KARACHI: The State Bank of Pakistan (SBP) has asked all commercial banks to conduct regular Know Your Customer (KYC) on the existing bank accounts, maintained by federal government offices.
In order to strengthen the public finances, the federal government has promulgated the Cash Management & Treasury Single Account (CM & TSA) Rules, 2020 in conjunction with Public Finance Management Act (PFMA), 2019.
The CM & TSA Rules, 2020 are applicable on all offices of the Federal Government, ie, Ministries, Divisions, their Executive Departments, Attached Departments, Subordinated Offices and Other Office(s) or Department(s) declared as such by the Federal Government.
The SBP has issued a circular Tuesday for implementation of Cash Management & Single Treasury Account Rules, 2020. According to SBP directives, in terms of Rule 4 (2) of the CM & TSA Rules, 2020, all commercial banks are required to conduct regular KYC on the existing bank accounts, maintained by the Federal Government offices, on prescribed format set out by the SBP.
As per CM & TSA Rules, 2020, the SBP will instruct the scheduled banks to conduct their regular procedure of KYC on existing bank accounts and the scheduled banks will report all such bank accounts and balance therein, operated or maintained by any Government office to Finance Division through the SBP.
Further, as per rules, the commercial banks will not open account of Federal Government Offices except under the authority of Finance Division as provided under Section 31 of the PFMA, 2019.
With regards, to closure of Federal Government accounts maintained with commercial banks, SBP reiterated that Finance Department, SBP has already issued detailed instructions last year for compliance purposes.
The SBP has advised the banks to meticulously comply with the requirements of related provision of the Act and Rules (PFMA, 2019 and CM & TSA Rules, 2020). The SBP has warned that any deviation from the stipulated requirements of Act and Rules will be subject to penal action under relevant provisions of the law.
As per rules, no government office shall open, operate or maintain a bank account for any purpose, except in accordance with the Act and these rules. The Federal Consolidated Fund Account, public account, assignment accounts, their sub-accounts and linked accounts as approved by the Finance Division, will form part of the treasury single account system.
Copyright Business Recorder, 2021
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