A reason why Pakistan is still on FATF grey list

[HAIDER]

HBL faces liability in terror financing case in US, bank says will ‘vigorously’ contest allegations​

Dawn.com Published September 29, 2022 Updated about 3 hours ago




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Pakistan’s largest bank, Habib Bank Limited (HBL), faces secondary liabilities in a terror financing case in the United States in which the plaintiffs had alleged the bank aided and abetted al-Qaeda terrorism and joined in a conspiracy to launch attacks that killed or injured 370 people in Afghanistan between 2010 and 2019.
The bank faces the liabilities under the Justice Against Sponsors of Terrorism Act as a party that “aids and abets, by knowingly providing substantial assistance, or who conspires with the person who committed such an act of international terrorism”, according to a New York district court order issued on September 28.
However, in a statement issued today, HBL said the allegations were “meritless”, adding that the bank was contesting them fully and vigorously.
“The public record is clear that HBL is unwavering in its commitment to combating the financing of terrorism, and — as 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,” the statement read.
According to the court order, a copy of which is available with Dawn.com, the plaintiffs alleged that the attacks were planned, authorised and committed by al-Qaeda, sometimes in conjunction with one or more other groups, including: Lashkar-e-Taiba, Jaish-e-Mohammad, the Afghan Taliban, including the Haqqani Network, and the Tehreek-e-Taliban Pakistan.
Judge Lorna G. Schofield said HBL “placed terrorists or those linked to terrorists on a ‘whitelist’ or ‘good guy list’ of people ostensibly pre-cleared for reduced scrutiny of their transactions [and] engaged in tactics, such as ‘wire-stripping’, that shield the identities of parties to transactions”.
The order stated that the plaintiffs had presented sufficient facts to infer that the bank used its New York branch “to further [al-Qaeda’s] terrorist goals”.
“The complaints give rise to a reasonable inference that defendant knew its customers were integral to al-Qaeda’s overall campaign of terrorism, carried out directly and by proxy. That is sufficient to allege the general awareness element.
“The complaints allege that defendant took deliberate steps to help customers evade international sanctions regimes, and in doing so incurred business risk that ultimately led to defendant’s expulsion from the US. Those allegations are sufficient …,” the order stated.
Judge Schofield said the allegations were sufficient to show that HBL “joined in a conspiracy to commit the attacks”. However, she turned down the plaintiffs’ claims of primary liability because none of the alleged banking services provided by HBL “were themselves acts of international terrorism”.
In its statement, HBL said its 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 due legal proceedings and no judgement was passed by the court on this matter,” it stated.
“HBL has made investments in management and resources to strengthen its AML and CFT protocols by partnering with global experts in this field. The bank seeks to adhere to the highest standards of compliance with international and country laws and regulations,” it added.
Prior to this, HBL had agreed to pay a fine of $225 million — the largest ever imposed upon a Pakistani bank by regulatory authorities — in 2017 for various violations of New York’s regulatory provisions.
The bank had also agreed to surrender its licence to operate a branch in New York and unwind its operations there. The branch had been operational since 1978.
In a strongly worded release issued at the time, the Department of Financial Services (DFS) of New York State had harshly castigated the bank and added that “DFS will not stand by and let Habib Bank sneak out of the United States without holding it accountable for putting the integrity of the financial services industry and the safety of our nation at risk.”
HBL had become the target of an enforcement action by DFS for 53 separate violations allegedly committed between 2007 and 2017.

* Later PTI govt shutdown those accounts.