NBP says 'fully committed to satisfying US regulators' expectations' after over $55mn fine

The National Bank of Pakistan said on Friday that it has reached agreements with the Federal Reserve Board and Federal Reserve Bank of New York (FRB), and the New York State Department of Financial Services (NYDFS), the US regulators of NBP's New York branch, in a notice to the Pakistan Stock Exchange (PSX).

Read the earlier story here: US authorities fine Pakistan's NBP $55mn for 'money-laundering', 'compliance failures

Its notice comes after US authorities, in a late-night development on Thursday, fined the NBP $55.4 million in separate orders, with the US Federal Reserve Board announcing a $20.4-million penalty for anti-money laundering violations, while New York State Department of Financial Services said the bank agreed to pay a $35-million penalty for failure to maintain an 'effective and compliant anti-money laundering program'.

"The agreements include fines totaling US$55.4 million focused on historical compliance program weaknesses and delays in making compliance-related enhancements," said NBP in the notice. "There were no findings of improper transactions or willful misconduct.

"The New York branch has been under new management since May 2020 and has substantially enhanced its compliance program. U.S. regulators have recognised the many positive changes resulting from new management. The National Bank of Pakistan and the New York branch are fully committed to satisfying the regulators' expectations."

On the said development, Arif Habib Limited (AHL) in a note said NBP may have to book a one-off charge worth Rs10 billion. “This can cause an impact of about Rs4.5/share on the bottom-line, we believe," it said.

"The consequence of this penalty expense will also be putting the CAR under pressure, which currently is well-above the minimum requirement of the SBP (as of September 2021: 22.5%)."