HBL to face cases before NYDFS: Noman Karamat Dar CEO HBL

*Ready to pay penalty if HBL had committed wrong *Closure of NY branch will not affect overall financial businesses in Pakistan and other countries

Karachi:Habib Bank Ltd (HBL) can easily pay the fine imposed by the New York State Department of Financial Services (NYDFS) without hurting financial operations of the country and other foreign countries, said Noman Karamat Dar, Chief Executive Officer (CEO) and President of Habib Bank Ltd (HBL) in a crowded press conference here on Tuesday.

“We are in negotiation with the NYDFS and it may impose maximum penalty up to $630 million on HBL or it can also reduce this amount,” the CEO said. “NYDFS informed the bank about the detail of penalty on Friday evening and the bank informed about it on Monday’s morning to the stock market.

The NYDFS said it is seeking to fine HBL, Pakistan’s biggest lender, up to $630 million for “grave” compliance failures relating to anti-money laundering rules and sanctions at its only New York branch.

The case has been put on September 27, in which we will define the bank’s point of view before the NYDFS and we will try to minimize the civil penalty imposed by the DFS, the CEO claimed.

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If penalty imposed on the bank, it would be the largest-ever penalty faced by a Pakistani financial institution. “Our bank did not commit any such big crime of which such a huge penalty has been imposed. It is just minor regulatory mistakes,” the CEO claimed. Therefore, the bank has decided to face the case in New York Department of Financial Services or any other court of law in US, he added.

Giving the position of the HBL, the CEO said, “we are a profitable and largest bank of the country, therefore — would not be the impact of such penalty in Pakistan or the share holders.”

“Already we are making our banking -transactions or remittances to Pakistan and others countries with other foreign banking channels,” the CEO claimed.

“Karachi-listed HBL decided to surrender the New York branch license and DFS have given us 30-day times to finalize and review the documentations process.

Mr Dar said the New York DFS is a sole regulator of the financial institutions in New York and it found “HBL’s compliance was “dangerously weak” and posing “grave risks” for them. He informed that DFS are calculating transactions from 2007 to 2015, and there are few suspicious transactions only.

He further claimed that our branch in New York was very small and we have no depositors’ accounts there. “HBL NY branch was a clearing branch and making transactions of remittances and other related payments to Pakistan and other parts of the world.  For last two-year, we had already handed over such remittances payments to other foreign banks to avoid further legal matters.

The CEO further said after the announcement of penalties by NYDFS on HBL, we have informed the State Bank of Pakistan first and it had said, “the potential fine posed no imminent risks to HBL or the country’s banking system.” The closure of its New York operation would have no material impact on HBL’s business outside the United States, SBP claimed.

The CEO while replying a question accepted that the HBL New York branch was making transactions of Saudi’s largest private bank Al Rajhi and our central bank and the Board of Directors knew about it and said the bank was making legal transactions of remittances of Pakistani people in US and other world but when USDFS informed HBL about irregularities in transactions so we discontinued such transactions of Bank Al Rajhi July 10, 2017.

HBL has struggled to comply with the agreement sign with NYDFS in May 2016, the CEO said but NYDFS claimed noting a 2015 inspection identified ‘serious deficiencies’ in the bank’s anti-money laundering controls.

HBL, majority-owned by the Pakistani government, subsequently agreed to introduce a range of measures to guard against money laundering and sanctions violations, including improving management oversight, tightening customer due diligence and suspicious transaction monitoring.




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Arshad Hussain
The author is business reporter at Pakistan Today. He can be reached at [email protected] He tweets @ArshadH47736937
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