Pakistan, which has been trying to elude accusations for keeping banking laws lax to help terrorist groups move funds, has suffered a major blow after two US banking regulators fined the National Bank of Pakistan over USD 50 million for not complying with anti-money laundering laws, said a think tank, Policy Research Group (POREG).
The Pakistani bank, which operates in the US as a foreign bank, was slapped with a penalty of USD 20.4 million on February 24 this year by the US Federal Reserve Board. In another blow to the bank, the New York State Department of Financial Services imposed an additional penalty of USD 35 million on the bank in relation to investigations carried out in 2014 and 2015.
Notably, the penalty was imposed by the Board for Pakistan’s continuous violation of international norms and regulations despite several warnings from different organizations, reported the think tank, adding that the Board has mandated the bank to set up an acceptable suspicious activity monitoring and reporting mechanism.
Further, in the investigations conducted by the New York Department of Financial Services, it was found that the Pakistani bank had failed to meet mandated oversight requirements and had serious issues with its transaction monitoring system.
However, citing previous examples the think tank reported that this is not the first time that Pakistani banks have come under international scrutiny for anti-money laundering laws violations.
“In 2007, Habib Bank was sued by the widow of assassinated US journalist Daniel Pearl for running the financial pipeline for al Qaeda and other terrorist groups. In 2017, the Habib Bank Limited (HBL) of Pakistan was forced to close its New York Branch,” the think tank reported citing several such examples.
Notably, the global anti-terrorist watchdog, Financial Action Task Force (FATF), which has retained Pakistan on its grey list, has time and again threatened to raise the sanction to the blacklist if Pakistan continues its laxity in anti-money laundering laws.
However, continuous gross violations of international banking norms have raised serious concerns regarding Pakistan’s intentions to rein in terrorist financing.