Connecting The Dots: Why UN Anti-Money Laundering Dept Launched Probe Against Nawaz

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Connecting the Dots: Banks: Habib Bank NY Branch; Al Rajhi Bank, Jeddah; Standard Chartered Bank, Lahore; Account Holders: Hill Metals, Nawaz Sharif, et al

JUL 22, 2018 (Updated): The United Nations anti-money laundering department has decided to start investigations against Nawaz Sharif, the former PM who was recently sentenced to 10-years imprisonment for living beyond known means, a website reports citing sources.

Following the Avenfield verdict (by accountability court), it seems like the PML-N leader is being investigated by global accountability bureaus, the Global Village Space wrote.

The department has decided to seize all records regarding financial matters of Nawaz Sharif and his family from concerned banks and public records, the report claims.

An initial investigation against Sharif conducted following his disqualification as PM reportedly unraveled his remittances amounting to US$10.4 million from Saudi Arabia during the period 2014-2017 to Habib Bank, New York Branch. These were later received in Standard Chartered Bank, Raiwind Branch, Lahore.

Sharif was elected PM for the third time in May 2013, and remained so until his disqualification by the Supreme Court in Panama Papers case following a landmark verdict in April 2017. Subsequently, an accountability court convicted him for not being able to back his sources of earnings beyond known means.

The United Nations Office on Drugs and Crime (UNODC) announced official investigation on Nawaz’s alleged money laundering via HBL NY upon discovery of irrefutable evidences regarding remittances during investigations by New York State Department of Financial Services in 2016 and 2017.

In September 2017, Reuters reported that, Habib Bank had agreed to pay DFS $225 million to settle an enforcement action brought against it for infringing laws designed to combat illicit money transfers.

The DFS in a legal filing in New York had said it was seeking to fine the bank, up to $630 million for “grave” compliance failures over anti-money laundering and sanctions rules at its only U.S. branch.

There were hundreds of questionable transactions and money transfers to and from the Kingdom, to and from Pakistan and other parts of the world, the filing said. By 2015, the DFS found, HBL’s compliance function was in an even worse state, lacking the most basic of controls on money-laundering and customer screening that “opened the door” to the financing of terror, wrote The Financial Times.

The NY regulator said the bank agreed to pay just over a third of that sum as part of a broader settlement in which it will shutter its New York branch, subject to conditions. These include submitting to a further DFS investigation of transactions processed by the branch from October 2013 to the end of September 2014, and from April 2015 through the end of July 2017.

According to FT, the DFS’ most recent investigation found that HBL facilitated billions of dollars in transactions with Al Rajhi Bank, a Saudi private bank one of the largest in the region. HBL also used a “good guy” list — a group of customers who supposedly presented a very low risk of illicit transactions — to wave through at least $250m in transactions with no screening at all, wrote FT.


The latest report citing documents and sources, says Nawaz Sharif had opened an account in the Saudi bank under the name of ‘Hill Metal Company’, which had a massive amount of remittances. Nawaz had misused Habib Bank NY branch, Al-Rajhi Bank and Standard Chartered Bank in Pakistan, it said.

Citing records. the report states Nawaz had “embezzled” money amounting to $10.4 million. Since then, the International Anti-Money Laundering Department at the UN has sped up their investigation processes, it claims.

According to these documents, $266,000 was transferred to Hill Metal Jeddah, Saudi Arabia, which were later rewired to Nawaz Sharif on 3rd March, 2014.

These funds had also been released from Habib Bank New York branch.

Similarly, Al-Rajhi Bank, Jeddah, and Habib Bank NY were also involved in this transaction. Moreover, on 9th March 2015, $799,945 was transferred from Al-Rajhi bank to Habib Bank New York branch, and then transferred to Nawaz Sharif via Standard Chartered in Pakistan.

On 22nd March 2015, an amount of $499,965 was transferred from Saudi Arabia to Habib Bank New York branch which were later transferred to Standard Chartered Bank, Lahore in Nawaz Sharif’s accounts.

During April 2015, another transaction took place where $8,165,000 was transferred from Saudi Arabia to Habib Bank New York Branch, and following past pattern the said amount was transferred to Standard Chartered Bank in Lahore.


The DFS’s announced settlement with HBL in Sept 2017 does not preclude further future enforcement action against HBL if the DFS investigation reveals further problems, reported Reuters.

The enforcement action followed a 2016 review in which the regulator said it found “weaknesses in the bank’s risk management and compliance” that management had failed to tackle.

The review showed HBL had failed to properly screen thousands of transactions and had processed payments for known criminals and sanctioned entities, among other failings.

“The bank has repeatedly been given more than sufficient opportunity to correct its glaring deficiencies, yet it has failed to do so,” Financial Services Superintendent Maria Vullo said in the statement cited by Reuters in its report.

“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.”

The New York branch of HBL had been licensed by DFS since 1978; for the year ending December 2015, it processed correspondent banking transactions worth a total of $287 billion.

According to the DFS, Habib Bank NY branch improperly cleared some transactions flagged by the bank’s monitoring system after withholding the names of beneficiaries or other pertinent information — a phenomenon known as “wire-stripping”.

In one instance, HBL handled a payment involving a Chinese weapons manufacturer that was subject to US sanctions. The DFS determined that trade-finance documents had been doctored to conceal that the goods shipped were explosives, FT reported.

Financial Action Task Force (FATF) and Pakistan

The Financial Action Task Force (FATF) said in June Pakistan has made “a high-level political commitment” to work with the global watchdog and Asia/Pacific Group on Money Laundering (APG) to strengthen its anti-money laundering (AML) and combating the financing of terrorism (CFT) regime — both regimes have been combined by FATF.

Pakistan was formally added to the grey list of countries involved in providing monetary assistance to terrorism and related causes after a  meeting of the FATF in Paris in last week of June.

Following the decision Pakistan committed to “address its strategic counter-terrorist financing-related deficiencies”. The FATF said Pakistan will work to implement its action plan to accomplish these objectives (Read objectives here).

Earlier on June 20, the Securities and Exchange Commission of Pakistan (SECP) in compliance with the FATF’s recommendations issued the Anti Money Laundering and Countering Financing of Terrorism Regulations, 2018.

Prior to that, on June 8, the National Security Committee (NSC) had reaffirmed its commitment to cooperate with FATF and strive towards realising “shared objectives”.

FATF, a global body that combats terrorist financing and money laundering, had taken the decision to place Pakistan on its grey list during a plenary meeting in February this year. The country was also included in the list from 2012 to 2015.

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