KARACHI: The State Bank of Pakistan (SBP) said on Friday it had told banks and development finance institutions (DFIs) they could open accounts of Afghan refugees and use the Proof of Registration (PoR) cards issued by the National Database and Registration Authority (Nadra) for the purpose.

The SBP directive has paved the way for the refugees to avail banking services in Pakistan that were not available to them even though many of them have been living in the country for decades.

“Afghan refugees can now open bank accounts in Pakistan and this will be the first time they will get the banking services,” said Abid Qamar, the chief spokesman for SBP.

Move will allow monitoring of business activities of new account holders

He said that biometric verification of Afghan refugees holding PoR cards was made available by Nadra with effect from February 26 over an existing established link. The biometric verification service for the refugees possessing the cards would work similar to the CNIC verification system. Banks and DFIs would verify the identity of the Afghan refugees holding PoR cards through Nadra’s biometric verification system for opening of accounts.

“This is a very good decision and it will help the State Bank and the government monitor the financial activities of the refugees,” said a former chief of a large public sector bank.

He said that because Nadra had an efficient system the refugees could be allowed to safely open their bank accounts.

Pakistani banks are currently facing strict vigilance by the regulators as well as by the agencies responsible for maintaining law and order in the country. Pakistan has been included in the grey list of the Paris-based Financial Action Task Force (FATF), which seeks to eliminate terrorism financing and money laundering from the country.

Recently the FATF urged the country to take more measures for complete elimination of terrorism financing and money laundering by May this year.

The SBP has taken measures to restrict movement of currency. In particular the currency exchange companies have been barred from moving cash within the country.

As a result, the companies are now using banking channels to move their cash. Bankers said the decision to allow Afghan refugees to open bank accounts should be viewed as a means to enhance monitoring of their financial assets. Many refugees have been doing business across the country but they often transfer money without using banking channels. This allows them to evade proper monitoring.

Bankers said the banks would also benefit from the move since a large amount of cash would be deposited in them. However, handling such amounts could be risky as well.

The SBP issued a circular in this regard, saying that for services offered by banks to account holders, where CNIC and biometric verification was required under the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) Regulations, valid PoR card was acceptable as an identity document.

“Banks and DFIs have also been advised to ensure compliance of all relevant legal and regulatory requirements including AML and CFT preventive measures instructed from time to time by SBP for account opening,” added the circular.

Published in Dawn, March 2nd, 2019