Anti-money laundering violations: US slaps Rs9.69 bn fine on Pakistan state-run bank

ISLAMABAD: The US’s Federal Reserve Board on Thursday announced a $55 million (Rs9.69 billion) penalty against the National Bank of Pakistan, operating in the United States and headquartered in Pakistan, for anti-money laundering violations. The Board will also require the firm to improve its anti-money laundering programme.

It is the second Pakistani bank which had come under scrutiny. It was announced when the Financial Action Task Force (FATF) was evaluating Pakistan’s compliance on money laundering and counter-terror financing in its ongoing plenary meeting in Paris.

According to the announcement, as detailed in the consent cease and desist order against the National Bank of Pakistan, the firm’s US banking operations did not maintain an effective risk management programme or controls sufficient to comply with anti-money laundering laws. The Board’s action is in conjunction with an action by the New York State Department of Financial Services.

In its detailed version, the Federal Reserve Board stated that within 60 days of this order, the bank and the branch shall jointly submit a written programme acceptable to the Reserve Bank and reasonably designed to ensure the identification and timely, accurate, and complete reporting by the branch of all known or suspected violations of law or suspicious transactions to the law enforcement and supervisory authorities, as required by applicable suspicious activity reporting laws and regulations.

In addition, the programme shall include the items, such as a well-documented methodology for establishing monitoring rules and thresholds appropriate for the branch’s risk profile, which considers factors, such as type of customer, type of product or service, geographic location, and foreign correspondent banking activities, including the US dollar clearing activities and policies and procedures for analysing, testing, and documenting changes to monitoring rules and thresholds. This reporter tried to get a version from the NBP but got no response.