Parliamentary Secretary for Finance Rana Muhammad Afzal Friday informed the National Assembly that Habib Bank Limited was not involved in any money laundering and $225 million fine imposed on it in the United States was due to its mismanagement and ineligibility of the staff. He said this while responding to a question asked by Pakistan Peoples Party member Dr Nafisa Shah about the fine imposed on the bank in the United States.

The parliamentary secretary said that the government had also dispatched an inquiry committee to the United States to investigate the matter, and it found nothing illegal being done by the bank. He also categorically denied that the bank was involved in money laundering.

A fine of $225 million has been imposed by New York State Department of Financial Services on HBL New York Branch mainly on account of weaknesses noticed in risk management and compliance of Bank Secrecy Act/Anti Money Laundering and inadequate screening and due diligence of the transactions conducted by the customers of HBL New York Branch, he said.

Rana Afzal said that in continuation of State Bank of Pakistan''s supervisory strategy, the SBP engaged bank''s board of directors and the senior management through various meetings in which HBL was advised to assess and monitor the risks associated especially with overseas operations of the bank. The HBL was instructed to address and resolve issues in the areas of Risk Management, Compliance especially Anti Money Laundering and Combating the Financing of Terrorism, he said.

The secretary said that HBL was also advised to submit to SBP monthly updates from March, 2016 for compliance with the orders issued by US regulators. He said the HBL reported timely compliance with various requirements as laid down in the orders. Furthermore, the SBP engaged US regulators to have an insight into the supervisory concerns of US regulators. This regulatory action has caused financial and reputational loss for HBL, he said, adding the action may not have pecuniary impact on overall banking sector in Pakistan.

Nonetheless, it may cause some reputational risk for Pakistani banks having international presence that may result into close monitoring by respective host regulators, he said.

To another question, the House was informed that Pakistan''s net domestic debt increased from Rs 8.69 trillion in June 2013 to Rs 13.51 trillion in September 2017. During the same period, the country''s net external loan is $17.68 billion while it has repaid $18.32 billion out of $35.995 billion loans obtained from different sources including multilateral, bilateral, commercial, bonds and International Monetary Fund.

Copyright Business Recorder, 2017