The financial Ombudsman has been instructed by President Dr. Arif Alvi to release crucial Standard Operating Procedures (SOPs) and to address the problem of financial frauds with the State Bank of Pakistan (SBP). The President underlined the necessity of blocking access to banking and financial services by blacklisting the CNICs of those who have been shown to be fraudulent and adding them to a central negative list.

These directives follow the President’s rejection of United Bank Ltd.’s (UBL) and Bank Alfalah Ltd.’s (BAL) two distinct appeals. The appeals asked the banks to compensate consumers who fell prey to online banking fraud with Rs1.9 million and Rs0.744 million, respectively.

In one instance, UBL account holder Qaiser Mehmood received a call that sounded like it was from the bank’s hotline, telling him to activate his digital banking app, which was deactivated. Upon activation, many fraudulent transactions were made fraudulently using Rs. 2 million from his account. In a similar vein, con artists called Brig (Retd) Muhammad Arif Shaikh and asked for his banking information in order to fix alleged technical issues. Nineteen transactions later, his account was debited of Rs. 994,000.

Even after contacting their individual banks to request reimbursements, the clients got no help. They each petitioned the Banking Ombudsman for assistance, and the Ombudsman ordered the banks to pay back the money they had lost. The banks filed appeals with the President challenging the Ombudsman’s rulings.

The President found in favor of the complainants after personally hearing the cases and going over the records that were available. He saw that the banks were not following the SBP’s instructions on setting up monitoring systems to look for fraudulent transactions.

The President underlined that the illegal money transfers were made possible by the fact that several successive transactions did not trigger alarms. In accordance with Section 41 of the Payment System and Electronic Fund Transfers Act of 2007, he pointed out that the banks had also neglected to demonstrate the authenticity of the transactions.

The banks had plenty of chances to show that they had complied with SBP guidelines, but they never did. The President came to the conclusion that the banks had engaged in malpractice and maladministration and were therefore accountable for paying the complainants’ financial damages.

The President dismissed the UBL and BAL’s arguments and ordered them to give Qaiser Mehmood and Brig (Retd) Muhammad Arif Shaikh, respectively, Rs1,998,500 and Rs744,000.

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