SBP to penalize banks over solar panel scandal
Certain banks are facing penalties from the State Bank of
Pakistan (SBP) for neglecting to detect substantial money laundering and
overinvoicing amounting to Rs69.5 billion by solar panel importers. The SBP
executive director revealed to the Senate Standing Committee on Finance that
penalties were imposed on banks failing to raise "Red Flags
Indicators" under the framework for managing risk related to trade-based
money laundering.
Without disclosing specific names or penalty amounts, the
SBP informed the committee that these penalties were associated with banks
approving the FI (declared invoice value for transfer). In response, the
committee requested the SBP to provide the names of these banks and details of
additional regulatory measures taken to combat fraud by solar panel importers.
State
Bank to penalize banks over higher dollar rates
The committee also urged the SBP to deliver a comprehensive
briefing on the extensive money laundering by solar panel importers in the next
meeting. While appreciating the Federal Board of Revenue (FBR)'s briefing on
the matter, the committee chairman emphasized the importance of an update from
the SBP.
During the committee briefing, FBR officials disclosed that
five banks received substantial cash deposits of Rs14 billion in the case of
M/s Bright Star Business Solution (Pvt) Ltd. Senator Musadik Malik highlighted
the occurrence of over-invoicing amounting to billions of dollars and called
for the SBP to provide details on actions taken against the involved banks,
characterizing the case as a form of "Hundi."
State
Bank of Pakistan (SBP) imposes heavy fines on four banks
Malik emphasized that 63 importers had engaged in imports
totaling Rs7 billion, and only 200 out of 450 importers had been audited,
uncovering a scam of Rs70 billion.
FBR officials provided details, indicating that 6,232 goods
declarations (GDs) filed by 63 importers were involved in over-invoicing
amounting to Rs69.5 billion. The FBR registered eight FIRs covering Rs40.94
billion (60% of the total) in 3,161 GDs. The discovery of cartels in Quetta and
Peshawar was also highlighted.
Furthermore, the FBR officials revealed that banks failed to
apply red flag indicators while dealing with fictitious solar panel clients,
and in 2020-21, two importers transferred import remittances of Rs20.4 billion
out of Pakistan while filing "Nil" income tax returns. Banks also
disregarded Financial Monitoring Units (FMU) instructions, allowing substantial
cash amounts to be deposited in the bank accounts of solar panel importers,
obscuring the origin of the funds, with some instances involving large cash
transfers of Rs10 million or more in a single transaction.
Source: Business Recorder