Regulators ask Pak based Habib bank to shut ops in US

Chelsea West
September 10, 2017

The New York state government on Thursday said Pakistan's Habib Bank had agreed to pay $225 million (Rs 1,436 crore) in settlement for infringing laws created to combat illicit transfers of money, Reuters reported.

The DFS said in a legal filing last month it was seeking to fine the bank, Pakistan's biggest lender, up to $630 million for "grave" compliance failures over anti-money laundering and sanctions rules at its only United States branch. This was the only branch of Habib Bank in America.

It singled out HBL's connections with Saudi Arabia's largest private bank Al Rahji, which has been linked by the US Senate and in the media to al Qaeda and the financing of extremism. In a legal filing, DFS has alleged that the bank has failed to work according to the rules in anti money laundering cases. In 2006, the U.S. authorities had ordered the bank to tighten its oversight of potentially illegal transactions but it failed to comply.

The fine amount is significantly lower than the penalty amount of $629.6 million that was initially proposed.The fine that HBL has agreed to pay is the largest ever imposed upon a Pakistani bank by regulatory authorities. The expanded lookback further requires Habib Bank to continue to engage the independent consultant, previously approved by the Department, to conduct this broadened review, until completion even after the license surrender process is completed.

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The regulators' agency said Habib allowed almost 13,000 transactions which were not screened properly. DFS said that this opens the way to financing activities and threatens the financial system as well as the American people. "The bank has repeatedly been given more than sufficient opportunity to correct its glaring deficiencies, yet it has failed to do so", Reuters reported Financial Services Superintendent Maria Vullo as saying in an official statement. Not only this, the bank improperly used a "good guy" list to rubber stamp transactions worth at least United States dollars 250 million in transactions, including those by an identified terrorist and an worldwide arms dealer, AFP reported regulators as saying.

Reuters reported the DFS as saying that Habib Bank had agreed to pay $225 million to settle an enforcement action, which was brought against it for infringing laws created to combat illicit money transfers.

"Under the circumstances, we believe it makes sense for the bank to take this one-off hit, rather than approaching courts which would have put the share price under a cloud for longer".

Other reports by TheSundaySentinel

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