The Habib Bank Limited has announced to close its operations, the HBL New York branch has decided to shut down due to huge penalty of nearly $630 million on the bank from state’s financial regulator.
A notice was sent by New York State Department of Financial Services (DFS) to HBL New York about the monetary penalty imposed of $629,625,000. HBL has decided to contest against it in US courts.
The case goes back to 2015, when US authorities decided to go against bank after their findings f deficiencies in risk management and Bank Secrecy Act/Anti-Money Laundering compliance programme at HBL’s New York Branch.
HBL mentioned in the filed letter that they did take extensive measures and DFS still did not acknowledge significant progress that HBL New York branch made.
The US Federal Reserve had lined HBL from conducting any dollar-clearing transactions or accepting any new accounts for US dollar clearing in December, 2015. However, HBL had clarified at the time that it maintains its US license and would continue to provide services as usual.
The HBL had said that during an examination, the US regulators found deficiencies in the risk management and BSA/AML compliance programme at HBL’s New York branch and, subsequently, escalated the enforcement actions from the “written agreement” to a “consent order” in the case of New York State Department of Financial Services and a “cease and desist order” in the case of Federal Reserve Bank of New York.
The orders from New York State Department of Financial Services said that there were certain additional requirements to remediate on the branch and once met and shared mechanisms of enforcement the branch could function.
The banking circle took the situation seriously and called it a bad omen for the country as well as the banking industry.