NBP President Arif Usmani claimed the improvement in his bank after the imposition of a penalty of $55 million for the “historical compliance program weaknesses and delays in making compliance-related enhancements.” Under new management, NBP sorted out all loopholes regarding required conditions. Usmani’s letter to the general manager of the Pakistan Stock Exchange delivered the message about the lack of illegal transactions and misconduct. All the transactions were legal and followed the bank rules and regulations.
The US Federal Reserve Bank imposed a penalty of $20.4 million against the violations of the anti-money laundering process. The US bank stressed the NBP for improving the Anti-money laundering steps to stop the illegal practice. The bank could not maintain a risk management program and anti-money laundering laws. The New York State Department of Financial Services also imposed a fine of $35 million due to repeated compliance failures that contributed to a total fine of $55 million. NBP and its New York Branch decided to pay the fine imposed by the regulating organization. The NY branch of NBP ignored the warnings of compliance deficiencies for years by the US bank. NBP President claimed the improvement in the NY branch after the new management.
US authorities also observed the improvement in the bank after the new management control to fulfill the department’s regulations. The shares of NBP saw a decline of 7.2% on Friday. The government holds the major chunk of NBP shares in the market. Government has 75.2 percent of the total shares of the largest commercial bank, NBP. Financial Action Task Force placed Pakistan on the grey list after failing to take steps in anti-money laundering and counter-terror financing in 2018.
“We don’t foresee the significant impact of this penalty on FATF review; however, Pakistan is expected to remain in the grey list of FATF,” Tahir Abbas, head of research at Arif Habib Limited, said.
Settlement with NYDFS
New York State Department of Financial Services (NYDFS) issued the report about the settlement, which would demand NBP create a written plan for all measures required to Anti-money laundering. The bank will require the evaluation of the processes through a third-party consultant to review the monitoring of the bank for all transactions enabling the bank for membership. NYDFS praised the bank for its cooperation in investigation and structuring the bank for improvement.
The central bank SBP had also fined them Rs 280 million for irregularities in the NBP related to anti-money laundering measures. Last year, SBP imposed a penalty regarding AML, Asset Quality, Foreign Exchange, and General Banking Operations (GBO).
Pakistan moved to bring reforms in banking related to illegal transactions to block money laundering and counter-terror financing. FATF found so many irregularities even after the placing of Pakistan on the Gray-list. If Pakistan reform fails to comply with FATF conditions, the international body will shift Islamabad from gray to black.
Source:
https://www.dawn.com/news/1676998
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