Pakistan’s Habib Bank has had its New York office shut down by United States banking regulators after nearly 40 years, for apparently repeatedly failing to heed concerns over possible terrorist financing and money laundering.
New York banking officials said Pakistan’s largest private banking organization neglected to watch for compliance problems and red flags on transactions that potentially could have promoted terrorism, money laundering or other illicit ends.
A $225 million fine was also issued by New York’s Department of Financial Services, (DFS) responsible for regulating foreign banks.
The office had been in operation since 1978. In 2006, Habib bank was ordered to tighten its oversight of potentially illegal transactions but failed to comply.
According to officials, the company facilitated billions of dollars of transactions with Saudi bank, Al-Rajhi Bank, which is reported to have links with terrorist group Al-Qaeda.
Habib bank, after numerous requests, failed to do enough to ensure that the funds were not laundered or used for terrorism.
DFS Superintendent Maria Vullo said in a news release, “DFS will not tolerate inadequate risk and compliance functions that open the door to the financing of terrorist activities that pose a grave threat to the people of this State and the financial system as a whole.”
“The bank has repeatedly been given more than sufficient opportunity to correct its glaring deficiencies, yet it has failed to do so.”
The agency said the bank permitted at least 13,000 transactions that were not sufficiently screened to ensure they did not involve sanctioned countries.
Regulators said the company waved through at least $250m in transactions with no screening at all through a “good guy” list — a group of customers who supposedly presented a very low risk of illicit transactions.
“DFS will not stand by and let Habib Bank sneak out of the United States without holding it accountable for putting the integrity of the financial services industry and the safety of our nation at risk,” added Vullo.
