State Bank of Pakistan (SBP) has ordered all financial institutions to fire all C-level executives of the top management and board of directors, who have been involved in white-collar crimes, criminal and terrorist activities in the past.
The central bank said in a circular: Any person(s) linked to any criminal activities or affiliated to any terrorist organizations shall not become part of financial institutions as well as Payment System Operators and Payment Service Providers (PSOs/PSPs).
The person shall become disqualified if he/she is found to be designated/ prescribed or associated directly or indirectly with designated/proscribed entities/persons (terrorist groups or banned outfit) under United Nations Security Council Resolution or Anti-Terrorism Act 1997.”
The central bank issued a questionnaire for professionals of financial institutions including top officials and other rank and files of the organization in a first step to scrutinize their background.
The pre-hiring investigation of the top management and board’s directors are already very comprehensive as per of the central bank’s regulations on Fit and Proper, however, the new directives will tighten the appointment process of these high officials.
Recently, many cases surfaced in which top-level bankers having associations with political parties were made CEOs under the influence of the federal and provincial government. They were included in various inquiries of accountability and even arrested in few cases.
This trend raised questions over the transparency and professionalism of the banking industry, as such professionals influence the operations of particular banks and could cause damage to the reputation of the whole banking and financial system.
It has also been observed that massive cases of fake accounts have been unearthed since the start of 2018, which were attributed to the financial corruption of political leaders with the support of banks and bankers.
This trend is worrisome for the banking industry that should be operated transparently without organized crimes such as money laundering through the involvement of bankers backed by political affiliations.
The central bank commented on the issuance of the circular saying: “SBP, from time to time, has been issuing instructions to strengthen the FPT criteria in view of the potential risks arising from money laundering, terror financing and proliferation financing.”
The central bank issued a questionnaire to commercial banks and financial institutions which is seemingly designed for top officials and directors of the banks rather than other professionals like (Vice President and Managers), and other lower staff.
