Blacklist for unwanted customers of bank
Monday, 23 January 2012
Pulok Debnath
Recently fraudulent transactions have been increased alarmingly all over the banking industry. To insulate the banks from operational and reputation loss caused by fraudsters, all the banks can maintain a blacklist of unwanted customers which can be checked, prior to opening of bank accounts and making any other banking relationship with them so that such unsolicited customers can be barred from building all types of banking relationship.
Banks obtain the reports of the central bank's Credit Information Bureau (CIB) about the certain applicants for loans or credits. It helps them to assess the credit worthiness of those applicants; it is very often found that some of the applicants cannot be offered loans, as CIB reports are not favourable. So if the mentioned negative list is also checked ahead of making the banking relationship with them, some applicants will not be eligible to become actual customers of the banks. Thus the customers who are detrimental to any bank can be driven away at the very initial stage.
The most undesirable customers of a particular bank become the preferred ones of another bank, since the latter does not know the transaction-history of this preferred customer. So if the banks maintain a common blacklist, at least such risky customers can be blocked from entering the banking industry.
Customers who make successful fraudulent transactions or attempt to make any forged transactions, submit manipulated documents, fabricated bank statements and fake information, deposit counterfeit notes etc., can be included in the blacklist. Besides, the customers against whom suspicious transaction reporting (STR) or suspicious activities reporting (SAR) is made to Bangladesh Bank and their involvement in such suspicious transactions or activities is proved by the investigation of the central bank, the law enforcers, National Board of Revenue (NBR), Anti-Corruption Commission (ACC), etc., can be enlisted as blacklisted ones. Even, if any staff of a bank who is terminated, penalised or charged because of the types of activities mentioned above can also be enlisted in the unwanted customers' list. Furthermore, the banks can blacklist any potential or actual customers if they have their own justification or evidence to treat them as unwanted. Law enforcers can also help the banks to prepare the list of such unwanted customers.
Our central bank may take the key operational role in maintaining a common file of the unwanted customers centrally. All other banks or financial institutions will share their respective blacklists with the Bangladesh Bank in a prescribed format, whenever any unwanted customer is detected or in a certain frequency.
The respective authorised persons of the member-banks will have access to the common file only for viewing. The authorised persons of the central bank will have the option to edit or update this file. Alternatively, all the banks can maintain this list separately and in this case they may share it among themselves so that each of the banks can have the updated list.
All the available important information of the blacklisted person such as the name, date of birth, parents' name, address, profession, photo, number of national identity card (NID), passport, driving license and TIN, etc., can be updated in the blacklist. When the customer's application is received, name and some other specific information will be checked first and then other related information will be cross-checked to find out if his or her name is there or not. If no real match is detected, the usual process about bank-client relationship can be continued.
A committee, consisting representatives of the of Bangladesh Bank, Bangladesh Association of Banks, Association of Bankers, Bangladesh and all other banks, can be formed to decide who will maintain the blacklist, what information will be there and how it will be checked. In line with ' know your client' (KYC) policy of the Bangladesh Bank, a risk-based numeric calculation is made on the basis of the required information and documents obtained from the customer, prior to opening his or her account.
The account is categorized based on the risk-points, the necessary approval is taken and the account is further monitored, depending on the risk-category of the account. The Bangladesh Bank can also make the blacklist checking a part of KYC and risk points can also be allocated, varying according to the severity of activities of the blacklisted applicants. If this blacklist is properly updated and maintained, it can be one of the effective fraud-mitigating initiatives.
The writer is a banker and also a student of EMBA, IBA, Dhaka University and may be contacted at
ppulok91@hotmail.com
Recently fraudulent transactions have been increased alarmingly all over the banking industry. To insulate the banks from operational and reputation loss caused by fraudsters, all the banks can maintain a blacklist of unwanted customers which can be checked, prior to opening of bank accounts and making any other banking relationship with them so that such unsolicited customers can be barred from building all types of banking relationship.
Banks obtain the reports of the central bank's Credit Information Bureau (CIB) about the certain applicants for loans or credits. It helps them to assess the credit worthiness of those applicants; it is very often found that some of the applicants cannot be offered loans, as CIB reports are not favourable. So if the mentioned negative list is also checked ahead of making the banking relationship with them, some applicants will not be eligible to become actual customers of the banks. Thus the customers who are detrimental to any bank can be driven away at the very initial stage.
The most undesirable customers of a particular bank become the preferred ones of another bank, since the latter does not know the transaction-history of this preferred customer. So if the banks maintain a common blacklist, at least such risky customers can be blocked from entering the banking industry.
Customers who make successful fraudulent transactions or attempt to make any forged transactions, submit manipulated documents, fabricated bank statements and fake information, deposit counterfeit notes etc., can be included in the blacklist. Besides, the customers against whom suspicious transaction reporting (STR) or suspicious activities reporting (SAR) is made to Bangladesh Bank and their involvement in such suspicious transactions or activities is proved by the investigation of the central bank, the law enforcers, National Board of Revenue (NBR), Anti-Corruption Commission (ACC), etc., can be enlisted as blacklisted ones. Even, if any staff of a bank who is terminated, penalised or charged because of the types of activities mentioned above can also be enlisted in the unwanted customers' list. Furthermore, the banks can blacklist any potential or actual customers if they have their own justification or evidence to treat them as unwanted. Law enforcers can also help the banks to prepare the list of such unwanted customers.
Our central bank may take the key operational role in maintaining a common file of the unwanted customers centrally. All other banks or financial institutions will share their respective blacklists with the Bangladesh Bank in a prescribed format, whenever any unwanted customer is detected or in a certain frequency.
The respective authorised persons of the member-banks will have access to the common file only for viewing. The authorised persons of the central bank will have the option to edit or update this file. Alternatively, all the banks can maintain this list separately and in this case they may share it among themselves so that each of the banks can have the updated list.
All the available important information of the blacklisted person such as the name, date of birth, parents' name, address, profession, photo, number of national identity card (NID), passport, driving license and TIN, etc., can be updated in the blacklist. When the customer's application is received, name and some other specific information will be checked first and then other related information will be cross-checked to find out if his or her name is there or not. If no real match is detected, the usual process about bank-client relationship can be continued.
A committee, consisting representatives of the of Bangladesh Bank, Bangladesh Association of Banks, Association of Bankers, Bangladesh and all other banks, can be formed to decide who will maintain the blacklist, what information will be there and how it will be checked. In line with ' know your client' (KYC) policy of the Bangladesh Bank, a risk-based numeric calculation is made on the basis of the required information and documents obtained from the customer, prior to opening his or her account.
The account is categorized based on the risk-points, the necessary approval is taken and the account is further monitored, depending on the risk-category of the account. The Bangladesh Bank can also make the blacklist checking a part of KYC and risk points can also be allocated, varying according to the severity of activities of the blacklisted applicants. If this blacklist is properly updated and maintained, it can be one of the effective fraud-mitigating initiatives.
The writer is a banker and also a student of EMBA, IBA, Dhaka University and may be contacted at
ppulok91@hotmail.com