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US ORDERS BANK TO CLOSE OVER MONEY LAUNDERING AND TERRORIST FINANCING

13 September 2017

US banking regulators have ordered Pakistan's Habib Bank to close its New York office after it failed to heed concerns over possible terrorist financing and money laundering.

New York banking officials have said that Habib, Pakistan's largest private bank, failed to watch for compliance problems and potentially suspicious transactions. The state's Department of Financial Services, which regulates foreign banks, has also fined Habib $225 million.

Habib has operated in the United States since 1978. In 2006, it was ordered to tighten its oversight of potentially illegal transactions but failed to comply.

New York regulators said Habib facilitated billions of dollars of transactions with Saudi private bank, Al Rajhi Bank, which reportedly has links to al Qaeda. They also accuse Habib of not doing enough to ensure that the funds were not laundered or used for terrorism.

Regulators say that Habib permitted at least 13,000 transactions that were not sufficiently screened and rubber stamped transactions made by an identified terrorist and an international arms dealer.

Aziz Rahman, founder of Rahman Ravelli, said Habib’s problems stem from initial failings to heed the warning signs.

He added: “If there is the slightest suggestion of wrongdoing in any transactions, a bank has to look into it thoroughly. It needs to have procedures in place to both ensure the concerns can be reported and that they are properly investigated.

“Failing to keep a close eye on the money flowing in and out of a bank is a guaranteed way to face legal problems. Any financial institution has to make sure its compliance procedures are appropriate and properly executed – and if they are not sure how to do this, then they must seek expert help.

“The alternative, as Habib has discovered, is not a pleasant one.’’

Read our article: MAKING SURE YOU DO ENOUGH TO PREVENT MONEY LAUNDERING


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