Sunday, January 02, 2011

http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=23394&Cat=3&dt=1/2/2011

KARACHI: Pakistan’s central bank has tightened regulations for microfinance banks by increasing checks against money-laundering and terrorism financing, a statement said on Saturday.

The State Bank of Pakistan directed microfinance banks to keep customer record for at least five years after termination of business. The prudential regulations in this regard have been amended. Banks obtain identification data of a customer through the customers due diligence process, account files and business correspondence.

According to the central bank, the prudential regulations for microfinance banks were previously silent on the record retention requirement. “The amendment has strengthened the regulations by including clear instructions on the minimum period for retention of “identification and transaction records” in line with the national and international practices,” the bank said.

The State Bank said that this was a step to strengthen microfinance banks’ regulations to check money laundering and terrorism financing.

In a circular issued on Saturday, the central bank said that microfinance banks should maintain all necessary records on transactions, both domestic and international, for at least five years following completion of the transactions.

“Such records must be sufficient for reconstruction of individual transactions so as to provide, if necessary, evidence for investigation or prosecution of criminal activity,” it added.

The necessary transaction record to be maintained included customer’s name (beneficiary’s name), address, nature and date of transaction, type and amount of transaction, currency involved, type and identification of any account involved in the transaction. The central bank also advised the microfinance banks that they should, however, retain records for longer period, if required by any other law or where transactions or relationship relate to any investigation, litigation or required by the court of law by any other competent authority.

“The identification and transactions record should be made available to the central bank as and when required,” it added.