UBL announces voluntary liquidation of NY branch

United Bank Limited (UBL) on Thursday announced voluntary liquidation of its New York branch. According to bank management, the closure of branch is under the global realignment strategy. Sources said that UBL was facing some regulatory compliance issues at its New York branch and in July this year UBL New York branch entered into a new Written Agreement (WA 2018) with the Federal Reserve Bank of New York (FRBNY).
Under the WA 2018, UBL was required to take steps to strengthen its Bank Secrecy Act and Anti Money Laundering (AML) Compliance, Customer Due Diligence and Suspicious Activity Monitoring and Reporting Programme. As per the agreement, the bank was also required to submit a comprehensive compliance plan within 60 days of the agreement and would also hire an independent consultant to conduct a comprehensive review of the Branch's compliance with the US AML laws and report its findings.
Although the bank has taken a number of steps towards regulatory compliance, it formally announced voluntary liquidation of UBL New York Branch.
According to the bank announcement, as part of global realignment strategy, UBL is intends to voluntarily liquidate and surrender its license pursuant to New York Banking Law. "This is a commercial decision keeping in view the commercial viability of NY Branch and is subject to all regulatory approvals," a notice sent by the bank to Pakistan Stock Exchange said.
According to the bank management, as per process UBL has also notified this intent to New York Department of Financial Services (NYDFS). The bank said that it will continue to work closely with its US regulators throughout the voluntary liquidation process to ensure that the New York branch is wound down in an orderly manner, complying with all applicable Federal and State Laws, Rules, and Regulations.
The Bank already has well established multiple correspondent banking relationships to provide US dollar clearing services to its customers, the notice said.
Analysts said that as per UBL's 2017 annual report, New York operations contributed 0.08 percent to total profit before tax of the bank. Therefore, the closure of New York operations is unlikely to have material impact on bank's profitability.
It may be mentioned here that in September last year Habib Bank Limited (HBL) paid a $225 million penalty to New York State Department of Financial Services (DFS) for non-compliance of laws and regulations designed to combat money laundering and illicit financing.
Initially, the DFS was seeking a fine of $630 million, however on Sep 7, 2017, HBL reached a settlement with DFS for payment of a fine amounted to $225 million and voluntary closure of HBL New York branch.