Major blow to Pak over 'terror funding' accusations, banks under international scrutiny
Islamabad (Pakistan), March 14: Pakistan has suffered a huge setback as two US banking regulators penalised the National Bank of Pakistan over USD 50 million for failing to comply with anti-money laundering laws, according to Policy Research Group (POREG), a think tank.
The Pakistani bank, which operates as a foreign bank in the United States, was fined USD 20.4 million by the US Federal Reserve Board on February 24 this year. The New York State Department of Financial Services slapped the bank with an additional USD 35 million penalties in respect to investigations conducted in 2014 and 2015.
According to the think tank, the penalty was imposed by the Board for Pakistan's continued violation of international norms and regulations despite numerous warnings from various organisations, and the Board has mandated the bank to set up an acceptable suspicious activity monitoring and reporting mechanism.
Furthermore, the Pakistani bank failed to meet mandatory oversight requirements and had severe issues with its transaction monitoring system, according to investigations conducted by the New York Department of Financial Services.
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Nevertheless, the think tank noted that this is not the first time Pakistani banks have come under international scrutiny for violating anti-money laundering laws.
"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," stated the think tank, citing several such examples.
The Financial Action Task Force (FATF), a global anti-terrorist body that has retained Pakistan on its grey list, has repeatedly threatened to escalate the sanction to the blacklist if the country continues to violate anti-money laundering laws.
However, Pakistan's repeated blatant violations of international banking norms have raised serious reservations about the country's commitment to combat terrorist financing.
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-PTC News
