NY regulator fines Habib Bank $225mn for compliance failures
- by Patty Hardy
- in Business
- — Sep 9, 2017
NY regulators said Habib facilitated billions of dollars of transactions with Saudi private bank, Al Rajhi Bank, which reportedly has links to al Qaeda, and failed to do enough to ensure that the funds were not laundered or used for terrorism.
"HBL shall vigorously contest this [order] in the scheduled administrative hearing and the courts of law in the United States", it added. In a legal filing, DFS has alleged that the bank has failed to work according to the rules in anti money laundering cases.
Habib Bank claimed on Thursday that the fine and the closure of its NY operations would have no impact on its businesses in other countries.
The New York Department of Financial Services (DFS) said on Thursday it had fined Habib Bank and its New York branch $225 million for failures to comply with laws and regulations created to combat illicit money transactions.
"HBL has received a notice in terms of which DFS seeks to impose and outrageous civil monetary penalty of up to $629.62 million", the statement added.
According to media reports, the Habib Bank facilitated billions of dollars in transactions with a Saudi private bank, the Al Rajhi Bank, which allegedly has had links to terrorist organisation al-Qaeda.
HBL disclosed it was in negotiations with the DFS last month and said the potential fine and closure of its NY branch would have no material impact on its business outside the United States.
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However, a 2016 inspection revealed that the bank had not endeavored to comply with U.S. regulations and particularly failed to properly screen at least 13,000 transactions flagged by its monitoring system.
HBL permitted at least 13,000 transactions that were not sufficiently screened to ensure they did not involve sanctioned countries, the agency said. The DFS press release suggests that all foreign transactions through the bank will be examined thoroughly.
Facing isolation on the issue of supporting terrorism, Pakistan, has on Thursday, faced another United States action against its flagship bank.
"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", Bloomberg quoted DFS Superintendent Maria Vullo as saying.
The bank had already agreed to surrender its licence to operate a branch in NY and unwind its operations there.
The bank had also announced that it would close its branch in NY after the United States financial regulator imposed a penalty of almost Dollars 630 million.
