Pakistan which is in serious economic turmoil has suffered another reversal when two US entities imposed fines worth $55 million on the National Bank of Pakistan (NBP) and its New York branch.
This fine that has been imposed comes just hours after Pakistan Prime Minister Imran Khan met Russian President Vladimir Putin in Kremlin on Thursday (February 24) amidst the ongoing “special military operation” by Russia into eastern Ukraine.
The US Federal Reserve which is the central bank and Superintendent of Financial Services of the state of New York imposed fines on the central bank of Pakistan over deficiencies and non-compliance with US federal laws.
The Federal Reserve has now imposed a $20.4 million fine, and the New York State Department of Financial Services has asked NBP to pay $35 million after it found “significant deficiencies” in the NBP branch’s “risk management and compliance with federal laws, rules, and regulations”.
As per the US Federal Reserve’s order, the deficiencies were related to anti-money laundering (AML) compliance and the Bank Secrecy Act (BSA) of the US
The fine has been imposed after an investigation carried was out on March 4, 2021, that said that NBP had entered into a written agreement with the authorities on March 16, 2016, to correct the “deficiencies”, however, a recent investigation found that NBP had failed to “achieve full compliance with each and every provision of the written agreement”.
The order also states, Pakistan’s NBP failed to comply with the US laws and the central bank of Pakistan and the Federal Reserve had “mutually agreed to enter into this Cease and Desist Order and Order of Assessment of a Civil Money Penalty.”
NYDFS Superintendent Adrienne A Harris in a press release said, “The NBP allowed serious compliance deficiencies in its NY branch to persist for years despite repeated regulatory warnings,”.
The press release also reveals that the branch’s senior management was unwilling or unable to promote a culture of compliance and has failed to adequately supervise the branch by allowing problems to worsen year after year.
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