US tightening screws on Pak banks over terror funding
Mar 08, 2022
Islamabad [Pakistan], March 8 : After the Paris-based Financial Action Task Force (FATF) retained Pakistan on its"grey list", the US is tightening screws on Pakistan financially for terror funding.
Policy research group Poreg said that the US has fined two of Pakistan's major banking regulators the National Bank of Pakistan over USD 50 million for not complying with anti-money laundering laws.
The move has come as a major blow to Pakistan which has been trying for the last few years to wriggle out of growing accusations of keeping its banking laws lax to help terrorist groups to move funds.
Pakistan's lame-duck efforts would be called out with the US Federal Reserve Board coming out heavily against the National Bank of Pakistan for anti-money laundering violations. The Pakistani bank which operates in the US as a foreign bank has been slapped with a penalty of USD 20.4 million on February 24 this year, reported Poreg.
The New York Department of Financial Services, in its investigations, found that the Pakistani bank had failed to meet mandated oversight requirements and had serious issues with its transaction monitoring system.
This is not the first time that Pakistani banks have come under close international scrutiny for anti-money laundering 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 most severe penalty imposed by the New York Department of Financial Services on any bank in its history.
In 2019, South Africa's central bank sanctioned Durban-headquartered HBZ Bank, with roots in Pakistan, for violating the country's Money Laundering and Terrorist Financing Control Regulations, reported Poreg.
In 2020, six Pakistani banks were found to be involved in money laundering in 29 suspicious transactions of close to USD 2.5 million. The banks named in the investigation by the International Consortium of Investigative Journalists are Allied Bank, United Bank (UBL), Habib Metropolitan Bank, Bank Alfalah, Standard Chartered Bank Pakistan, and Habib Bank (HBL). These suspicious transactions took place in 2011 and 2012.
In February 2020, the UAE central bank launched an investigation into Pakistan's largest bank, Habib Bank Ltd, for possible violation of anti-money laundering and terrorism-financing laws.
These gross violations of international banking norms have raised serious doubts about Pakistan's intentions and capability to rein in terrorist financing.
