February 18, 2020 (MLN): The State Bank of Pakistan has imposed a penalty of Rs. 12.8 million on Habib Bank Limited, as a result of procedural violations on the latter’s part.
According to the details provided by SBP, the violations were made in the area of Customers’ Due Diligence (CDD) and Know Your Customer (KYC).
Back in December, SBP had imposed a monetary penalty worth Rs. 219.138 million on five banks due to violation of SBP’s rules and regulations.
It seems that Habib Bank has been experiencing quite rough phase, not just because of the constant penalties imposed by SBP, but also because of the various glitches has been embroiled in lately.
Earlier, the Bank had informed about its plan to close down its New York branch, that too voluntarily. The decision to wipe out operations in New York ensued after Department of Financial Services (DFS) accused Habib Bank of more than 53 counts of grave misconducts.
A detailed report released by DFS in this regard investigated serious deficiencies identified in the New York branch ranging from Anti Money Laundering (AML) compliance, including the Bank Secrecy Act (BSA) to terrorist financing.
Subsequently, the Bank reached a settlement with the New York State Department of Financial Services through a consent order under New York Banking Law, under which the former was asked to pay a hefty penalty of $225 Million.
Following the closure of the branch, which is expected to take place on or before March 31, 2020, HBL will no longer operate any bank branch in the United States.
In yet another shocking affair, the Middle East operations of the Bank got accused by a renowned media house of displaying “significant irregularities” in dealings with politically exposed clients and screening some transactions.
These claims were made on the basis of an inspection by the South Asian nation’s central bank that took place more than a year after the lender was shut out of the U.S. financial system.
However, HBL was quick to give a befitting reply to these claims, stating that “in 2017 few weaknesses were identified at HBL UAE which contravened its processes and standards. This should never have happened”.
“Over the last two years, we initiated a business transformation program which is now largely complete. A new senior leadership team is in place. We have transformed our control and compliance process to ensure that they are in line with international standards. All staff have undertaken additional training as a reminder of our robust compliance and control processes and their responsibilities”, it added.
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