United States ousts Pak's biggest bank over terror link concerns

New York branch of Pak bank allowed transactions by persons on US terror watch lists

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. The regulator has now ordered Habib Bank to pay $225 million (around Rs 1,400 crore) and surrender its license to operate in the state, Bloomberg reported. Habib has operated in the United States since 1978. Give Pak due credit, says China Meanwhile, China said on Friday that Pakistan has done its "best" to combat terrorism and "some countries" must give it full credit for that, days after Beijing backed the BRICS's declaration which named Pakistan-based terror groups like LeT and JeM for the first time.

Habib company secretary Nausheen Ahmad, in a letter to Pakistan Stock Exchange, in August, had called the initially proposed penalty of $ 626.6 million "outrageous" and "capricious". In 2006, the U.S. authorities had ordered the bank to tighten its oversight of potentially illegal transactions but it failed to comply.

DFS Superintendent Maria T Vullo emphasised that new consent order follows a 2016 DFS examination that found weaknesses in the bank's risk management and compliance and the bank's failure to undertake extensive remedial actions required by a 2015 consent order.

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.

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.


In another instance, the DFS reported that the Habib handled payments involving individuals wanted by USA authorities, including an individual suspected of cybercrime and a Chinese weapons manufacturer subject to USA sanctions.

The regulators also said the bank used a "good guy" list to stamp almost $250 million in transactions including the one from an identified terrorist and an global arms dealer, AFP reported.

Granted the request of a customer to cancel an instruction to send funds through the New York Branch to a person who was blocked from using the US financial system, so that the instruction could be resent by intentionally omitting the prohibited party's name.

The closure of the branch has no impact on the bank's business, he added, since it was an "immaterial part of the balance sheet and profitability". The DFS press release suggests that all foreign transactions through the bank will be examined thoroughly.

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