US probing HBL for alleged terror financing

• Habib Bank Limited (HBL) has been under investigation for allegedly providing financial support to the terrorist organisations.
• The bank said the allegations in the complaints are meritless and it is contesting them fully and vigorously.
• HBL Bank and HBL’s New York branch were previously implicated in money laundering and terrorist financing back in 2017.

KARACHI: Habib Bank Limited (HBL) has been under probe again in the United States for allegedly providing financial support to the terrorist organisations.

As per the Justice Against Sponsors of Terrorism Act (JASTA), HBL Bank has repeated misconduct and revealed a pattern of funding terrorism at various occasions in the last decade as of 2006.

Plaintiffs in these consolidated cases are 370 individuals who were injured or whose family members were injured or killed in terrorist attacks, who brought this action against HBL under the Anti-Terrorism Act (ATA), as amended by the JASTA.

In its clarification, the bank said the allegations in the complaints are meritless, and HBL is contesting them fully and vigorously.

The public record is clear that HBL is unwavering in its commitment to combating the financing of terrorism, which has been well documented — its extensive global implementation of anti-money laundering compliance controls has been highly successful and lauded by regulators around the world, it added.

HBL’s motion was successful in two respects. The court dismissed the primary liability claim and narrowed the case substantially.

The court also stated secondary liabilities will be evaluated following the due legal proceedings and no judgement was passed by the court on this matter, the statement noted.

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The parties are expected to meet on October 19, 2022 to file a proposed civil case management plan and scheduling order.

HBL proactively initiated a business transformation programme, in early 2018, around its control and compliance processes and systems to adhere to international standards.

HBL has made investments in management time and resources to strengthen its anti-money laundering (AML) and combating the financing of terrorism (CFT) protocols by partnering with global experts in this field.

HBL Bank and HBL’s New York branch were previously implicated in money laundering and terrorist financing back in 2017.

The bank was penalised $225 million and lost its New York banking licence for non-compliance with and violation of New York’s state laws and regulations.

The bank recognised a penalty of Rs23.72 billion in 2017 that wiped majority of the bank’s profits.

To recall, HBL’s Common Equity Tier-1 and Tier-1 CAR deteriorated to 12.1 per cent each in 2017, compared with 13.1 per cent in 2015.

HBL has one of the lowest Credit Adequacy Ratio (CAR) in the banking industry.

As per June 2022 accounts, the Tier-1 and Common Equity Tier-1 CAR stands at 11.39 per cent and 10.69 per cent, respectively against the requirement of 11.0 per cent and 9.5 per cent.

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