Ational Ank of Akistan: Compliance Group

Compliance Group
National Bank of Pakistan

Head Office, Karachi
Compliance & Control Program (Revised-2015)
The Management Committee in its 365th meeting held on 8th September 2015
approved the Compliance & Control Program for its implementation.
This document is for internal use of National Bank of Pakistan employees only. Any
act of divulgence to third parties shall be viewed seriously and warrant disciplinary
action.
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Contents
Items Page
Number
1. Introduction 4
Compliance Function 5
Objective 6
2. Compliance Set-up (Organogram) 6
Core Functions 8
3. Scope of Regional Compliance Work 9
Core Functions 9
Compliance & Control Program for Regional Office 11
Reporting of Prompt Exceptions to Head Office 14
4. Monthly Exception Reporting 16

Compliance & Control Program for Cluster Area Branches 17
Weekly Reporting to RCCH 18
5. Compliance & Control Program Checklist 19
6. Regional Inspection Report 26
7. Prompt Exception Report Formats 29
8. Compliance Review Sheets 37
9. Monthly Exceptions Reporting Formats to Regional Office & CG HO 46
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Home
Introduction:
Compliance is rapidly evolving as a tool for good corporate governance. The regulator has made it
mandatory for the banks to have an independent and effective compliance setup for ensuring strict
observance of all statutory provisions contained in various regulatory guidelines issued from time to
time and also bank's internal policies and fair practices code, which typically include specific areas
such as know your customer, the prevention of money laundering and terrorist financing.
A separate Compliance Set-up was introduced in the Bank vide President Office Circular No.
16/2001 dated 21st June 2001 as a part of Operations Group. Subsequently, Compliance Set-up was
separated from Operations Group and an independent Compliance Group was created vide
President Office Circular No. 05/2004 dated 22nd March, 2004. During this period, different roles,
job & scope of Compliance were defined, which sometimes created ambiguity in understanding the
actual role of the Compliance Group. The actual role of Compliance Group, as per international best
practices & SBP guidelines, is to “ensure that bank is compliant with all the policies of regulators
and internal SOPs”
The Board Audit Committee (BAC) in its 166th meeting held on 8th August 2014 directed that the
Internal Control Unit reporting at that time to Operations Group requires to be revisited for
enhancing its scope and should be merged with Compliance Group for synergy. In compliance of
the directives of BAC, the Internal Control Wing has been established in Compliance Group and
hence the Compliance Review Program (CRP) is being amended / updated to enhance the control
activities.
The function of Compliance Group is to identify the discrepancies, elevate and escalate them to the
concerned authorities and push them for their early and timely rectifications. The rectification of
discrepancy is a function of respective Group who committed the discrepancy, whether at Branch
Level, Regional Office Level or at Head Office Level. The compliance role / function has been
discussed at length in the 350th (A) Management Committee Meeting held on 21st April 2015 and the
worthy President defined the role of Compliance Group that:
“The President said that the function of Compliance Group is not to rectify the errors of
field functionaries but to get the errors rectified by field staff. Their job is to identify the
discrepancies, elevate & escalate them to the concerned authorities and push them for their
early & timely rectifications. He said that if a circular or procedures having ambiguities
were issued in the past, the same may be reviewed and corrected so that ownership of those
activities and role is taken by respective groups in order to perform their responsibilities as
per their TORs/job responsibilities. He stated that no matter, whose job was prior to now,
but now clear demarcation should be made so that this matter is resolved without any
further delay.”
The Bank’s Board of Directors in its 245th meeting held on 13.05.2015 also directed the compliance role
as quoted below:
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“Regarding rectification of irregularities on which SBP imposed penalties, the Board

advised that the rectification of irregularities pointed out of SBP would be responsibility of
the Group in whose area these irregularities were pointed out. The responsibility of the
Compliance Group is to get the irregularities rectified through the concerned group…..”
The Compliance & Control Program has been based on the aforesaid directives of the President and
Board of Directors.
Compliance Function:
Compliance function is defined as an independent function that identifies, assesses, advises,
monitors and reports on the bank’s compliance risk, that is, the risk of legal or regulatory sanctions,
financial loss, or loss to reputation a bank may suffer as a result of its failure to comply with all the
applicable laws, regulations, codes of conduct and standards of best practices.
The function of Compliance Group is to identify the discrepancies, elevate and escalate them to the
concerned authorities and push them for their early and timely rectifications. The rectification of
discrepancy is a function of respective Group who committed the discrepancy, whether at Branch
Level, Regional Office Level or at Head Office Level.
Compliance function existed in the bank from the day it came into being. All unit heads were
responsible for compliance function in their areas of jurisdiction. Internal Audit function as an
independent entity within the bank was responsible for identifying, assessing, advising, monitoring and
reporting of irregularities and exceptions through various types of audit activities.
Presently, the Compliance Set-up has been established in all the layers of the Bank i.e.:
1. Head Office
2. Regional Offices
3. Cluster Area Branches
4. Other branches of Clusters
Purpose:
The Compliance & Control Program shall provide the understanding about the work flow of various
functions of the Compliance Group. The key principle underlying the design efficacy of policies and
procedures of a control objective is the principle of segregation of duties. It would hence be
essential for each Group to demonstrate adequate segregation of duties in terms of design and
operation to strengthen the internal controls. In addition, the internal audit shall in its periodical
review of processes ensure that no material areas which may compromise the effective applicability of
this principle is overlooked, whether this pertain to IT or functional controls.
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Objective:
The role of compliance function is to develop and promote the compliance culture in the bank. Their
job objective is to identify the discrepancies, elevate & escalate them to the concerned
authorities and push them for the early rectifications of the reported lapses/ discrepancies/
irregularities. At Head Office Level, the reported exceptions shall be taken up with the concerned
Groups for rectifications. At Regional Office Level, the exceptions shall be reported to the
concerned Regional Head for the earliest rectification.
A checklist has been designed containing the areas & items to be reviewed by the compliance
functionaries after a specified period as given therein. The given frequency of review of every item
is for the Area Compliance & Control Managers (ACCM), to be posted in Area Cluster Branches.
The Area Compliance & Control Inspectors (ACCI) shall visit the other branches of the cluster on
bimonthly basis (Once in two months). However, as soon as the required number of staff members
are posted in the Compliance Group having adequate experience, knowledge & skills, the frequency
of visits of ACCI shall be changed from bimonthly to monthly basis or fortnightly.
Promulgation:
The Compliance & Control Program (CCP) shall be promulgated after approval from the Bank’s
Management Committee. On approval & promulgation of the CCP, all the previously defined role,
functions & job descriptions of the Compliance Group and the Compliance Functionaries shall stand
withdrawn.
Updation:
The review and updation of the Compliance & Control Checklist this program shall be an ongoing
process to ensure continuous alignment between the regulatory framework and the bank-wide
strategy and the internal & external dynamics in which the bank operates.
The Compliance Group shall formally initiate any modifications to the Compliance & Control
Program keeping in view the developments, changes and trends in the compliance environment
whether required by law, regulator or the bank’s Senior Management/BoD. This program, in its
entirety, shall be reviewed on a periodic basis at least once in three years and updated. However,
updation of the checklist shall be a regular feature and an ongoing process. Upon issuance of any
new directive of the regulator or instruction from the bank’s management, the same shall be
incorporated in the checklist.
Organogram of Compliance Group

The Compliance Group has been reorganized as per Organizational Circular No.09/2015 dated May 27,
2015and the Group is now functioning with the following Organogram.
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ORGANOGRAM OF COMPLIANCE GROUP-Head Office Annexure-II
Group Chief
Divisional Head
Internal Control Compliance SBP Inspection Islamic Banking

Review Wing Monitoring Wing Coordination Wing Compliance Wing
Regulatory International
AML/ KYC Wing Compliance Wing Administration Wing
Compliance Wing
Regional Compliance &

Control Heads
Area Compliance & Area Compliance & Compliance

Control Managers Control Inspectors Support staff
SAEED HABIB KAUSAR IQBAL MALIK

SVP & DIVISIONAL HEAD SEVP &GROUP CHIEF
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Core Functions
Head Office Compliance Set-up has the following core functions:

1. Establishment and maintenance of compliance network in the bank by ensuring that:
a. Compliance function has a formal status within the bank with appropriate
standing, authority and independence.
b. Compliance staff has access to relevant and necessary documents, information
and personnel to carry out their responsibilities.
c. Compliance staff expresses and discloses its findings to Branch/Regional/ Head
Office Management without any fear.
d. Compliance staff is not placed in a position where there is a possible conflict of
interest between their compliance responsibilities and any other responsibilities
that may impair their independence and judgment.
e. compliance function assists the Senior Management in managing effectively the
Compliance risk faced by the bank
2. Compliance with relevant laws, regulations and bank’s policies with special emphasis on
KYC and Anti Money Laundering (AML).
3. To keep liaison with SBP Inspection Team in their Inspection and follow up with Groups at
Head Office for rectification of Irregularities and submission of Compliance Status Report
to the SBP.
4. Reporting of Suspicious / Currency Transactions to Financial Monitoring Unit.
5. Submission of Fraud & Forgery cases received from Regions to SBP and its escalation to
appropriate level.
6. Processing of Exception Reports Prompt and Monthly received from Regional Offices and
its reporting to the President and Group Chiefs as per Criteria of Reporting enabling them to
rectify the same.
7. Follow up with Groups at Head Office for rectification of the irregularities and closure of
diarized audit findings.
8. Processing of Internal Control Memorandum submitted by External Auditors. Follow up
with Head Office Groups for implementation of External Auditors observations reported in
Internal Control Memorandum (ICM) and presentation of Status Report to the Management
Committee.
9. Review of Head Office Revenue & Capital Expenditure at Financial Control Division.
10. Processing of Institutional Risk Assessment Framework Questionnaire in coordination with
Groups at Head Office and its submission to SBP on half yearly basis.
11. Vetting of Instruction Circulars and Policies developed by various Groups of the Bank.
12. Approval for opening of High Risk Accounts as per procedure.
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Scope of Regional Compliance Work:
In view of enhanced scope of activities in the bank, the responsibilities to review the
implementation of rules and regulations have increased tremendously at all levels. The scope of
Compliance function covers a broad spectrum of review of banks functions including review of
implementation of instructions/ directives given by SBP, applicable laws of the country, instructions
contained in Standard Procedure Manual as per checklist designed for the purpose and reporting of
deviations to appropriate level of management for their rectifications.
Strengthening of Compliance Network in the Region:

The Regional Compliance & Control Head is responsible to ensure that an effective Compliance
Network is established in the Region. In this regard he must ensure:
1. Availability of sufficient and adequately trained resources at Regional Office to meet the
functional responsibility of all branches under his jurisdiction. In case of requirement of a new
resource, he will submit requisition with the Regional Head who shall post a well trained
resource keeping in view the nature of assignment.
2. Proper training to the staff under his jurisdiction in coordination with the Compliance Group
through NBP Staff Colleges. Moreover, posting of skilled staff as Area Compliance & Control
Managers and Area Compliance & Control Inspectors and arrangement for their proper training
in key areas such as Know Your Customer, Anti Money Laundering and Foreign Exchange etc.
Core Functions:
1. Establishment and maintenance of compliance network in the region by ensuring that:
a. Compliance function has a formal status within the region with appropriate
standing, authority and independence.
b. Compliance staff has access to relevant and necessary documents, information
and personnel to carry out their responsibilities.
c. Compliance staff expresses and discloses its findings to Branch Management,
Regional Management, Regional Compliance & Control Head and Group Chief
Compliance at Head Office without any fear.
d. Compliance staff is not placed in a position where there is a possible conflict of
interest between their compliance responsibilities and any other responsibilities
that may impair their independence and judgment.
e. Compliance function is to assist the Branch/Regional Management in managing
the Compliance risk effectively.
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3. Coordination with SBP Inspection Team and External Auditors to ensure that visiting SBP
Inspection Team / Auditors are provided with all required documents/information in time.
4. Regional Compliance & Control Head to act as Anti-Money Laundering Supervisory Officer
of the Region.
5. Reporting of Suspicious / Currency Transactions to Head Office for onward submission to
FMU.
6. Review of Regional Office transactions.
7. Ensure that the Area Compliance & Control Managers /Inspectors are functioning as per
Compliance & Control Program.
8. Arrange Inspection of other branches of clusters on bi-monthly basis (once in two months)
and reporting of exceptions to Regional Head for rectification and Compliance Group Head
Office for further escalation. (If Inspectors are posted in Regional Office, then RCCH shall
perform this function. If Inspectors are posted under ACCM then he will perform this
function. Moreover, the frequency of visit of Inspector shall be changed on posting of
adequate staff and CG shall advise any change therein from bimonthly to monthly or
fortnightly)
9. Monitoring & follow up with the concerned authorities for rectification of the exceptions.
10. Reporting of Fraud, Forgery, Attempted Frauds, Dacoity & Attempted Dacoity to Head
Office. Exceptions under this head for Rupees Five Million and above are required to be
reported to SBP within two ( 2 ) working days of detection.
11. Processing of Prompt and Monthly exception reports received from branches and
submission to Regional Head and Head Office as per Criteria of Reporting.
12. Participate in discussion on Audit Reports.
13. Follow up for rectification of irregularities and closure of diarized audit findings.
14. Periodical Visits of the Branches (at least five (5) branches per month)
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Compliance & Control Program for Regional Office

The Regional Compliance & Control Head will arrange for review of Compliance Function at
Regional Offices as per following program:
S.No Items of Review Frequency Review Function
1. Sanctioning of Daily
Fresh Finances/ 1. Approval within delegated Business
Discretionary Powers as per Documents of
Renewals
Empowerment.
2. Completion of Review Sheet for all finances
sanctioned / confirmed at Regional Office.
3. If there is violation of Business
Discretionary Powers, Prompt Exception
will be reported.
4. All other exceptions which are not prompt in
nature will become part of Monthly
2. Review of Expense Daily Exception Report.
Vouchers (Running 1. Expenses at Regional Office are approved
within financial powers as per Document of
Expenditure)
Empowerment.
2. All relevant documents have been attached
with the Voucher.
3. With holding tax has been deducted as per
prevailing law. Sales tax Invoice has been
obtained (where applicable)
In case of exception/ violation, the RCCH will
report Prompt exception. All exceptions which
are not prompt in nature will become part of
3. Voucher for Daily Monthly Exception Report.
Purchase of Assets 1. All Expenses for Purchase of Assets have
(Capital been approved as per document of
Expenditure) empowerment.
2. All relevant documents have been attached
with the Voucher.
3. Assets purchased for below Rs. 10,000 are
not charged to Asset Account (debited to
Charges Account) as per Instruction Circular
No. 89/2004 dated August 10, 2004.
4. General Sales Tax has been deducted
correctly and deposited in Govt. Account as
per Instruction Circular No. 126/2008 dated
24th October, 2008.
5. Withholding Tax has been deducted on
Gross Amount as per Income Tax Ordinance
In case of violation, the RCCH will send to
Compliance Group, Head Office as Prompt
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Exception. All exceptions which are not prompt
in nature will become part of Monthly Exception
Report.
4. Processing of Monthly 1. Complaint Register is properly maintained.
Customer 2. Customer complaint is handled promptly.
Complaints
5. Consolidation of Monthly 1. e-CIB data is received from Branches in time and
Information consolidated at Regional Office.
6. Review of SWIFT
Quarterly 1. Functions are segregated for input of
Centre message, verification of message and
release of message.
2. Specific duties are assigned to staff in
writing.
3. SWIFT Centre has a Supervisor who is
fully acquainted with the functions of
SWIFT Centers and sufficient knowledge
of flow of incoming and outgoing SWIFT
messages with the following TORs:
a. Review of all outgoing messages to
ensure that message corresponds to the
underlying authorization of the branch
duly signed by authorized person of the
branch. He ensures that serial number of
all outgoing messages is not broken and
all messages are filed sequentially. He
tallies the relayed message with original
message to ensure that correct message
is relayed.
b. Review of all incoming messages and
ensure their in time distribution to
concern branches. Before distribution,
he also ensures that all incoming
messages are properly numbered,
contains Signature of Authorized person
along-with stamp of the Swift Centre
and are entered in the Register before its
distribution.
4. SWIFT Centre ensures that the Original
message has been signed and stamped by
authorized person. In case of issuance of
Duplicate message by SWIFT center, it
ensures that the words “Duplicate Message;
Avoid Duplication” is clearly and visibly
mentioned.
5. Password expiry period is set for maximum
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15 days for all the three authorized persons
i.e. staff responsible for (i) input of message
(ii) verification of message and (iii) release
of message.
6. Physical or electronic lock is mounted on
the doors of server room to restrict the
access to authorized personnel only.
7. Logs to keep record of entry /exit to server
room are maintained.
8. Server room is equipped with smoke
detectors and fire alarms.
9. Training is imparted to staff and their back
up is prepared.
7. Staff Rotation Quarterly 1. Obtain list of Staff with their date of posting
from Admin Section as on March 31, June
30, September 30, and December 31, in
April, July, October and January.
2. Staff is rotated after three years.
8. Staff Personal Files Quarterly 1. Personal files of Incoming staff have been
received and of outgoing have been
dispatched.
2. The documents in Personal files are serially
numbered.
9. Privilege Leaves Annually Review how many staff members have availed
Privilege Leave during the year and report
exception in case of non-availment by the Staff.
Review Sheet
Review of finances approved at Regional Office:
Business
S. Discretionary
Loan Sanctioning Exceptions
No. Name of Branch Loan Type Powers of
Amount Authority If any
Sanctioning
Authority
1.
2.
3.
4.
Signatures of Reviewing Official

(With Name & Designation)
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Reporting of Prompt Exceptions to Head Office
The Prompt Exceptions include fraud, forgery, attempted fraud, theft, dacoity, mishap and all those
exceptions reportable to the President by Head Office as per revised criteria of reporting circulated vide
Instruction Circular # 89/2015 dated 28.07.2015.
The ACCM and ACCI if find any Prompt Exception during their branches’ review, they will report the
same on the format prescribed hereunder to the Branch Management for their comments and will send
the PE to RCCH on the same day.
The Regional Compliance & Control Head (RCCH) will report all Prompt Exceptions observed by the
ACCM or ACCI during their branches’ review to the Regional Head under intimation to
Compliance Group Head Office. The Regional Head will submit his comments within 24 hours and the
Prompt Exception will be reported to Compliance Group Head Office along-with the comments of the
Regional Head.
The RCCH will not delay submission of Exception Report to CG Head Office under any
circumstances, especially with the reason that “Comments from the Regional Head are still
awaited” or “on advising by the Regional Management to hold the exception”. In case Regional Head
does not give comments within the stipulated time, the RCCH will submit the Exception Report to
Head Office clearly mentioning therein that “Exception Report was submitted to Regional Head on (date)
but comments not received”.
The RCCH will ensure that in case of any prompt exception in the branch/ regional office it is
intimated to Compliance Group Head Office on the same day he gets information from ACCM, ACCI
or any other source.
The RCCH will ensure that exceptions relating to fraud, forgery, attempted fraud, dacoity for
Rupees five million and above are reported to Compliance Group, Head Office on top priority basis since
these are required to be reported to SBP within two ( 2 ) working days of its detection in terms of SBP
BPRD Circular No. 3 of 2014 dated February 20, 2014.
Additionally, the compliance functionaries may also report any other irregularity/observation of
significant nature which may cause any financial/reputational loss to the bank as Prompt Exception.
Moreover, in case of non-deduction of tax or non-depositing of tax in Govt. Treasury in time, the
Compliance Functionaries are required to report exceptions on Prompt basis.
The Prompt Exception Reporting Formats have been designed for reporting of PE of different
natures, detail of which is given below:
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S. No. Nature of Prompt Exception Reporting Annexure

1. Committed OR Attempted Mishap (Fraud /Forgery/Dacoity/Theft/Fire/ Any other P-1
Mishap
2. Leakage of Income P-2
3. Violation of Financial Powers P-3
4. Violation of Business Discretionary Powers P-4
5. Shortage / Shortfall of Stocks P-5
6. Shortage of Cash P-6
7. Accounts not classified/misclassified in Statement of Classified Accounts P-7
8. Reporting of unbalanced Books/ Accounts. P-8
9. Disbursed/Renewed Finances without issuance of DAC P-9
10. Reporting of other Prompt exceptions (Not classified above) P-10
(Please note that under the column of Annexure, “P” stands for Prompt)
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Monthly Exception Reporting:
At month end, the RCCH will arrange for consolidation of all outstanding exceptions and prepare a
branch-wise consolidated report as per Format annexed as M-1 to M-8 (M stands for Monthly, from
Page # 50 to 58). The format will contain branch-wise outstanding exceptions identified by the
ACCM and ACCI but not rectified. The details thereof will also be provided to Regional Head for their
immediate rectification.
Modus Operandi for Reporting of Exceptions:
The compliance officials shall check the activities as per the checklist given hereunder in this
document. The frequency in the checklist has been set for Area Compliance & Control Managers
(ACCM) of Cluster Area Branches. As the review criterion has been enhanced, therefore the Area
Compliance & Control Inspector (ACCI) shall be allotted to check/review three ( 3 ) branches per
month. However, till posting of the required skilled staff in the Regional Compliance Wings, the
number of allotted branches may vary. In such eventuality, the frequency of checking/review by
ACCI shall also be bimonthly (once in two months). However, the Compliance Group Head Office
may change the frequency from bimonthly to monthly or fortnightly keeping in view the staff
strength of Regional Compliance Wings as well as nature of exceptions in the area/specific
branches.
Other Branches of Cluster:

 The Area Compliance & Control Inspectors (ACCI) shall be posted/ deployed reporting to Area
Compliance & Control Managers (ACCM) (However, till posting of required number of skilled
staff in Regional Compliance Wings, ACCI may be reporting to RCCH as per advice of the
Compliance Group). They will inspect the other branches of the clusters on rotation basis on the
schedule given by the ACCM. He will report all types of exceptions to the Branch Manager for
rectification on the spot. He will impress upon the branch management for spontaneous
rectification of the exceptions. In case the branch management does not rectify the reported
exceptions, he will handover the report of Outstanding Exceptions to Branch Management for
rectification within seven (7) days and copy thereof to ACCM along with reason(s) given by the
Branch Management for non-rectification on the spot. The ACCM shall give its copy to the
concerned Cluster Branch Manager to arrange rectification from the branch with allotted time.
 If the reason(s) given by the Branch Management for non-rectification of exceptions on the spot
are unjustified, the ACCI shall give copy of the report of outstanding exceptions to RCCH for
taking up the matter with Regional Head (RH) for rectification.
 If all the exceptions are not rectified by the Branch Management within allocated seven days, the
ACCI shall send report of Outstanding Exceptions to the RCCH who will send the same to the
Regional Head (RH) to arrange rectification within further seven (7) days.
 After lapse of the allotted seven days to RH for rectification, if still there are exceptions which
are un-rectified, the RCCH shall report the same to the Compliance Group, Head Office on
month end as Monthly Exception Report (MER) for onward escalation to the concerned Group,
President or any Management Level Committee.
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Cluster Area Branches:

 Independent Area Compliance & Control Managers (ACCM) shall be posted in all the Cluster
Area Branches who will report to the Regional Compliance & Control Heads (RCCH). The
ACCM shall check the branches’ operational activities as per checklist given in this program on
the frequency given therein. He will report all types of exceptions to the Area Branch Managers
for rectification on the spot. He will impress upon the branch management for spontaneous
rectification of the exceptions. In case the branch management does not rectify the reported
exceptions, he will handover the report of Outstanding Exceptions to Area Branch Management
for rectification within seven (7) days and copy thereof to RCCH along with reason(s) given by
the Area Branch Management for non-rectification on the spot.
 If the reason(s) given by the Area Branch Management for non-rectification of exceptions on the
spot are unjustified, the ACCM shall give copy of the report of outstanding exceptions to RCCH
for taking up the matter with Regional Head (RH) for rectification.
 If the Area Branch Management does not rectify any of the outstanding exceptions within
allocated seven days, the ACCM shall send report thereof to the RCCH who will send the same
to the Regional Head (RH) to arrange rectification within seven (7) days.
 After lapse of the allotted seven days to RH for rectification, if still there are exceptions which
are un-rectified, the RCCH shall report the same to the Compliance Group, Head Office on
month end as Monthly Exception Report (MER) for onward escalation to the concerned Group,
President or any Management Level Committee.
At end of each month, the RCCH will consolidate all the outstanding exceptions reported by
ACCM, ACCI OR observed by the RCCH and shall prepare a branch-wise consolidated Monthly
Exception Report (MER) of outstanding exceptions of all the branches and regional office. The
RCCH shall send the said MER to the Compliance Group Head Office for escalation to the
appropriate level under intimation to the Regional Head for their immediate rectification.
However, exceptions relating to fraud, forgery, attempted fraud, dacoity, etc. which are prompt in
nature will be reported immediately to the Head Office as per present mechanism. It is re-
emphasized here that exceptions relating to fraud, forgery, dacoity for Rupees five million and
above are required to be reported to SBP within 2 working days hence RCCH are required to
remain highly attentive on these exceptions so as to ensure compliance of SBP directives.
Compliance & Control Program for Cluster area Branches

Core Functions
1. Review of implementation of Compliance with applicable laws, rules and regulations with
special emphasis on KYC and Anti-Money Laundering.
2. Review of transactions as detailed in checklist of Compliance & Control Program on
periodical basis as per frequency mentioned therein.
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4. Coordination with SBP Inspection Team and External Auditors to ensure that they are
provided with all required documents/information in time.
5. To check reporting of Suspicious / Currency Transactions Reports by the branch.
6. Arrange Inspection of other branches of clusters through RCCI on bi-monthly basis (once in
two months) (If Inspectors are posted under ACCM. Moreover, the frequency of visit of
Inspector shall be changed on posting of adequate staff to monthly or fortnightly)
7. Monitoring & follow up with the concerned authorities for rectification of the exceptions,
irregularities and closure of diarized audit findings..
8. Reporting of Fraud, Forgery, Attempted Frauds, Dacoity & Attempted Dacoity to Head
Office. Exceptions under this head for Rupees Five Million and above are required to be
reported to SBP within two ( 2 ) working days of detection.
9. Participate in discussion on Audit Reports.
10. Reporting of Prompt and Monthly Exceptions to Regional Compliance & Control Head &
Head Office where required.
11. Act as Anti-Money Laundering Officer of the Branch.
Weekly Reporting to Regional Compliance & Control Head

The Area Compliance & Control Manager (ACCM) shall perform the review function as per
checklist. He will review the Daily Review Items and in case of need selected items of other
frequency as per his own choice and will hand over the exception report to the Area Branch
Management for rectification. He will report the Outstanding Exceptions to the Regional
Compliance & Control Head (RCCH) on weekly basis. NIL Report is required in case of no
outstanding exception in the branch.
Maintenance of Effective Follow -up:
The Regional Compliance & Control Head will arrange for effective follow up with the Regional Head
till complete rectification of irregularities and will provide rectification status report to Group Chief
Compliance at Head Office for all those irregularities reported earlier.
Accountability (ACCM & ACCI):

The job of the Area Compliance & Control Manager/Inspector is to identify the exceptions/
discrepancies, elevate & escalate them to the concerned authorities for spontaneous rectification. They
will Review the Compliance Function of his allocated Branch as per checklist on periodical basis and
shall impress upon the branch management for rectification on the spot. They will be responsible if
any irregularity is pointed out by Auditors from the area which was required to be reviewed by him
but he has not pointed out the same irregularity during his review.
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COMPLIANCE & CONTROL PROGRAM
S.
Items of Review Review Function Frequency
No
Account Opening
Account Opening - Individual
1 Review Sheet Daily
Accounts
2 Account Opening - Government
Review Sheet Daily
Accounts
3 Account Opening - Firms/Limited
Companies/Societies/Trusts/Clubs Review Sheet Daily
etc.
Reconciliations of NBP General/Collection/Suspense/Sundry Accounts
F-21A is printed on daily basis and properly
checked/ filed.
RBVs received in the branch are responded in
time. Examine the outstanding entries in List-B
4 NBP General Account of NBP General Account and reasons for non- Daily
responding.
Proper follow up has been made with originating
branch for un-responded RBVs.
Originated RBVs are dispatched to responding
branches in time.
F-110 A is prepared accurately and all Govt.
Daily
5 Submission of 110-A to relevant Account entries have been reported.
Office The branch has maintained the record of F-110
Daily
properly.
Entries are reversed within 30 days and taken
Suspense/Advance Mobilization
6 to proper head of account and no entry Daily
Account:
remained outstanding for more than 30 days.
Entries are reversed within 30 days and branch
Sundry Deposit / Other Sundry is following up for outstanding entries. No entry
7 Monthly
Liabilities Account
remained outstanding for more than 30 days.
Funds of all collection accounts (Electricity,
Gas, Telephone) & tax deductions/collections
(Income/ Sales/Property Tax/FED/Traffic
Challan, EOBI Collection etc.) are remitted as
8 Collection Accounts per instructions Monthly
Registers & scrolls are properly maintained.
Utilities bills & Taxes collection timing is
observed.
Charges (if any) are recovered.
Maintenance of all types of accounts:
Profit rates are applied correctly & profit paid in
time.
Withholding tax is deducted from profit and
9 Application of Profit rates and deposited in Govt. a/c as per procedure. Quarterly
deduction of withholding tax
Profit has been paid to the closed accounts. WH
Tax Exempted to Accounts after obtaining proper
documents.
Verify Requisition Slips that Cheque Books
10 Issuance of Cheque Books issued to A/c holder or his authorized agent Daily
only.
Page 19 of 54
Cheque Books issued after receipt of

acknowledgement of letter of thanks or with
justification of Manager/Operations Manager for
issuance before acknowledgement of LOT.
Cheque Book series recorded in computer
system.
Branch did not obtain signature of customers
on acknowledge portion of requisition slip at the
time of requisition.
Undelivered cheque books are not retained and
sent to Regional Office as per procedure.
Top 100 depositors' data has been prepared,
properly analyzed & sent to Regional Office.
Top 100 depositors' accounts have been
converted into CAOP & profile of customer has
been updated, reviewed and completed in all
11 Top 100 depositors' data respects. Monthly
Closed accounts' data has been prepared & sent to
Regional Office as per SBP instructions.
The requisite exercise has been done within
stipulated time i.e. within 30 days of each half
year end.
CTRs have been auto uploaded (For EBS Br) or
sent to Compliance Wing Regional Office (For
CBA & Islamic Banking Br) within 7 days from
transaction.
12 Currency Transaction reports If CTRs Not/late uploaded, then: Daily
1. Date wise data of all CTRs not uploaded

2. Number of CTRs uploaded after prescribed
time
Approval from Compliance Group HO obtained
before executing any customer transaction
13 Transactions Monitoring thresholds exceeding the thresholds given in Instruction
Daily
Circular # 113/2013.
Such approvals are properly recorded/placed for
auditor's/inspector's review.
Branch acted on written request. If acted on
verbal instructions then written request has
been obtained.
14 Stop Payment of Cheques Time and date stamp has been affixed or hand Monthly
written on the written request.
Proper marking has been made in the Computer
System.
Notices served before conversion of accounts
into dormant / inoperative as per instructions of
SBP.
Operations were allowed/accounts were
15 Dormant/Inoperative Account
activated by obtaining CNIC/fulfilling necessary Monthly
requirements.
Accounts converted into CAOP while changing
their status from inoperative to operative.
Page 20 of 54
Review of Declaration Forms (CZ-50) that these

are properly filled in.
The status of this effect has been updated in the
16 Deduction of Zakat Computer System. Quarterly
Zakat deducted on all eligible accounts /
deposits /certificates and amount remitted to
HO Karachi.
Branch has complete record comprising the
number of statements sent and number of SOA
17 Un-delivered Statement of returned undelivered along with reasons.
Half Yearly
Accounts The SOA returned undelivered due to
incomplete address have been re-dispatched
after completion of address in the system.
Branch served notices to depositors of
Unclaimed Accounts before three months from
completion of 10 years from last transaction
18 Transfer of Unclaimed Deposits to date.
Half Yearly
Head Office Branch has transferred Unclaimed Deposits to
Head Office as per procedure and no such
account / instruments left unattended. (Review
in January).
19 CNIC not available Old accounts having NICs were debit blocked as
Monthly
per Para-26 R-1 of AML/CFT Regulations.
20 Expiry of CNIC Branch informed the active customers on expiry
of their CNICs as per BPRD Circular Letter # Monthly
20/2011.
Remittances
Acknowledgement from customer is taken at the
time of issuance of all instruments (On random
basis).
Issuance of Bank Drafts, TTs, Pay TT messages are relayed in time.
21 Daily
Orders, MTs, Call Deposits etc.
New voucher is being used for issuance of
instruments/TTs etc.
Copy of CNIC is obtained from Walk in
Customer.
Branch follows up for DDs paid Ex-Advices with
concerned branches.
Branch passed entry on original TT message
duly signed/stamped by authorized person of
Payment of Bank Drafts/ TTs/POs/
22 SWIFT Centre. Daily
CDR
Confirmation is obtained from issuing branch
for big amounts.
In case of Cash Payment over counter, CNIC of
beneficiary is obtained.
Beneficiaries filled Form specially designed for
Western Union /eRemittance Transactions
correctly as per CNIC.
Branch has sent activity report along with one
Western Union/ eRemittance (all consolidated RBV to link branch on same day. Daily
23
operators’ payments)
In case of Remote Transaction proper procedure is
followed.
Customer filled form & system generated
voucher have been placed properly for review.
Page 21 of 54
SS Card scanned and up-loaded in the system

24 Inter Branch Transactions enabling transactions through IBT.
Daily
Operator & Supervisor's Ids available and
transactions affected.
Local / Intercity Clearing:
Registers are properly maintained.
Returned Items are entered properly in the
Register.
25 Clearing (Local / Intercity) Daily
Cheques are returned with specific reasons.
Instruments are properly scrutinized so that
these are not returned on technical reasons.
Entries in Clearing Adjustment Account are
26 Clearing Adjustment Account Daily
reversed within 24 hours.
Review Activities of Branches:
Large Transaction Activity Report is being
27 Suspicious Activity Report generated daily.
Daily
The report is reviewed and scrutinized by
authorized officials.
Branch is generating Report of Non-Financial
Transactions.
28 Non-Financial Report Daily
The Report is reviewed and scrutinized by
authorized officials.
All the branch books are reviewed by authorized
29 Daily Branch Books persons on daily basis. Daily
The printouts are properly filed
Expenses/Capital expenses/Purchases:
All expenses have been approved as per
Document of Financial Powers.
30 Expenses vouchers (Revenue
Expenses are within the budgetary limits Daily
Expenditure)
All relevant documents have been attached with
the Voucher.
All bills for purchase of asses have been
approved as per document of empowerment.
Purchase of Assets (Capital All relevant documents have been attached with
31 Daily
Expenditure) the Voucher.
Branch has obtained Sales Tax Invoice &
deducted withholding tax as per rules.
At the time of Payment of branch premises rent,
withholding tax has been deducted as per rules
32 Deduction of Withholding Tax Withholding tax has been deducted from Daily
payment to service provider companies as per
rules.
Pension Payments
Review of scrolls and relevant registers (at
random).
Specimen signatures of authorized officials
33 Pension Payment (DAO, CMA, AGPR etc.) are available on record Monthly
Confirmation of PPOs obtained from the
concerned DAO, CMA/AGPR office.
Page 22 of 54
Miscellaneous:
Periodical balancing of books have been done for
all relevant accounts and figures tally with
General Ledger.
1. Sundry Deposit A/c
34 Balancing of Books (Non-System 2. DD/GDD Payable A/c Monthly
Based Books)
3. Cumulative Deposit A/c
4. Call Deposit Account
5. Locker Key Deposit A/c
6. Stamp Account
Transparent complaint box is affixed at
prominent place.
Complaint Register is properly maintained.
35 Processing of Customer Complaints Banking Mohtasib Complaint Forms & Monthly
Procedure displayed at the branch.
Customer complaint is handled promptly within
prescribed time.
Locker operation was allowed without recovering
the overdue locker rent.
Key deposit recovered from locker hirers.
36 Lockers Quarterly
Notice regarding locker insurance displayed.
Lockers broke opened in case of continuous
default in payment of locker rent.
Staff remained posted for more than three years in
the same branch.
37 Staff Matters Quarterly
Staff members availed Privilege Leave for 15
days during the year.
Deduction of Income Tax from Income Tax deducted from the retirement
38 Retirement Benefits of NBP Staff benefits calculated by the Branch Management
Member is as per FBR Rules.
1. CCTV System installed & in working
condition with recording for 30 days.
2. Burglar Alarm System installed.
3. Smoke Detectors installed and in working
order.
39 Security Measures 4. Security Guards performing their allotted Quarterly
duties.
5. Fire Extinguishers are available and not
expired.
6. Proper Strong Room Door installed.
7. Proper Locker Room Door installed.
Declared Rate of Profit
Annual Accounts of the Bank
Prize Bond Draw Lists
Notice for Levy of Incidental Charges
40 Branch Notice Board Service standards Monthly
Banking Mohtasib complaint form displayed for
customers.
List of unclaimed deposits placed
Notice indicating acceptances of soiled notes
Internal complaint handling procedure.
Page 23 of 54
Proper locking arrangement, complaint box &

special phone terminal placed in ATM Booth as
per PSD Circular # 2/2007.
The branch carried out ATM cash balancing and
reconciliation on every working day
Daily reporting to CFC (Card Facilitation Center)
regarding captured ATM Cards performed at the
branch.
Log of captured ATM cards sent to CFC as per
PSD Circular # 1/2008.
41 Captured ATM Cards were sent to CFC after

ATM Operations waiting for prescribed time as per PSD Master Daily
Circular # 1/2008
Newly issued ATM Cards were kept under dual
control as per BSD Circular # 7 of 2014
Daily reporting regarding settlement/unsettled
claims, balance in Suspense Account is being
done as per SBP PSD Cir. No.1 of 06.04.2006
Branch obtain copy of CNIC at the time of
delivery of captured ATM cards as per PSD
Circular #1 of 2008 (Para 4)
Captured ATM Cards were kept under dual
control as per PSD Circular # 1 of 2001 para4
Currency Chest Vault Register is properly
maintained
Cash is within the prescribed limit by SBP and
42 is insured.
Proper maintenance of currency
Daily
chest vault Register (B-50) Chest is in joint custody.
Review last date of Cash Verification by
Manager/ Operations Manager (Cash is required
to be verified weekly basis).
43 Physical Count of all security stationery (Except
Physical Count of Security
Cheque books issued by NIFT) to be balanced Monthly
Stationery
with branch register for Security Stationery.
Maintenance of Circular Files
 President’s Office Circulars
Files are properly maintained and all Circulars
44  Instructions Circulars Quarterly
are filed sequentially.
 Information Circulars
 Circular Letter issued by Groups
Letter of Credit (Import & Export) /Letter of Guarantee (Inland & Foreign):
45 Establishment/Amendment of
Import LC Review Sheet Monthly
46 Retirement of Import Documents Review Sheet Monthly

Issuance of Guarantee (Local/
47 Review Sheet Monthly
Foreign)
48 Negotiation of Export L/Cs Review Sheet Monthly
49 Booking of Export Refinance Review Sheet Monthly
Branch is following up the matter with
beneficiaries for calling back of the expired
50 Expired Guarantees Guarantees. Quarterly
Check that securities against expired LGs are
intact.
Page 24 of 54
Finances (Fresh, Renewals, Rescheduling/Restructuring):

Review that the Disbursement Authorization
Certificate has issued before disbursement /
renewal as per procedure.
51 Fresh Finances/ Renewals Monthly
Check that finances have been sanctioned/
renewed within Business Discretionary Powers.
Monitor that the sanctioned limits and

Monitoring of sanctioned limits and
52 outstanding on all relationship to ensure that Quarterly
outstanding
the same are within sanctioned limits.
Check the current balance as per General ledger

53 Submission of e-CIB Report to abstract with the total amount reported in eCIB
Regional Office Monthly
to confirm that all accounts have been reported
therein.
Review that all non-performing loans have been
Reporting of all non-performing
54 reported in Statement of Classified Advance as Quarterly
loans in SCA
per Prudential Regulation.
The Area Compliance & Control Manager/Inspector may check/inspect any item of review more
frequently than prescribed in the frequency as per his choice.
Page 25 of 54
REGIONAL INSPECTION REPORT
Page 26 of 54
National Bank of Pakistan

Regional Inspection Report
Date:___________________
Branch Name with Code

Branch Category I II
(Please tick relevant box)
Number of Staff Number of Working Staff (including Number of Non-Working Staff (including
Contractual & Outsourced Staff) Contractual & Outsourced Staff)
Region
Date of Present
Branch Team Name
Assignment
Branch Manager
Operations Manager
Date
No. of No. of No. of Clearance *Reasons
Conducted
Audit & Inspection Irregularities Irregularities outstanding Certificate for non-
On (Date)
Pointed out Rectified Irregularities Accepted rectification
SBP Inspection
Annual Audit
(Significant Findings)
Snap Audit
IS Audit
Credit Risk Review

(CRR)
Regional Inspection
The branch has been reviewed as per check list, which is attached duly filled from the period from
_________________ to ________________ and the pointed out exceptions have been discussed with
the branch management for on spot rectification. The Branch Manager / Operations Manager has also
signed the checklist, copy of which has also been handed over to him / them for rectification
of outstanding exceptions within seven (7) days.
Name:_______________________
Designation:___________________
Page 27 of 54
Branch Management Certificate
The exceptions pointed out have been discussed by the ACCM / ACCI for on spot rectification
thereof. However, the following exceptions could not be rectified due to the brief reason(s) given
against each. However, we will make utmost efforts to rectify these outstanding exceptions within
seven (7) days and will take measures for non-repetition in future.
Sr # Items of Review No. of Brief Reason(s) for non-rectification on spot

Instances
Branch Manager:____________ Operations Manager:____________

Name:____________________ Name:__________________
Garde:_____________________ Grade:__________________
Page 28 of 54
Annexures
(Prompt Exceptions)
Page 29 of 54
Annexure “P-1”
Reporting of Mishaps (Committed OR attempted Fraud/Forgery/Dacoity/Fire/Theft/Robbery etc.)
1.
Name of Branch & Code
2.
Regional Office
3.
Category of Branch
4.
Nature of Incident
5.
Date of Incident
6.
Date of Detection/ Report
7.
Name & Designation of Officer who
detected
8.
Amount Involved
9.
Recovery if any
10.
Whether incident is covered under the
insurance policy.
11.
Name of Insurance Company
12.
Sum Insured in case of Dacoity
13.
Status of Insurance Claim lodged to HO
14.
In case of Dacoity the name of Security
Agency
15.
Security Arrangements like hidden
cameras, alarm etc.
16.
Date F.I.R. Lodged
17.
Name of staff responsible with
designation & present place of Posting.
18.
Involvement of Outsider if any
19.
Steps taken/ To be taken
20.
Modus Operandi in Brief
21.
Regional Head Comments (Within 24 hours)
Page 30 of 54
Annexure “P-2”
Reporting Format of Leakage of Income:
1. Name of Branch with code

2. Category of Branch
3. Head of Relevant Account
4. Amount involved
5. Date of Detection of Leakage of Income
6. Brief detail of Leakage of Income
7. Person who detected the Leakage
8. Name of Officer/ Staff Responsible
9. Steps taken/To be taken
10. Amount Recovered
11. Regional Head Comments (Within 24 hours)
Annexure “P-3”
Reporting of Violation of Financial Powers:

1. Name of Branch with Code
2. Regional Office
4. Date of Report
6. Details of Head of Amount Financial Over and
Violation Account Sanctioned Power Above
7. Steps taken/ to be
taken
8. Regional Head
Comments
Page 31 of 54
Annexure “P-4”
Reporting of Violation of Business Discretionary Powers:
2. Regional Office
4. Type of facility
5. Date of Sanction
6. Amount Sanctioned
7. Date of Disbursement
8. Present Outstanding
9. Name and Grade of Officer/ Executive who

sanctioned the facility
10. Business Discretionary Power of Sanctioning

Authority
11. Amount violated
12. Status of Account (Classification if any)
13. Steps Taken/ To be taken
Page 32 of 54
Annexure “P-5”
Reporting of Shortage/Shortfall of Pledged Stock:

2. Regional Office
4. Name of Borrower
5. Date of Report of shortage of stocks
6. Type of Facility
7. Limit of Finance
8. Date of sanction
9. Date of Expiry
10. Present Outstanding -Principal Amount
11. Mark-up outstanding
12. Total Liabilities
13. Status of classification as per requirement of PR (if
applicable)
14. Name of Mucaddum Company
15. Nature of Stock
16. Value of Stock position as per Bank’s Books
17. Value of stocks as per Mucaddam’s last report (with date)
18. Value of Stock position as per Godown/ As per
Inspection Report
19. Value of shortage/Shortfall of Stock
20. Complete detail/Value of collaterals
22. Steps Taken to be taken
Page 33 of 54
Annexure “P-6”
Shortage of Cash:

3. Balance as per Ledger
4. Cash available physically
5. Shortage Amount of Cash
6. Name & Designation of Officer Responsible
Annexure “P-7”
Accounts not Classified/misclassified in the Statement of Classified Accounts:

3. Regional Office
4. Name of Borrower
5. Nature of Finance
6. Limit of Finance
7. Date of Sanction
8. Date of Availment
9. Date of Expiry
10. Present Outstanding-Principal Amount
11. Mark-up outstanding
12. Total Liability
13. Date on which the account was due for classification
14. Category of classification reported by the Branch
15. Classification as per Prudential Regulations (Sub-
Page 34 of 54
Annexure “P-8”
Reporting of Unbalanced Books/ Accounts:

3. Regional Office
4. Title of Account
5. Balance as per General Ledger as on
6. Balance as per Subsidiary Ledger/ Register as on
7. Difference (4 - 5)
8. Date when last Balanced
10. Steps taken/to be taken
Annexure “P-9”
Disbursed/Renewed Finances without issuance of DAC
1. Name of Branch & Code
2. Regional Office
4. Name of Borrower
5. Nature of Finance(s)
6. Limit(s) Sanctioned
7. Sanctioning Authority with ref
8. Date of Disbursement
9. Amount Disbursed
10. Name of Officials made
11. Brief Details
12. Steps taken/ To be taken
13. Regional Head Comments
Page 35 of 54
Annexure “P-10”
Reporting of Other Prompt exceptions (Not classified above)
1. Name of Branch & Code
2. Regional Office
4. Nature of Exception
5. Date of Detection/ Reporting
6. Name & Designation of

Officer who detected/Reported
7. Brief Details
8. Steps taken/ To be taken
9. Regional Head Comments

(Within 24 hours)
Page 36 of 54
Compliance Review Sheets
Page 37 of 54
Account Opening - Individual Accounts

Account # Review Date
Title of Account Type of Account All types of deposit

accounts
CNIC # Expiry Date of
CNIC
CNIC Verified from Nature of Individual, Proprietorship,

NADRA Account Partnership etc.
S.
Yes No If "No" comments
No Items of Review
1 Copy of valid CNIC of all account holders /partners
obtained.
2 Copy of CNIC of all account holders / partners verified
through NADRA Verisys.
3 Proper KYC completed and AOF has requisite
information regarding expected monthly turnover,
source of income, purpose of account, expected monthly
income, usual mode of transactions and maximum
expected transaction amount (DR & CR) etc.
4 Proof of profession (student/self employed/service/
pension etc.) obtained.
5 Identity documents of account holder(s) & next of kin
attested.
6 Signature of joint account holders obtained on AOF
7 Signature verified by the branch officials.
8 CNIC was bearing thumb impression whereas account
was opened with signature
9 Permission for opening of high risk account obtained
from Compliance Group HO through Regional Head.
10 Letter of thanks dispatched to account holder on the
same day
11 Undertaking obtained if signatures of account holder
differ on CNIC & AOF.
12 Zakat deduction option checked on AOF for non-
Muslim/ Muslim accountholder who submitted affidavit
of non-deduction.
13 Separate CZ-50 obtained from all joint account holders.
14 Acceptance of Terms & Conditions for account opening
& maintenance obtained from account holder.
15 Acknowledgement of receipt of copy of account opening
form obtained from account holder.
16 FATCA form has been attached with the AOF duly filled
up & signed.
17 Cheque books were issued to the account holder
without obtaining acknowledgement of letter of thanks
Area Compliance & Control Manager / Inspector - Name & Grade
Page 38 of 54
Account Opening - Government Accounts
Title of Account Type of Account All types of deposit accounts
S.
Items of Review Yes No If "No" comments
No
Accounts were opened after obtaining special
1 resolution/ authority from the concerned administrative
department
Account holder authorized himself for account
2
operations in a joint account
Government accounts/deposits to be operated by an
officer of Federal/ Provincial/ Local Government in his
official capacity were opened after obtaining special
3 resolution/authority of the concerned administrative
department duly endorsed by Ministry of Finance or
Finance Department of concerned Provincial or Local
Government
Authority letter was obtained from the Government
4 Department and operating instructions by the
designated persons.
Copy of valid CNIC of concerned official(s) obtained and
5
verified from NADRA before opening of account.
Identity documents of concerned officials obtained and
6
attested.
Acceptance of Terms & Conditions for account opening &
7
maintenance obtained from account holder.
Acknowledgement of receipt of copy of account opening
8
form obtained from account holder.
Copy of Instruction Circular was not attached/ obtained to
9
open Office Collection Account
Page 39 of 54
Account Opening - Firms/Limited Companies/Societies/Trusts/Clubs etc.
Title of Account Type of Account All types of deposit accounts
Nature of Account Limited Company, Society,

Trust, Club, NGO etc.
S.
Items of Review Yes No If "No" comments
No
1 Accounts of firms/ limited companies/ societies/ associations
were opened after obtaining proper identification/ documents
CNICs/ SS Cards of Directors/ authorized signatories/
2 trustees/ Identification documents of all Directors/ Trust
Deed containing list of trustees duly attested are available
Up-dated Form-29/ Board Resolution to open account/
3 Certificate of commencement of Business/ Certificate of
registration/ Copy of bye-laws/ rules & regulations available/
obtained
4 Account operation instructions given by the company is as per
procedures given in articles of association
5 Copies of memorandum & articles of association bear SECP
seal
6 Under taking by all authorized persons to inform bank in case of
any change in their particulars not furnished
7 Partnership deed is attested.
8 Un-registered partnership mentioned on AOF In
9 partnership account, authority letter in favor person
authorized to operate the Account obtained
10 In sole proprietorship account, letter of sole proprietorship for
account opening was obtained
In association/society account resolution of governing body/
11 executive committee for opening of account and authorizing the
persons to operate the account was obtained
12 Permission for opening of high risk account obtained from
Compliance Group HO through Regional Head.
Accounts for business purposes were opened in personal name
13 of partners/ sole proprietor/ director instead of in the name of
business
14 Acceptance of Terms & Conditions for account opening &
maintenance obtained from account holder.
15 Acknowledgement of receipt of copy of account opening form
obtained from account holder.
Page 40 of 54
ISSUANCE OF LETTER OF CREDIT (Inland / Foreign)
Name of Customer ______________________ Review Date
L/C # ______________________ Sanctioned Limit
S.No Items of Review Yes No If "No" comments

1 Disbursement Authorization Certificate has been
issued before opening of LC.
2 The customer has submitted L/C application on
prescribed form (IB-8) which meets Foreign
Exchange Manual requirement.
3. L/C opened within approved limit or specific
approval from competent authority and details
have been mentioned on Offering Sheet.
4 The items mentioned in L/C are not in Negative
List.
5 Performa Invoice/indent was properly signed/
stamped by Exporter and accepted by importer
and importer signature verified by the Bank.
6. LC opened on valid indent/ Performa invoice
(within validity date) (Para-7-Ch-XII-FEM)*
7. Margin is retained as per sanction advice
8. LC has been opened on NBP branch or bank with
which NBP agency arrangement.*
9. Credit worthiness of foreign supplier has been
obtained for LC amount of PKR 1.5(M) and above
(Para 7 chapter XIII FEM).*
10. LC gives all the details as mentioned in Performa
invoices/Indent (Para 7 chapter XIII FEM)*
11. LC must require the beneficiary to enclose invoice
and packing list with the shipment.
12. Branch has obtained SBP/Ministry of Finance
(whichever applicable) permission for import of
sugar, food grains (cereals) if price is on CFR basis
(Para 5 chapter XIII FEM) and for import of Oil and
Petroleum products.*
13. LC mentioned same country of origin of goods as
mentioned in Performa Invoice (Para 8 Chapter-XIII
FEM).*
14. Forward cover has been booked if requested by the
customer and proper noting has been made on file.
15. Contingent Liability has been booked.
16. Opening Commission has been recovered as per
tariff.
* Foreign Exchange Manual is applicable only on Foreign L/C
Page 41 of 54
ISSUANCE OF LETTER OF GUARANTEE (Local / Foreign)
L/G # ______________________ Sanctioned Limit
In case of "No"
S.No Items of Review Yes No
comments
1. Disbursement Authorization Certificate has
been issued before issuance of LG.
2. The customer has submitted request for
issuance of Letter of Guarantee along-with
format of the L/G.
3. L/G has been issued within approved limit or

specific approval from competent authority.
4. Guarantee is fully secured.
5. Letter of Guarantee indicates specific amount

and expiry date and contains claim lodgment
date.
6. Counter Guarantee from the customer has
been obtained.
7. Margin is retained as per sanction advice
8. Letter of Guarantee meets Foreign Exchange

Manual requirement if issued in favour of
beneficiaries outside Pakistan.*
9. Contingent Liability has been booked.
10. Commission has been recovered as per tariff.
* Foreign Exchange Manual is applicable only on Foreign L/C
Page 42 of 54
Retirement of Documents
L/C #
In case of "No"
comments
1. Documents have been scrutinized within a
reasonable time.
2. In case of discrepant documents negotiating bank
has been informed immediately via SWIFT
3. In case discrepant documents have been received,
same have been conveyed to importer for
acceptance immediately.
4. Lodgment of documents in time
5. Form-I was filled/signed properly by importer and

importer’s signatures were verified by branch
official with signatures & seal. Signatory has
disclosed his status/capacity i.e. Director/
Partner/ Proprietor etc. of firm. (Para-32-Ch-XIII-
FEM)
6. Revenue stamps have been affixed on accepted
bill of exchange on usance basis.
7. Correct exchange rate has been applied on the
date of lodgment of documents.
8. Reporting of Transaction on FET to Head Office
9. Recovery of charges as per tariff
10. Reversal of contingent liability entry
Page 43 of 54
Export Negotiation
L/C #
S.No Items of Review Yes No If "No" comments

1. Scrutiny of Export Documents received from exporters
within a reasonable time preferably 24 hours.
2. Timely advising of the discrepancy to the exporter.
3. Purchase/negotiation of discrepant documents done
after approval of the competent authority.
4. Dispatch of negotiated documents within reasonable
time preferably the same day.
5. In case E-Form was certified by another bank, the
branch has obtained NOC from certifying bank.
6. Form-E has been signed by Exporter disclosing his
status and form has been properly filled (Para-8(ii(e))
Ch-XII-FEM).
7. Documents of title to cargo have been drawn to the
order of NBP (Para- 11(i(a)) Ch-XII FEM).
8. Duplicate E-Form copy has been retained and placed in
the branch file.(Para-15-Ch-XII—FEM).
9. Export Bills were purchased/ negotiated after the
approval of competent authority.
10. Negotiation of export documents was made after date of
shipment/ flight date.
11. IB-9 (buy-back indemnity) from exporter has been
received while negotiating discrepant export documents.
12. Branch obtained credit worthiness report of foreign
buyer or a suitable undertaking from the exporter in
case of export against D/A or T/R basis (para-26, Ch-
XII-FEM)
13. Correct exchange rate has been applied on negotiation
14. Charges have been deducted in negotiation and

collection cases as per prevailing tariff.
15. Correct exchange rate has been applied on negotiation

16. Transaction has been reported to TMG on FET.
Page 44 of 54
Export Re-Finance
Account #
In case of "No"
Comments
1. Export Finance facility is within the approved limit.
2. Disbursement Authorization Certificate has been
issued as per procedure.
3. Customer application for grant of SBP Finance is
available
4. Form D submitted to SBP is duly completed and
signed by the borrower, his signature is verified by
the bank and the Form is also signed by the bank.
5. Undertaking on Form B for Direct Exporter or on
Form C for Indirect Exporter duly signed by the
borrower and verified by the bank is available on
bank record.
6. Copy of Export Order / LC for Direct Exporter and
Inland Letter of Credit/ Standardized Purchase Order
in case of Indirect Exporter is on branch record
7. Following is available on branch record:
In case of Pre-Shipment Finance
For Direct Exporter
Original and duplicate copy of Form E and Bill of
Lading
Or FCRs and EPRC (for direct exporter),
For Indirect Exporter
Invoice, Truck/ Railway Receipt, Goods Received
Note/ Delivery Challan signed by the
In case of Post Shipment (for direct exporter)
EPRC.
8. Approved EE-1 or NOC from other bank is on bank’s
record and the proposed application is within
Exporter’s entitlement.
9. Form D-3 submitted to SBP is duly completed and
signed by the borrower, his signature is verified by
the bank and the Form is duly signed by the bank
10 Finance is within entitlement limit of the Exporter.
Page 45 of 54
Monthly Exception Report

(MER) Formats
Page 46 of 54
M-1
Violations of Know Your Customer Reported For the Month of _____________________
Acceptance Zakat option Cheque book AOF not

Copy of CNIC not Proof of
Permission
of Terms &
Acknowl- Next of Photograph of issued before properly Total No.
No. of FATCA for High edgement Kin Letter of not properly
Name of
Accounts
CNIC verified
Form not
Profession
Risk A/c
Conditions
of duplicate Details thanks not illiterate A/c received LOT signed by of
Branch not from not of A/c checked & without Account Violations
Opened Obtained not AOF not not dispatched holder not
Obtained NADRA Obtained Opened not CZ-50 not completing Holder(s)
Obtained
obtained
obtained obtained obtained/ Shabby formalities Reported.
obtained (If
signature
required)
Page 47 of 54
M-2
Violations in issuance of Import Letter of Credit
L/C does Disbursem

Performa L/C has been ent
not
Invoice/ Indent L/C has relayed by Signatures Authorizati
110% mentioned SBP on
Order was not Cutting not been SWFT in time
Letter of Insurance same on IB-8 Reimbursemen Total No.
Name No. of properly alterations/ opened on and relayed authorized Certificate
undertak has not country of Debit t instructions of
of L/Cs signed/ additions on valid message has has not
ing not been origin of Sign. on not sent to the been issued
Violations
Branch Opened stamped by the IB-8 not Indent/ not been Authority Reported
obtained arranged goods as Reimbursing as per
Exporter & not authenticated Proforma compared with SBP bank procedure
L/C value mentioned and other
accepted by invoice original permit not
in proforma
the Importer message documents
invoice verified
not verified
Grand
Total
Page 48 of 54
M-3
Violations Related To Retirement of Documents
Non- Documents
negotiable have not been Bill of
SBP Permit
shipping Not entered in scrutinized Exchange have
not endorsed
No. of documents Inward Mail within a Lodgment of not been Total No. of
Name of Form-1 not for the amount
Document endorsed 100% register and reasonable documents not properly Violations
Branch filled properly utilized
Retired lien have not receipt date not time, in time endorsed and Reported
(Partially/
been marked marked preferably with delivered to
Fully)
on deposits of 24 hrs from the the Importer
importer date of receipt
Grand
Total
Page 49 of 54
M-4
Region-wise Violations of Prudential Regulation O-3 (Entries Outstanding Exceeding

30 Days) in the Month of __________
Sundry Deposit NBP General

Name of Branch Suspense Account
Account Account List ("B" )
Grand Total
Page 50 of 54
M-5
Consolidated Position of Violations of Business Discretionary Powers Reported

in the Month of _____________
Total No. of
Name of Name of Nature of
Violations
Region Branch Finance
Reported
Grand Total
Page 51 of 54
M-6
Violation Related to Letter of Guarantee
L/G has not been

issued within approved Counter Guarantee Commission has not
Name of Branch limit or specific from the customer has been recovered as per
approval from not been obtained tariff
competent authority
Grand Total
Page 52 of 54
M-7
Violation of the Financial Powers (Below the Limit from Prompt Exception)
Name of Region Name of Branch Sub-Head of Number of Instances

Charges Account
Violated
Page 53 of 54
M-8
Miscellaneous Exceptions Reported during the Month______________________
Name of Region Exception No. f Branches Number of Instances

Involved
Page 54 of 54

Ational Ank of Akistan: Compliance Group

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Ational Ank of Akistan: Compliance Group

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Compliance Group

National Bank of Pakistan

4. Monthly Exception Reporting 16

9. Monthly Exceptions Reporting Formats to Regional Office & CG HO 46

“Regarding rectification of irregularities on which SBP imposed penalties, the Board

Organogram of Compliance Group

ORGANOGRAM OF COMPLIANCE GROUP-Head Office Annexure-II

Internal Control Compliance SBP Inspection Islamic Banking

Regional Compliance &

Area Compliance & Area Compliance & Compliance

SAEED HABIB KAUSAR IQBAL MALIK

Head Office Compliance Set-up has the following core functions:

Scope of Regional Compliance Work:

Strengthening of Compliance Network in the Region:

Compliance & Control Program for Regional Office

S.No Items of Review Frequency Review Function

S.No Items of Review Frequency Review Function

S.No Items of Review Frequency Review Function

Signatures of Reviewing Official

Reporting of Prompt Exceptions to Head Office

S. No. Nature of Prompt Exception Reporting Annexure

Monthly Exception Reporting:

Modus Operandi for Reporting of Exceptions:

Other Branches of Cluster:

Cluster Area Branches:

Compliance & Control Program for Cluster area Branches

Weekly Reporting to Regional Compliance & Control Head

Maintenance of Effective Follow -up:

Accountability (ACCM & ACCI):

COMPLIANCE & CONTROL PROGRAM

Cheque Books issued after receipt of

1. Date wise data of all CTRs not uploaded

Review of Declaration Forms (CZ-50) that these

SS Card scanned and up-loaded in the system

Proper locking arrangement, complaint box &

41 Captured ATM Cards were sent to CFC after

46 Retirement of Import Documents Review Sheet Monthly

Finances (Fresh, Renewals, Rescheduling/Restructuring):

Monitor that the sanctioned limits and

Check the current balance as per General ledger

REGIONAL INSPECTION REPORT

National Bank of Pakistan

Branch Name with Code

Credit Risk Review

Branch Management Certificate

Sr # Items of Review No. of Brief Reason(s) for non-rectification on spot

Branch Manager:____________ Operations Manager:____________

Reporting Format of Leakage of Income:

1. Name of Branch with code

Reporting of Violation of Financial Powers:

Reporting of Violation of Business Discretionary Powers:

1. Name of Branch with Code

9. Name and Grade of Officer/ Executive who

10. Business Discretionary Power of Sanctioning

11. Amount violated

12. Status of Account (Classification if any)

13. Steps Taken/ To be taken

14. Regional Head Comments (Within 24 hours)

1. Name of Branch with Code

1. Name of Branch with Code

Accounts not Classified/misclassified in the Statement of Classified Accounts:

1. Name of Branch with Code

Branch Manager: Operations Manager: