Largest Pak bank to wind up operations in New York post USD 630m penalty

Pakistan's largest bank on Monday announced that it would close its branch in New York after the United States financial regulator imposed a penalty of nearly USD 630 million.

Formerly Habib Bank Limited and now referred to as HBL Pakistan, the bank was penalised by the New York State Department of Financial Services (DFS) for deficiencies in risk management and for not adhering to Bank Secrecy Act/Anti-Money Laundering compliance programmes since 2015, The Dawn has reported.

The bank has said that it will contest the DFS notice in court. The civil monetary penalty is to the tune of USD 629,625,000 read a letter filed by HBL to Pakistan Stock Exchange.

"Despite HBL's sincere and extensive remediation measures, DFS is still not appreciating... the significant progress that HBL has made at its branch in New York," read the letter filed by the bank.

"HBL shall vigorously contest this [order] in the scheduled administrative hearing and the courts of law in the United States," it added.

In December 2015 the US Federal Reserve had restricted HBL from conducting any dollar-clearing transactions or accepting any new accounts for US dollar.

The banking circle took the situation seriously and called it a bad omen for the country as well as the banking industry.

HBL Pakistan is headquartered in Karachi.