Banking & Finance

Penalties imposed: HBL faces sorry state of affairs in country and abroad

Aftab Ahmed

Islamabad: Under financial tightening of FATF, State Bank of Pakistan (SBP) has penalized Habib Bank Ltd (HBL) Rs 204 million for procedural violations while observing its Mar-June 2020 monitoring report, reads an official document of the SBP.

It is interesting to mention that SBP—regulator of all scheduled banks in Pakistan—has imposed a monetary penalty worth Rs. 219.138 million on five banks due to violation of SBP’s rules and regulations in Dec 2019.

Offsite supervision & Enforcement Department of SBP further said, “HBL has been found in procedural violation in the area of Customers Due Diligence (CDD) and Know Your Customers (KYC)”.

In addition to penal action, SBP further said, “HBL has been advised to strengthen its processes related to CDD/KYC to avoid recurrence of such violations in future.”

The SBP in its Feb 2020 order has also imposed a penalty of Rs 12.8 million on Habib Bank Limited (HBL) for procedural violations for failing to provide the details in the area of Customers’ Due Diligence (CDD) and Know Your Customer (KYC).

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.

Following the closure of the branch, which was expected to take place on or before March 31, 2020, HBL would  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.

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