ISLAMABAD: A Senate panel on Friday unanimously approved a bill that envisages punishments for executives of banks and financial institutions for discriminating against anybody, including politically exposed persons (PEPs), in the provision of banking services.

A meeting of the Senate Standing Committee on Finance, chaired by Senator Talha Mahmood, also directed the State Bank of Pakistan (SBP) to submit a written statement within three days on the status and details of $250 million repatriated to Pakistan by the National Crime Agency (NCA) of the United Kingdom.

The ‘Banking Companies Amendment Bill 2021’ was moved in the Senate by Mr Mahmood himself after different members, on several occasions, raised the issue of banks’ discriminatory attitude towards parliamentarians, such as refusal to open bank accounts or issue credit cards, etc.

For example, Pakistan Muslim League-Nawaz Senator Mussadik Malik said his credit card was cancelled by a bank without giving any reason, claiming that the bank did not respond to letters inquiring about the reason behind the move either.

Senate Standing Committee on Finance seeks update on $250m settlement from UK’s NCA

During the meeting, members complained that such practices were against the spirit of fundamental rights guaranteed under the Constitution.

The bill was later referred to the Senate committee.

It initially proposed one year imprisonment or up to Rs100,000 as a penalty, which was unanimously increased to Rs1 million on the recommendations of senators.

The proposed amendment in section 83 of the Banking Companies Ordinance (BCO) 1962 seeks to insert a new sub section 1E, that reads: “If an officer of the banking company or a schedule bank, as the case may be on the basis of creed, religion, gender, ethnicity, madressah or Islamic educational institute, class or group of citizens like politicians, government servants or teachers of the madressah, refuses to open an account, issuance of letter of credit, bank guarantee or any other financial facility only on the ground of politically exposed person, issues red alert or high-risk alert for business trade, without any sufficient restriction under any law, shall be punished with simple imprisonment for a term which may extend to one year, or with fine which may extend to one hundred thousand, or with both.”

However, Friday’s meeting saw heated discussions after officials from the Ministry of Finance and SBP opposed the bill. They submitted that the finance minister had instructed them to oppose the bill, saying there was no need for such a law, given the fact the constitution provided equality to all citizens.

They also maintained that Article 74 of the Constitution required a bill or amendment affecting the constitution or functions of SBP to be introduced in parliament with the consent of the government.

However, committee members expressed their displeasure over the repeated absence of the SBP governor and Federal Board of Revenue (FBR) chairman from the panel’s meetings and also criticized the Ministry of Law for sending a draftsman to attend, instead of the law secretary.

The SBP director banking told the committee that over 32,000 bank accounts fell in this category, saying that the proposed amendment in the BCO was not required as the central bank had specifically advised all banks to follow ethical banking practices in dealing with customers in order to avoid discriminatory practices against any segment of society, including PEPs.

The meeting was informed that Section 7A of the Anti Money Laundering Act (AMLA), 2010 required all reporting entities and banks to conduct customer due diligence before entering into a business relationship, while section 7D prohibited the opening of account or business relations where such diligence could not be completed. Section 7J provides a mechanism to redress grievances on such counts, which could also be challenged before the SBP, the official explained.

However, the director could not provide any data or examples when senators asked what actions the central bank had taken against violators in this regard.

Repatriated money

The panel also raised questions on the details of the $250m, repatriated by UK’s NCA following a settlement with an influential real estate developer, and asked if the funds had been deposited with the central bank or kept separate in the Supreme Court of Pakistan’s account.

However, the SBP officials had no answer to these questions.

The committee the directed the SBP to provide the details in writing within three days or else this would be taken up as separate agenda item in the next meeting that may lead to some strictures.

It is worth noting that in December 2019, the NCA agreed to a £190m ($250m) settlement with the family of Malik Riaz. A statement released by the office of the prime minister’s special assistant on accountability at the time had claimed that Britain had agreed to an “immediate repatriation” of the funds received after the settlement.

On Friday, the Senate panel also asked the FBR to make a valuation of properties as part of the budget exercise. Representatives of the Real Estate Consultant Association (RECA) stated that the valuation rate should be jacked up by 25 per cent.

The meeting was attended by senators Shahzad Waseem, Sherry Rehman, Saadia Abbasi, Saleem Mandviwalla, Musadik Malik, Kamil Ali Agha, Zeeshan Khanzada, Faisal Saleem Rehman and Haji Hidayatullah.

Published in Dawn, February 19th, 2022