The State Bank of Pakistan (SBP) has imposed substantial fines on Allied Bank Limited, along with three other banks, due to violations of regulatory rules and standards. A total of Rs83.157 million in fines have been levied on these four banks.
The violations primarily pertained to breaches in Know Your Customer (KYC) protocols, foreign exchange procedures, and general banking operations. The penalties were based on identified shortcomings in complying with regulatory guidelines and did not necessarily reflect the financial stability of the entities involved.
Earlier in August, the SBP had already fined Allied Bank Limited Rs16.578 million for non-compliance with regulatory instructions related to General Banking Operations. The bank was advised to enhance its internal processes to prevent future violations.
Despite previous warnings, Allied Bank continued to flout regulatory guidelines, prompting this recent action from the State Bank of Pakistan. The central bank found deficiencies in ABL’s systems and noted a lack of adequate corrective measures taken by other commercial banks against these violations.
The SBP highlighted serious breaches including failures in Customers Due Diligence (CDD) and Know Your Customer (KYC) procedures, as well as non-compliance with regulations regarding asset quality.
This is not the first time such action has been taken against Allied Bank. In 2019, the State Bank imposed fines of over Rs60 million on the bank for similar regulatory violations. The central bank instructed ABL to conduct an internal inquiry into these breaches and to take disciplinary action against responsible officials.
Additionally, the Supreme Court of Pakistan fined the President of ABL for evading a court hearing in a case involving bank pensioners. The plaintiff argued that ABL had not increased pensions for retired officers in decades nor made any contributions to their accounts.
The highest court directed senior officials of Allied Bank to uphold moral standards when dealing with individuals who had devoted their entire careers to the bank.
For context, Allied Bank was established in 1975 through the merger of several banks during a period of nationalization. Its predecessor was Australasia Bank.
Officials from ABL have declined to comment on this development.
