HBL agrees to pay $225m fine after settlement with United States regulator

HBL agrees to pay $225m fine after settlement with United States regulator

The New York State Department of Financial Services (DFS) said in a statement that the Habib Bank had consistently failed to correct its "glaring deficiencies", and that the bank's misconduct will "no longer occur on U.S. soil".

"The bank has repeatedly been given more than sufficient opportunity to correct its glaring deficiencies, yet it has failed to do so", Financial Services Superintendent Maria Vullo said in the statement.

The bank was also ordered to surrender its license to operate in the state, effectively removing it from the USA financial system.

Habib Bank, which has operated in the United States since 1978, was ordered to tighten its oversight of potentially illegal transactions in 2006 but failed to comply.

The New York State Department of Financial Services on Thursday said Pakistan's Habib Bank had agreed to pay $225 million to settle an enforcement action brought against it for infringing laws created to combat illicit money transfers.

The order came after Habib Bank repeatedly failed to pay heed to concerns over possible terrorist financing and money laundering, officials were quoted as saying in an AFP report.

DFS said that this opens the way to financing activities and threatens the financial system as well as the American people. In 2006, the bank was ordered to stay alert on potentially illegal transactions.

The review showed HBL had failed to properly screen thousands of transactions and had processed payments for known criminals and sanctioned entities, among other failings.

"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.

It also showed that the bank used a "good guy" list - a list of customers regarded low risk - to rubber stamp at least US$250 million in transactions.

He also added that shutting down New York's branch will not adversely affect the overall balance sheet as it was an, "immaterial part of the balance sheet and profitability".

HBL had become the target of an enforcement action by DFS for 53 separate violations allegedly committed between 2007 and 2017.

Earlier, the bank facing a possible $630 million fine over compliance failures by its NY branch, admitted mistakes but denied any wrongdoing and said the penalty sought by USA regulators was disproportionate. The DFS press release suggests that all foreign transactions through the bank will be examined thoroughly.

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