On Thursday, the New York Department of Financial Services (DFS) said it had fined Habib Bank and its New York branch $225 million for failing to comply with laws and regulations designed to combat illicit money transactions.
The regulator said it had also imposed a surrender order imposing conditions for the orderly wind-down of Habib Bank’s New York branch.
The DFS added that the country’s largest bank has agreed to investigate historical transactions processed by the New York branch as a condition of the order.
The enforcement action was brought following a 2016 review during which the DFS found “weaknesses in the bank’s risk management and compliance.”
Earlier, Habib Bank Ltd, facing a possible $630 million fine over compliance failures by its New York branch, admitted mistakes but denied any wrongdoing and said the penalty sought by US regulators was disproportionate.
“There is no specific wrongdoing,” HBL Chief Executive Noman Karamat Dar had told a press briefing in Islamabad. “Yes there are mistakes, but we are saying that the fine for these mistakes is disproportionate.”
HBL, which has announced it plans to surrender its US banking licence, has been embroiled in accusations over money-laundering compliance failures by its New York operation for more than a decade.
The DFS, which has pursued several aggressive enforcement actions against foreign banks, had said HBL’s compliance systems were “dangerously weak” and “serious and persistent failings” at its New York unit appeared to affect the entire enterprise.
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.
It had also identified instances of so-called “wire-stripping”, whereby a bank deliberately strips out information related to a payment, such as the originator or beneficiary, that may raise suspicions.
The bank had said operations outside the United States would not be affected and that it would contest any fine. Dar said whatever happened would have no long-term effect.
“Our liquidity, profitability and strength are enough to take the bank forward,” he said.
Until April 2015, Pakistan’s government held a 42.5 per cent stake in HBL, the country’s oldest bank. But it sold its shares as part of a privatisation drive, bringing in more than $1 billion. The DFS, however, still lists HBL as majority-owned by the government. (Reuters)
 said it had fined Habib Bank and its New York branch $225 million for failing to comply with laws and regulations designed to combat illicit money transactions.){kind=link}