President Dr Arif Alvi has directed two private banks to compensate victims of online scams, rejecting their representations in a landmark decision. The president, after personally hearing the cases, instructed the banks to pay Rs1.9 million and Rs0.744 million to customers who fell prey to online banking fraud orchestrated by fraudsters.
The victims, Qaiser Mehmood and Brigadier (retd) Muhammad Arif Shaikh, approached the Banking Ombudsman seeking relief after substantial amounts were siphoned from their accounts through fraudulent means. Despite the Ombudsman’s directive for the banks to refund the lost amounts, the financial institutions contested the decision, filing representations with the President.
President Alvi scrutinized the cases and found the banks to be non-compliant with the State Bank of Pakistan’s (SBP) directives regarding the implementation of monitoring systems to detect fraudulent transactions. Notably, the president observed that the banks failed to establish the legitimacy of transactions, violating Section 41 of the Payment System and Electronic Fund Transfers Act, 2007.
Expressing dissatisfaction with the banks’ lack of evidence showcasing compliance with SBP directives, President Alvi concluded that malpractice and maladministration were evident on the part of the banks. He firmly held the financial institutions responsible for the victims’ losses and ordered them to pay compensation.
Furthermore, President Alvi directed the Banking Mohtasib to engage with the State Bank of Pakistan to establish essential standard operating procedures (SOPs). These SOPs aim to blacklist the CNICs of proven fraudulent individuals, placing them on a central negative list. The president emphasized the need for the banking industry to deny facilities to these individuals, reinforcing measures to curb online fraud.
This decision sends a strong message against banking fraud and underscores the importance of stringent adherence to regulatory directives in safeguarding the interests of customers. President Alvi’s commitment to ensuring justice for victims of online scams highlights the government’s proactive stance in addressing financial crimes.
