Earlier in 2015, the only USA branch of Pakistan's largest bank Habib Bank Limited (HBL) had been slapped a strict enforcement order by United States Federal Reserve after significant breakdowns were identified in the branch's anti-money-laundering program which was found to be not in compliance with U.S. federal laws.
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. He advised Islamabad that "It's time for Pakistan to demonstrate its commitment to fight terror".
Habib, Pakistan's largest private bank, neglected to look out for compliance problems and red flags on transactions that potentially could have promoted terrorism, money laundering or other illicit ends, according to AFP.
The probe revealed that a "substantial number of parties were improperly included" on the list and that "at least $250 million in transactions have flowed through the New York Branch without any screening due to the apparent improper inclusion on the so-called "good guy" list".
In a review in 2016, the New York Department of Financial Services had found that Habib Bank did not adequately screen thousands of transactions, and processed payments for known criminals and entities on the sanctioned list.
The negotiations were failed with the USA regulators regarding the issue as the bank doesn't find any logic in penalising the branch 2006 onward, he added. But bank had failed to comply with the instructions.
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. Habib has also failed to do enough that the funds were not laundered or used for terrorism.
"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 DFS also slapped a $225 million penalty on the bank.
"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 USA soil and that DFS will still investigate the bank's prior activities", said the Superintendent of DFS. According to regulators, the bank has incorrectly approved transfers of $ 25 million, including terrorists and global arms dealers.
The United States would not allow Habib Bank to sneak out of US.
The DFS said a court hearing set for later this month had been canceled as part of the settlement.