Pakistani Bank Fined $630 Million for AML Violations

In August, Habib Bank Ltd (HBL), was fined a record $630 million for a Pakistani financial institution by the New York State Department of Financial Services (DFS) for noncompliance with state and federal anti-money laundering (AML) laws at its U.S. branch.  However, DFS said that, for infringing laws designed to fight illegal money transfers, HBL will pay $225 million as part of a settlement agreement.

It was found that HBL failed to properly screen thousands of transactions and, as a result, facilitated payments for known criminals and sanctioned entities including billions of dollars through at least 13,000 transactions with a Saudi bank that reportedly has links to al Qaeda.

Along with agreeing to pay just over a third of the original sum and closing its New York City branch for failing to comply with New York’s anti-terrorism and AML laws, HBL must submit all of its transactions from periods dating back to October 2013 to a DFS investigation. 

HBL was given ample opportunities to correct weaknesses and deficiencies in its compliance program that allowed for these AML violations but failed to do so.  DFS said they will not standby and let HBL leave the US without holding it accountable for its negligence, putting the financial services industry and the nation’s safety at risk.

HBL stated it is “committed to strengthening its compliance processes, operations and controls” throughout their 1,700 branches.  As part of the settlement agreement, a court hearing scheduled for later this month has been canceled, and the DFS investigation will determine if further enforcement action is taken depending on its findings.

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