Significant Irregularities found at Pakistan's top bank after US sanction

A West Asian operation of Pakistan’s largest bank displayed “significant irregularities” in dealings with politically exposed clients and screening some transactions, according to an inspection by the South Asian nation’s central bank that took place more than a year after the lender was shut out of the US financial system.
 
 The findings are contained in a State Bank of Pakistan report, finalised in the first half of 2019, on Habib Bank’s operations in the United Arab Emirates (UAE). The inspection was conducted after the Financial Action Task Force (FATF), a global watchdog for illicit financial activities, put Pakistan on its monitoring list.

 
FATF is due to review whether to downgrade Pakistan a step further, to its blacklist, at a meeting in Paris that starts on Sunday. That would have serious consequences for the nation’s economy and its bailout program with the International Monetary Fund.
 

FATF in some of Habib Bank’s UAE branches helped certain customers disguise transactions by issuing pay orders in their own names, while gaps in risk profiling and monitoring reflected an “ineffective compliance function and compliance culture,” the central bank said. In an earlier draft version of its inspection report, also seen by Bloomberg News, the central bank said UAE staff skirted rules when opening an account for Duduzane Zuma, the son of former South African President Jacob Zuma.

 
The critical nature of the findings, which haven’t previously been reported, offers further evidence of the sorts of weak controls FATF has been looking at more broadly in its assessment of Pakistan, though the central bank’s final inspection report also notes some remedial measures taken by the bank.