Hours after Pakistan Prime Minister Imran Khan met Russian President Vladimir Putin in Kremlin on Thursday amidst the ongoing “special military operation” by the Russian troops in eastern Ukraine, two US authorities imposed fines worth $55 million on the National Bank of Pakistan (NBP) and its New York branch.
According to reports, the US Federal Reserve, the central bank of the country, 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 the federal laws.
The Federal Reserve has imposed a $20.4 million fine, and the New York State Department of Financial Services has asked NBP to pay $35 million after the authorities 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 order, issued based on the investigation carried out on March 4, 2021, noted that NBP had entered into a written agreement with the authorities on March 16, 2016, to correct the “deficiencies”. However, the recent investigation has found that NBP had failed to “achieve full compliance with each and every provision of the written agreement”.
The order also noted that as Pakistan’s NBP failed to comply with the US laws, 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.”
The US Federal Reserve has ordered NBP to carry out reforms on Corporate Governance and Management Oversight; Bank Secrecy Act, and AML Compliance Programme, Customer Due Diligence; Suspicious Activity Monitoring and Reporting; Transaction Monitoring System.
The reserve has demanded the NBP implement its recommendations within 60 days of the order. It has also asked NBP to designate an officer within ten days who will be “responsible for coordinating and submitting” to the Reserve Bank its written plans.
Meanwhile, the NYDFS Superintendent Adrienne A Harris announced that NBP and its NY branch had agreed to pay the penalty.
“The NBP allowed serious compliance deficiencies in its NY branch to persist for years despite repeated regulatory warnings,” a press release quoted Harris as saying.
This action resolves the Department’s investigation into compliance deficiencies at the NY Branch with respect to Bank Secrecy Act/Anti-Money Laundering (“BSA/AML”) requirements.
— NYDFS (@NYDFS) February 24, 2022
The press release further said that the continued failures revealed that the branch’s senior management was unwilling or unable to promote a culture of compliance, adequate resources were not provided for compliance programmes, and the bank failed to adequately supervise the branch by allowing problems to worsen year after year.
Interestingly, the penalty against Pakistan’s NBP came just after Prime Minister Imran Khan met Russian President Vladimir Putin in Kremlin on Thursday. His meeting with Putin came at a time when Russia has launched a special military operation in eastern Ukraine.
Imran Khan arrived in Russia on Wednesday on a two-day visit. However, just hours after he arrived in Moscow, the Russian President ordered a special military operation in eastern Ukraine, leaving the Pakistan establishment confused. Later, Vladimir Putin held a face-to-face meeting with Prime Minister Khan in the Kremlin.
Russia takes control of Ukraine
On Thursday, Russian President Vladimir Putin announced limited military operations against Ukraine. In a televised address, Russian President Vladimir Putin declared the special operation to be conducted in East Ukraine.
Putin had added explicitly that Moscow does not plan to occupy Ukraine. He said the military action he announced would seek to “demilitarise” and “denazify” Ukraine and came in response to threats from Ukraine.
According to Ukraine’s border guard agency, the Russian military entered the country from neighbouring Belarus. The Russian forces crossed Belarus to enter Ukraine from the North, said Ukraine’s Ministry of Internal Affairs. The Northern border forces in Ukraine have come under attack by Russian troops.
PUTIN’S DECLARATION OF WAR SPEECH TRANSLATED IN ENGLISH pic.twitter.com/VIswV0PqxM
— The_Real_Fly (@The_Real_Fly) February 24, 2022
The Russian troops allegedly launched attacks on border units, border patrols, and checkpoints using artillery, heavy equipment, and small arms.
Earlier in the day, large explosions were heard in Kharkiv, Ukraine. Several cities, airports, roads are hit by the rockets as Russian troops take control of East Ukrainian cities.
During his address declaring military action against Ukraine, Russian President Vladimir Putin had urged the Ukrainian soldiers to lay down arms. He said those who followed his demand would be allowed to leave the battle zone and return to their families.
