NEW YORK, Dec 17 (Reuters) - A major Pakistani bank and its New York branch must boost measures to prevent money laundering after regulators found “significant breakdowns” in the bank’s compliance with federal and state laws, New York’s financial regulator said on Thursday.
Habib Bank Ltd in Karachi and the New York branch must put a series of reforms in place, including hiring an outside professional to review the bank’s policies for preventing illicit money transfers and submitting plans to regulators for enhancing those policies, the New York Department of Financial Services (NYDFS) said.
Habib’s New York branch is in the process of addressing the regulators’ concerns and “will be taking several steps to remediate the issues,” said Manochere Alamgir, branch general manager.
Federal and state laws require financial institutions to have policies and procedures in place to detect and prevent illicit money transfers. The measures include everything from screening customers and reporting suspicious transactions to regulators.
On Dec. 1, New York Governor Andrew Cuomo proposed rigorous new regulations for banks in New York State to prevent money laundering and the financing of terrorist groups.
Cuomo’s proposed regulations would, among other things, require a bank’s chief compliance officer to certify whether a bank maintains the types of systems outlined in the rule to detect and prevent illicit money transfers.
The most recent examination of Habib’s New York branch by NYDFS and the U.S. Federal Reserve Bank of New York “identified significant breakdowns” in the bank’s anti-money laundering compliance efforts, the NYDFS said. The nature of those breakdowns is unclear.
The reforms, which Habib Bank agreed to in a settlement, also follow a NYDFS finding that Habib did not fully comply with a 2006 agreement with New York banking regulators and the Federal Reserve for shoring up the bank’s anti-money-laundering programs, the NYDFS said.
Habib will also need NYDFS permission to accept new foreign correspondent bank accounts and new customer accounts for clearing transactions in U.S. dollars, NYDFS said. (Editing by Matthew Lewis)