Habib Bank’s Middle East operations had “significant irregularities” in dealings with politically exposed clients and screening some transactions during 2011 to 2017.
This was flagged and identified by the State Bank of Pakistan during an inspection.
The findings are contained in a State Bank of Pakistan’s report, finalized in early 2019, on Habib Bank Ltd’s operations in the United Arab Emirates, said Bloomberg in a report published yesterday.
The draft report on the U.A.E. operations of Habib Bank was prepared after an on-site inspection by the central bank, said Bloomberg. It includes lists of customer accounts that were flagged for alleged involvement of HBL staff in various violations.
SBP said that the employees in some Habib Bank branches in the U.A.E. helped certain customers disguise transactions by issuing pay orders in their own names. The gaps in risk profiling and monitoring reflected an “ineffective compliance function”, added the SBP.
The inspection report also said the U.A.E. operation provided banking services to “politically exposed persons” without marking them as PEPs.
HBL, after the irregularities surfaced, fixed the flaws and fired the compromised people, the report said.
Habib Bank’s Official Response
In a written reply to Bloomberg’s story, Habib Bank stated that,
In 2017, a few weaknesses were identified at HBL UAE which contravened our processes and standards. The bank responded back by saying that this should never have happened.
Over the last two years, we initiated a business transformation program which is now largely complete. A new senior leadership team is in place.
We have transformed our control and compliance process to ensure that they are in line with international standards. All staff have undertaken additional training as a reminder of our robust compliance and control processes and their responsibilities.