ISLAMABAD: Acknowledging that there is no law in the country to curb cyber crimes and terror funding, Finance Minister Ishaq Dar expressed confidence on Monday that digitising the financial sector would help trace money laundering and financing of terrorism.
A draft bill for controlling cyber crime and terrorism funding, he said, was in final stages and would be presented before parliament in a couple of months for approval.
Mr Dar was addressing an international conference on “Innovations in digital finance for financial inclusion” organised by the State Bank in cooperation with the UK Department for International Development.
He said the bill would help boost security for mobile and internet banking and curb funding for terrorist activities, adding that the government was fully supportive of transition from traditional banking system to the digitised system of banking.
Finance Minister Ishaq Dar says digitising the financial sector will help trace money laundering
He did not specify methods and procedures through which the government intended to phase out cash-based economy and replace it with digital modes of payment.
Mr Dar said the government and State Bank would work with global agencies like UNO’s Better-Than-Cash-Alliance for a roadmap to digitise government’s retail payments. “I look forward to the day when people will be paying for their parking tickets and toll taxes on spot through mobile wallets,” he said.
The conference is part of the United Nations’ global campaign to encourage developing economies to shift their mode of payments from cash-based to digital-based so that signature marks and movement of money could be traced.
Pakistan has decided to implement Nadra’s biometric technology for identity verification by banks to perform their customers-due-diligence (CDD) procedures at the time of opening customers’ accounts and for over-the-counter (OTC) payment transactions.
State Bank Governor Ashraf Mahmood Wathra said that Pakistani society relied on excessive use of cash, especially for payments and savings. “But this is risky, costly and inconvenient to the businesses and public at large. Besides, it restrains our national efforts towards documentation of the economy.”
He said Pakistan was among the countries which had the lowest number of bank branches because of diverse geographic landscape with scattered population and security challenges in some parts. But because of initiatives taken by the SBP there are now eight branchless banking providers operating in the country.
“As a result of these efforts, Pakistan is now one of the largest branchless banking markets in the world,” he said, adding that average monthly transactions had reached Rs125 billion.
He said the number of branchless banking accounts had significantly increased and reached 4.7 million. The average size of branchless banking transactions is Rs5,600 which indicates that mostly poor and low-income people were using this technology.
But at the same time, the SBP governor said, over-the-counter transactions in banks constituted 82 per cent of the total transactions.
The participants noted that since digital mode of monetary transaction was increasing, the State Bank would have to strengthen the grievance redressal system and increase monitoring of misuse of the system and to take effective and prompt steps against it.
Besides, the institution of banking ombudsman needs to be strengthened, especially after larger number of people will be using the electronic system for banking transactions.
Published in Dawn, November 18th, 2014