HBL Slapped with $225 Million Fine in USA

HBL (Habib Bank Limited) had a branch in New York. Recently, there was a clash among the rules of the financial department there and the HBL’s US branch. The financial department warned HBL and asked them to submit some details about the statements.

Later, The New York State Department of Financial Services fined Habib Bank’s New York branch for $225 million, that it has closed now, as it failed to obey New York laws and regulations designed to combat money laundering, terrorist financing, and other illicit financial transactions.

Habib Bank is directed to pay the whole amount within 14 days of the order.

Habib Bank has agreed to pay which says that DFS will take no further action against HBL. The New York State Department of Financial Services had said last month that it could fine HBL for up to $630 million for not following the rules regarding anti-money laundering in the US.

According to the updates, DFS order will further investigate transactions processed by the branch from October 2013 to the end of September 2014 and from April 2015 through the end of July 2017.

“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,” said the department in a statement.

This enforcement order is followed by a 2016 review, during which the department had identified certain “weaknesses in the bank’s risk management and compliance”.

The bank has repeatedly been given more than sufficient warnings to correct its glaring deficiencies, yet it has failed to do so, from the dept. statements.

“DFS will not stand by and let Habib Bank sneak out of the United States without holding it accountable for putting the integrity of the financial services industry and the safety of our nation at risk”, it added.

“The terms of this Consent Order and the Surrender Order now agreed to by the bank will ensure that Habib’s misconduct will no longer occur on U.S. soil and that DFS will still investigate the bank’s prior activities”, Superintendent of DFS said.

DFS in its recent investigation found, among other misconduct, that Habib Bank:

• Facilitated billions of dollars in transactions with a Saudi private bank, the Al Rajhi Bank, with reported links to al Qaeda, without adequate anti-money laundering and counter-terrorist financing controls;
• Failed to adequately identify customers of the Al Rajhi Bank that might be using the Al Rajhi account at Habib Bank to transfer funds to New York, thus permitting unsafe “nested activity”;
• Allowed for at least 13,000 transactions to flow through the New York branch that potentially omitted information adequate to properly screen for prohibited transactions or transactions with sanctioned countries;
• Improperly used a “good guy” list – a list of customers who supposedly presented a low risk of illicit transactions – to permit at least $250 million in transactions without any screening, including transactions by an identified terrorist from Pakistan, an international arms dealer, an Iranian oil tanker, and other potentially sanctioned persons and entities; and
• Granted the request of a customer to cancel an instruction to send funds through the New York Branch to a person who was blocked from using the U.S. financial system, so that the instruction could be resent by intentionally omitting the prohibited party’s name.

HBL has previously said the closure of its New York operation would have no material impact on its business outside the United States.

Habib Bank, headquartered in Karachi, Pakistan, is Pakistan’s largest bank, with $1 billion in total revenues in 2016, and $24 billion in total assets. The New York branch was successfully licensed by DFS in 1978.

Source: ProPakistani