Pakistan’s Habib Bank has been ordered to shut down its New York operation by the local regulator and fined $225m over money laundering and terrorist financing charges.
The New York Department of Financial Services (DFS) accused the bank of carrying out transactions worth billions of dollars with Saudi Arabia’s Al Rajhi Bank –that is said to have al Qaeda links -without sufficient controls in place.
The bank was also accused of clearing at least $250m in transactions including those of potentially sanctioned persons and entities. It also cleared at least 13,000 transactions through the New York branch without the information required to screen for prohibited transactions or transactions with sanctioned countries, DFS said.
The bank, which is the largest in Pakistan, has now agreed to surrender its licence for the New York branch.
DFS superintendent Vullo said: “The bank has repeatedly been given more than sufficient opportunity to correct its glaring deficiencies, yet it has failed to do so. 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.
“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 U.S. soil and that DFS will still investigate the bank’s prior activities.”
The Pakistani lender unveiled plans to wind up its New York branch last month after DFS sought a fine of up to $630m for deficiencies in complying with anti-money laundering laws.