The government is going to distribute different allowances worth Tk 29.4 billion under social safety network through MFS service providers Nagad and bKash among 50 million account holders across the country but disbursement of allowances may face bump due to faulty accounts opened by the operators without know your customers (KYC) compliance, industry experts warn.
"Opening such accounts without validation of persons (face to face interaction) and avoiding KYC compliance is highly risky and allows fraudsters to grab others money and launder fund for the purpose of terror financing", said a central bank official. As a result, the concern has been raised as some MFS operators have opened millions of accounts as per the lists of mobile SIM owners without following the KYC protocol as per the Regulations of Bangladesh bank and AML&CFT Guidelines of BFIU. Such account opening opportunity allows many people to open multiple MFS accounts from some operators and make frauds and financial crimes untraced, the sources said.
Besides, MFS accounts opened based on mobile user's registration ignoring KYC compliance enforced by Bangladesh Bank and BFIU, fraudsters would be able to do social engineering to grab money from genuine recipients.
A study conducted by Finance Ministry shows that a lot of anomalies have been unmasked of government's allowance disbursement to poor people through MFS during the corona pandemic situation. Nearly 28 lakh people who were owners of saving certificates and government employees and retired officials were supposed to enjoy government pension. Such anomalies are occurring for lack of proper KYC compliance.
Any banking account without proper identification of customers is risky and the big barrier to mobile banking. Therefore, regulators across the globe have imposed on MFS providers to identify and validate their customers' properly, the sources said.
"Once MFS accounts are opened ignoring KYC rules, people can take advantage of including their near and dear ones in the list of poor people", a top executive of a leading commercial bank said. To avoid fraud and duplication in monetary disbursement, the recipient list must be prepared on the basis of strong sense of responsibility- the MFS accounts with KYC and NID verification.
The government distributes tens of billions among the poor and the destitute under the social safety program every year. Prime Minister Sheikh Hasina recently inaugurated the disbursement of the allowances through Nagad and bKash at a program at the Bangabandhu International Conference Centre via video call from the Ganabhaban.
According to sources, the allocation for 250,000 widows and destitute women stands at Tk 12.3 billion. BDT 16.2 billion has been allocated for 1.8 million insolvent people with disabilities, Tk 29.4 billion for 4.9 million people for paying old-age allowances and BDT 956.4 million for 100,000 students with disabilities.
"Any effective payment solution in the context of Bangladesh needs to empower the beneficiaries to be able to make informed choices, be cost-effective and transparent", the report said.
To avoid any disruptions in aid disbursement, industry experts say the government should not disburse its funds through MFS channels that do not comply all rules from opening to maintenance MFS accounts including KYC enforcement as per the guidelines of Bangladesh Bank and BFIU.
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