The Central Bank of UAE (CBAUE) declared on Wednesday, February 19, 2020, that the regulator would conduct an investigation against Pakistan’s largest bank, Habib Bank Ltd. (HBL) over the mismanagement of financial resources. The regulator is examining to ascertain whether the bank had violated anti-money laundering and terrorism-financing laws set by the global financial watchdog.
An investigation against Pakistani Bank
The regulatory inquiry is launched under the guidance of a Paris unit of the Financial Action Task Force (FATF), a global financial watchdog, concerning the issues about the bank’s inadequately complying with global regulations on money laundering and terrorism financing.
With the investigation, the FATF would decide this week whether to put Pakistan on a list of countries on non-compliant with global financial regulations, which would have significant consequences including financial sanctions.
A CBAUE’s spokeswoman told Reuters that it was confirmed about the regulator’s inquiry to Pakistani bank. The bank, which is largely owned by the Aga Khan Fund for Economic Development and Pakistan government, had total assets of 3.1 trillion Pakistani rupees ($20.1 billion) at the end of September 2019. The spokeswoman said in a statement on Wednesday that it was in “close contact” with Pakistan’s banking regulator to ascertain financial irregularities by the Pakistani bank in UAE.
The UAE banking regulator said in a statement, the authority “will take appropriate regulatory action once we have verified the findings reported in the media to confirm if there was any violation of UAE’s Anti-Money Laundering and Combat of Financing of Terrorism (AML/CFT) laws and procedures.”
Previous HBL Cases
In a report last week, Bloomberg reported that Pakistan’s banking regulator had found financial irregularities in HBL’s UAE operations and exposed clients who were involved in illicit dealings.
HBL officials admitted its “few weaknesses” that happened in 2017 in its UAE operations that violated the financial processes and standards. Responding to the issues, HBL released a statement saying, “We have transformed our control and compliance process to ensure that they are in line with international standards.”
In 2017, HBL had paid a heavy fine when the New York State Department of Financial Services found the involvement of the bank for “grave” compliance failures on anti-money laundering and sanctions rules. As a settlement of the action, the bank agreed to pay $225 million out of the total fine of $630 million imposed by the regulators.
Following the latest news, Pakistan Stock Exchange said it would complete a “voluntary closure” of the bank’s operations in the US complying with the New York State banking regulator on or before March 31, 2020. Meanwhile, the State Bank of Pakistan, the country’s banking regulator, did not immediately respond to queries by Reuters.
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