Bangladesh Bank governor Dr. Atiur Rahman Wednesday said as part of its stronger supervisory vigilance on fraud in banks, the central bank has put in place an on-line electronic ‘supervision dashboard’, which can provide warning signs of potentially fraudulent transactions.
Referring to a Material Loss Review (MLR) for recentbank fraud¸ he said the central bank found “clear negligence” in the affected banks in respect of mandatory control and bona fide verification routines like Know Your Customer (KYC), Credit Risk Grading (CRG), and Anti Money Laundering Provisions.
It demonstrates major lapses and deficiencies in their credit administration, risk management and internal control and compliance functions, he said.
His remarks came at an ICCB interactive session on International Trade held in the city.
In supervisory response to these episodes, he noted the BB has considerably tightened its onsite and offsite vigilance on risk management, corporate governance, internal controls and internal audit functions in banks.
Pursuant to BB reports on board level lapses in mandatory control and oversight functions, GOB has reconstituted the boards of directors in SCBs with persons meeting the fit and proper eligibility criteria, Governor added. He expressed his hope that these disciplines are adhered to in right earnest so that Banks will succeed in keeping themselves largely free of the stigma of insider abuses, fraudulence and losses attendant thereto.
The foreign exchange transactions modules of the supervision dashboard are already operational and in use by BB and the banks. He urged upon the MDs/CEOs to make sure that they monitor all L/C transactions by their respective branches so that they can immediately track any suspected fraud and take preventive measures. The Governor advise all the banks to open L/Cs through SWIFT as it most essential to prevent any fraud.
ICCB President Mahbubur Rahman said international trade has been a major driver of global growth and the world today is significantly more economically interdependent on international trade.
But the commercial crimes are growing faster than international trade, he said, adding frauds are more complex and involve larger sums than ever before.
Mahbubur Rahman noted that the recent scams that have occurred in different banks, in particular the largest state owned Bank and a most important one because of treasury operations, has shaken the entire banking sector of the country.
“We have arranged this session with the MDs/CEO in presence of the Governor with the aim of discussing on the modalities for detection and prevention of such fraud. I must thank our Governor for taking serious interest to address the issue in its appropriate perspective both administrating and operationals” he added.
Mr. Mamun Rashid, Chairman, ICCB Standing Committee on Banking, Technique and Practices urged all bank executives specially the trade professionals to further review our existing trade undertaking, processing and settlement model, integrate information technology delivery platform, risk management model and overall trade documentation model.
Mr. P. Mukundan, Director & Chief, ICC-Commercial Crime Services made a presentation on the International trade Fraud. He explained about the various loopholes in the L/C transactions. He mentioned that International Maritime Bureau (IMB) can work close with the Bangladesh Bank and commercial banks in developing s system for detection and prevention of fraud. He observed that it is of utmost importance that the banks check the balance sheet and have collateral before opening of any account of its clients as well for opening L/Cs
Mohammed Hossain, National Fraud Risk Detection and Mitigation Adviser, Central Bank Strengthening Project Cell, Bangladesh Bank, Mohammed Nurul Amin, MD & CEO, National Credit & Commerce Bank & President of Association of Bankers Bangladesh, S. M. Aminur Rahman, MD & CEO Janata Bank, Pradip Kumar Dutta, MD & CEO Sonali Bank, Md. Shameem Ahmed Chaudhury, DMD, AB Bank; Yasin Ali, Deputy Managing Director, Prime Bank Ltd, among others, spoke during the session.
Source: The Financial Express