The HBL had said that during an examination, the U.S. regulators found deficiencies in the risk management and BSA/AML compliance programme at HBL’s New York branch and, subsequently, escalated the enforcement actions from the “written agreement” to a “consent order” in the case of New York State Department of Financial Services and a “cease and desist order” in the case of Federal Reserve Bank of New York.
The penalty, if imposed, would be the largest ever faced by a Pakistani financial institution.
The DFS could not immediately be reached for comment.
A December 2015 DFS statement said it had “identified significant breakdowns” in the bank’s anti-money laundering compliance. It further chose to close its operations in NY and the DFS has allowed it to submit a withdrawal application, agencies reported.
Habib Bank Limited (HBL), one of the top five banks of Pakistan, has announced closure of its New York branch, licensed by the New York State Department of Financial Services (DFS), after American authorities sought to impose a hefty penalty of $630 million due to non-compliance with U.S. anti-money laundering laws.
HBL released a filing that said that the bank is working sincerely and extensively taking remediation measures which are sadly not acknowledged by DFS.
“HBL shall vigorously contest this in the scheduled administrative hearing and the courts of law in the United States”.
Extending his hope that problem will be fixed as soon as possible Manochere Alamgir, who is now functioning as General Manager in HBL New York Branch, said that they have hired a new compliance staff and a third-party consultant to resolve the matter as per asked by the Federal Reserve authorities.
Examinations of HBL’s NY branch at the time “identified significant breakdowns” in the bank’s anti-money laundering compliance efforts but the nature of the breakdowns was unclear.
The amount of the fine is over the amount of profit the bank made in 2016. That bank continues to have a NY branch.
The move is being termed as an attack on Pakistan’s financial institutions after US President Donald Trump’s August 22 speech, in which he overlooked Pakistan’s sacrifices in war on terror and instead accused Pakistan of “sheltering terrorists”.