US Imposes Heavy Penalty for NBP On Account of Non Compliant with Regulations

US central bank has imposed a heavy penalty for the National bank of Pakistan due to not complying with the anti-money laundering and terrorist financing regulations.

The NBP has been warned several times as per the statement issued by the Finance department of the US for complying with the regulations regarding money laundering but the bank remained silent to introduce relevant technology and infrastructure.

As per the statement of the US Financial Service Department, the wording of the penalty imposed on NBP is as under

“The National Bank of Pakistan allowed serious compliance deficiencies in its New York branch to persist for years despite repeated regulatory warnings. Foreign banks that enjoy the privilege of operating in New York have an obligation¬† to maintain effective controls, and the Department will continue to promote financial transparency and take action to protect the global financial system when those obligations are not met”

As a result, the NBP New York branch received a heavy penalty of $55 Million due to being non-compliant with US regulations of anti-money laundering. Although there was found no money laundering case for the NBP New York branch yet the matter was to comply with the regulations that is mandatory for any financial institution to comply if operating in the United States.

The total penalty on NBP in Rupees is Rs.9.7 Billion and the total profit of the bank for 2021 stands as Rs.25 Billion which means a big chunk of the profit of NBP goes to the penalty imposed by the US.

The same type of penalty was also faced by Habib Bank Ltd New York branch equal to $630 Million which was further reduced to $225 Million. As a result, HBL had to close its branch operations in New York City.

NBP is also facing a big pension liability case worth Rs.70 billion in the Supreme Court of Pakistan. NBP has filed a petition to review the judgment final verdict is still awaited.

Due to this reason, NBP has stopped the dividends payments since 2017.

Read More about this story in Dawn

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