US shuts down, fines Pakistan’s Habib Bank for terror financing and other charges
NEW YORK: In another jolt to Pakistan, the US has shut down the country’s largest lender Habib Bank’s operations here and slapped a fine of USD 225 million for its failure to comply with laws aimed to combat money laundering, terrorist financing, and other illicit financial transactions.
The action against the Karachi-based Habib Bank comes days after US President Donald Trump said Pakistan provided safe havens to terrorists attacking US and Afghan troops. US Secretary of State Rex Tillerson had also warned Pakistan that it could lose its status as a ‘major US ally’ and military aid suspended if it continued to back terror groups.
The US Department of Financial Services (DFS), a regulator of foreign banks in the country, said the decision follows a 2016 examination that found weaknesses in the bank’s risk management and compliance and the bank’s failure to undertake extensive remedial actions required by a 2015 consent order.
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“The 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,” said Financial Services Superintendent Maria T Vullo.
“The bank has repeatedly been given more than sufficient opportunity to correct its glaring deficiencies, yet it has failed to do so,” Vullo said.
She said the DFS will not 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 the country at risk.