tracing of terror financing networks, the same should be sent to the Sindh police for perusal.

Published in Dawn, December 31st, 2016

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