Govt to screen Rs4.03tr investments in savings schemes.

Byline: Mubarak Zeb Khan

ISLAMABAD -- The government has decided to initiate screening of Rs4.038 trillion investments in National Savings' schemes of more than seven million investors to stop any ill-gotten money to become part of the financial system and to safeguard valued investors from the menace of money laundering and terror financing.

The decision came as part of compliance with Financial Action Task Force (FATF) recommendations. The Asia Pacific Group in its recently published Mutual Evaluation Report has pointed out a number of deficiencies on the part of Central Directorate of National Savings (CDNS) which has negatively affected the overall grading of different recommendations.

The FATF wants Islamabad to trace and identify the owners of these investments in the National Savings schemes. It has already given a deadline of February 2020 to remain on grey list with a set of recommendations to Pakistan for implementation.

On Saturday, the finance division through promulgation of the National Savings Schemes (AML-CFT) Rules, 2019 has decided to engage an AML-CFT compliant bank, through competitive bidding, to put in place the requirement as well as the necessary training of employees of CDNS.

Decision comes as part of compliance with FATF recommendations

Accordingly, Expression of Interest, in consultation with the State Bank of Pakistan, has been sought from the interested bank to conduct KYC (Know Your Customer) and other requirement of new as well as existing client of CDNS.

This will include the biometric verification and screening of potential clients in the UN Proscribed Person List.

Currently, the CDNS manages portfolio of Rs4,038 billion of more than seven million investors. National Savings schemes provide risk-free and competitive avenue to all segments of society, especially the most vulnerable - senior citizens, pensioners, widows, physically challenged persons and family members of martyrs.

However, it provides a non-inflationary and cost effective borrowing to government of Pakistan to bridge the overall fiscal deficit, which ultimately reduces dependency on external borrowing. Further break-up shows that 19 per cent of domestic debt consists of National Savings schemes, while these deposits are equal to 28pc of total deposit of scheduled bank.

Moreover, around 33pc of CDNS deposits are in welfare...