New York DFS fines HBL NY branch $225m

Karachi: The New York Department of Financial Services (DFS) said on Thursday that it had fined Habib Bank Limited (HBL) New York branch $ 225 million for its failures to comply with laws and regulations designed to combat illicit money transactions.

A notification sent to the Pakistan Stock Exchange by HBL on Friday morning is shared below:

The DFS said it had also imposed a surrender order imposing conditions for the orderly wind down of Habib Bank’s New York branch.

The country’s largest bank has agreed to an investigation of historical transactions processed by the New York branch as a condition of the order, the DFS added.

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The enforcement action was brought following a 2016 review during which the DFS said it 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 license, 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.

HBL is to close down New York branch after hefty fine by US government.

It had also identified instances of so-called “wire-stripping”, whereby a bank deliberately strips out information related to a payment, such as an originator or beneficiary, which may raise suspicions.

The bank had said operations outside the United States would not be affected and it would contest any fine. Dar said whatever happened, there would be no long-term effect.

“Our liquidity, profitability and strength are enough to take the bank forward,” he said.

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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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