ISLAMABAD: The State Bank of Pakistan (SBP) is holding an inquiry into the circumstances surrounding the $225 million penalty imposed on Habib Bank Ltd’s (HBL) branch in New York City, the National Assembly was told on Tuesday.
Responding to a calling attention notice, Parliamentary Secretary for Finance Rana Mohammad Afzal Khan told the lower house that the committee tasked with fixing responsibility in the matter, headed by the deputy governor of the central bank, would submit its report within two or three weeks.
The parliamentary secretary also said that the HBL board of directors was holding its own inquiry into the matter. “We have to protect our business interests, and when a foreign regulator takes action against a Pakistani enterprise, [the government] must ensure that there are no excesses committed against us. If the defects in our compliance, which the regulator pointed out, had been removed in the first place, perhaps they might not have been able to punish [HBL] in this way,” he said.
“Whenever a Pakistani organisation is penalised abroad, it is a source of embarrassment to us. We have also strengthened the monitoring and compliance of the 142 branches of local banks that are operating abroad so that such an incident is not repeated,” he said.
“The New York Department of Financial Services (DFS) was initially seeking a penalty of around $600m, which was subsequently reduced to $225m. We are extending discreet support to [HBL], our embassy has done a good job in this regard,” he said.
He said the DFS had penalised the HBL branch for not complying with its rules regarding risk management and anti-money laundering, adding that HBL had settled the penalty by agreeing to pay $225m fine.
“There will be no negative impact on Pakistani deposits with the branch’s closure,” he remarked.
Published in Dawn, September 20th, 2017