Bank regulators slaps $ 255 million fine
Facing isolation on the issue of supporting terrorism, Pakistan, has on Thursday, faced another US action against its flagship bank. The bank regulators have ordered Habib Bank to close its New York office for “repeatedly failing to heed concerns” over possible terrorist financing and money laundering. Bank has also to pay a sum of $255 million as fine.
The move has come in less than twenty days after President Donald Trump tore into Pakistan over its stand on the issue of counter terrorism. He advised Islamabad that “It’s time for Pakistan to demonstrate its commitment to fight terror.”
According to Associated France Press, Habib, the largest private Pakistani bank, neglected to watch for compliance problems and red flags on transactions that potentially could have prompted terrorism, money laundering or other illicit ends. Habib Bank was operating its office in New York for last 40 years.
The Department of Financial Services (DFS), which regulates foreign banks, has also slapped a $ 255 million fine on the bank. The regulators had, in 2006, ordered to tighten its oversight of potentially illegal transactions. But bank had failed to comply with the instructions.
The US regulators said that Habib bank facilitated transactions of billions of dollars with Saudi private Al Rajhi Bank, which allegedly has links with Al-Qaeda. Habib has also failed to do enough that the funds were not laundered or used for terrorism.
The Pakistani bank had reportedly permitted at least 13,000 transactions without sufficient screening.
“DFS will not tolerate inadequate risk and compliance functions that open the door to the financing of terrorist activities that pose a grave threat to the people of this State and the financial system as a whole,” DFS Superintendent Maria Vullo said in a news release.
Habib company secretary Nausheen Ahmad, in a letter to Pakistan Stock Exchange, in August, had called the initially proposed penalty of $ 626.6 million “outrageous” and “capricious.” He said that the bank has decided to close its New York operations “in an orderly manner.”
The DFS has asked Habib to surrender its licence after meeting the agency’s requirements saying it will not stand by and let Habib sneak out of the US.