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National Bank of Pakistan fined $55 mln by US regulators

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National Bank of Pakistan (NBP) said on Friday it had reached an agreement with US regulators to pay $55 million in fines imposed on its New York branch, triggering a more than 7 percent drop in its shares.

The Federal Reserve Board and Federal Reserve Bank of New York, and the New York State Department of Financial Services (NYDFS) announced on Thursday NBP's New York Branch would be fined up to $55.4 million for non-compliance and anti-money laundering violations.

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In notice to the Pakistan Stock Exchange (PSX) on Friday, NBP said it has reached an agreement with US regulators.

“The agreement includes fines totaling $55.4 million focused on historical compliance program weaknesses and delays in making compliance-related enhancements,” the notice said.

The bank’s shares were down 7.2 percent by the Friday prayers break in the trading session.

It added there were no findings of improper transactions or willful misconduct, the New York branch is under new management since May 2020 and that NBP has substantially enhanced its compliance program, which it said had been recognized by US regulators.

The Pakistani state owns 75.20 percent of NBP, one of the largest commercial banks in the country.

Global anti-money laundering watchdog, the Financial Action Task Force (FATF), has placed Pakistan on its ‘grey list’ for deficiencies in its counter-terror financing and anti-money laundering regimes since June 2018.

“We don’t foresee significant impact of this penalty on FATF review, however, Pakistan is expected to remain in the grey list of FATF,” Tahir Abbas, head of research at Arif Habib Limited told Reuters.

Pakistan’s largest bank, HBL, also faced a similar fine in 2017, where US regulators initially imposed a penalty of $630 million for non-compliance of anti-money laundering laws, which was later revised down to $225 million.

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