The Consumer Protection Department has received a series of complaints wherein some unscrupulous elements are defrauding the general public through “Cheque Washing”, a practice wherein the text of a cheque is erased by chemicals and then rewritten with a new payee and amount. The impact of such alteration on the surface of the cheque is difficult or sometimes impossible to detect with the naked eye.
2. To prevent financial loss and mitigate the associated reputational risk to the institution which can potentially arise from such fraudulent practices, all banks are advised to assess the adequacy and implementation of their internal control procedures pertaining to encashment of cheques.
3. In addition to conformity with Clearing Bank Specification (CBS) -1 as specified in BPD Circular No. 19, dated June 25, 2003, it is highly recommended that effective equipment such as ultraviolet lamps are deployed at the branches.
4. Banks/DFIs should train their front-desk staff to assess the authenticity of cheques. Prudence should be exercised while making payments against cheques, and especially against bearer cheques.
5. In addition, Banks/DFIs are advised to strictly adhere to guidelines on internal controls and instructions relating to opening and operations of accounts issued by State Bank of Pakistan (SBP) from time to time.