US Fines, Shuts Pak’s Habib Bank on Suspicions of Terror Financing
The bank reportedly neglected to watch for red flags on potential terror financing and money laundering.
US banking regulators on Thursday directed Pakistan’s Habib Bank to shut its New York office for neglecting to watch for compliance problems and red flags on transactions that potentially could have promoted terrorism, money laundering or other illicit ends, New York banking officials said.
The New York State Department of Financial Services has also slapped a $225 million fine on the bank for deficiencies relating to compliance with state and federal laws at its only US branch. This fine is much lesser than the $629.6 million penalty that was initially proposed.
The compliance issues date to 2015 when the DFS told Karachi-listed Habib Bank (HBL) to institute a series of reforms pertaining to the bank's policies for preventing illicit money transfers.
A December 2015 DFS statement said it had "identified significant breakdowns" in the bank's anti-money laundering compliance.
Nausheen Ahmad, the bank's company secretary, said in a statement on Monday that despite HBL's "sincere and extensive remediation measures, DFS is still not appreciating or recognizing the significant progress that HBL has made at its branch in New York".
She said HBL has received a notice from DFS , which "seeks to impose an outrageous civil monetary penalty of up to $629.625 million."
HBL said that it will "vigorously contest" the fine in US courts, adding that there will be no "material impact on HBL's business outside of the United States".
The statement added that HBL has submitted an application to DFS to shut its New York operations.
(With inputs from Reuters.)
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