Major Relief for Victims: President Alvi’s Decisive Move Against Online Fraud

President Dr. Arif Alvi has issued directives to two private banks to compensate their customers who suffered losses due to online banking fraud. The affected customers will receive Rs 1.9 million and Rs 0.744 million from the respective banks as restitution for falling prey to online banking scams orchestrated by fraudsters.

Additionally, the President has urged Banking Mohtasib to address the issue of banking fraud with the State Bank of Pakistan (SBP). The objective is to establish essential SOPs that would enable the blacklisting of proven fraudulent individuals’ CNICs. This measure involves placing these individuals on the central negative list. Thereby preventing the banking industry from extending any banking or financial facilities to them. The aim is to enhance security and prevent fraudulent activities within the banking sector.

President Alvi issued these directives in response to two distinct representations filed by clients of private banks. One citizen, Qaiser Mehmood, received a call from a number that appeared to be the bank’s helpline. The caller asked him to activate his disabled banking app. In a similar incident, Brigadier (retired) Muhammad Arif Shaikh received a call from fraudsters. The fraudsters requested his banking credentials under the pretense of fixing technical flaws in his account. Subsequently, an amount of Rs 994,000 was transferred from his account through 19 transactions.

The citizens who fell victim to the fraud attempted to seek refunds from their respective banks. Their efforts were in vain. They each approached the Banking Ombudsman, seeking relief from the lack of assistance. In response, the Ombudsman instructed the banks to reimburse the lost amounts to the affected customers.

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Subsequently, the banks lodged separate representations challenging the decisions made by the Banking Ombudsman. President Alvi conducted personal hearings for the cases. He carefully considered the arguments presented by both parties and reviewed the available records. Following the deliberations, President Alvi ruled in favor of the complainants. He noted that the banks were found to be non-compliant with the directives issued by the SBP. These directives were regarding the implementation of monitoring systems to detect fraudulent transactions.

President Alvi highlighted that the failure of the banks’ monitoring systems to raise alerts during multiple consecutive transactions was a significant lapse. He emphasized that, under Section 41 of the Payment System and Electronic Fund Transfers Act of 2007, the banks also failed to effectively establish the legitimacy of transactions. The President’s decision underscores the importance of robust security measures. He also highlighted the adherence to regulatory guidelines in the banking sector to protect customers from online fraud.

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President Alvi not only sought reimbursement but also urged the Central Directorate of National Savings (CDNS) to refer the matter to the Federal Investigation Agency (FIA) for a thorough investigation. This was aimed at holding any delinquent officials of CDNS involved in the scam accountable and subjecting them to appropriate punishment. The President’s actions demonstrate a commitment to addressing financial fraud and ensuring accountability in such cases.