Washington, September 8: The United States in past few years has taken stringent action against Pakistan and as well as on those terrorist organizations which originated in Islamabad. However, looking at the threats, US ordered Pakistan's Habib Bank to shut down its operation in New York branch over financing terrorism and money laundering case.
The United States banking regulators ordered Habib Bank which is Pakistan's largest private bank to shut down its operations in New York branch over financing terrorism and money laundering case. The Habib bank is likely to exit the US market entirely over failures in its anti-money laundering programs.
Earlier, US banking regulators have imposed $225 million fine for repeatedly failing to heed concerns over possible terrorist financing and money laundering. Although fine of $225 million is much smaller than the $629.6million penalty initially proposed.
DFS Superintendent Maria Vullo in a news release on Thursday said, "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." "The bank has repeatedly been given more than sufficient opportunity to correct its glaring deficiencies, yet it has failed to do so," Vullo added.
Meanwhile, United States banking regulators also 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.
Interestingly, Habib has operated in the United States since 1978, and in 2006 was ordered to tighten its oversight of potentially illegal transactions but failed to comply. Earlier, in an August letter to the Pakistan Stock Exchange, Habib company secretary Nausheen Ahmad called the proposed fine of USD 629.6 million "outrageous" and "capricious" and said the bank had decided to close its New York operations "in an orderly manner."
Habib Bank repeatedly violated the terms of a 2006 agreement in which it promised to improve its internal controls, resulting in a 2015 order that called for the bank to hire an independent consultant to review its dollar-clearing activities, the regulator said. In a follow-up examination by DFS in 2016, Habib received the lowest rating.