Daily The Business

Over Rs 12b Habib Bank money laundering scame breaks the surface

 M Jahangir Hayat

LAHORE: An over rupees 12 billion money laundering has been undertaken by the Habib Bank Limited Import and Export Hub during the last two years as more than once bills of lading have been used for making payments in abroad while the State Bank of Pakistan (SBP) pointed out the illegal practice to the bank, Daily The Business has learnt reliably.

Reliable sources on the condition of anonymity said that over $110billion money laundering, the SBP warned the HBL that awakened the bank management from the deep slumber which prompted the top management to take action against the lower staff to save their skin.

The sources said explaining the modus operandi said that one bill of lading have been used many time to make payment in abroad through the banking system of the HBL branches in Lahore including Krishen Nagar, Data Darbar, Lake Road and Langa Mandi.

Following the central bank took notice the HBL management involved the FIA and terminated the central character of the incident Incharge Import and Export Hub Asif Aziz, the sources informed.

The sources further said that following the incident the bank management terminated and reprimanded a number of officers and officials including Lahore Regional Chief Mujtuba Naqvi, however, the RC following severely censured resigned from the bank and joined another bank reportedly Bank Alfalah.

The sources said that lower staff was made the escape goat and a number of them including Shahid Lateef, credithead Imtiaz Ahmed, area managers Sohaib Dar, Khawaja Adnan, Ejaz, Ferhat Abbas and other were also terminated.

“For the time being get shocked… its a scam of around 12 Billion PKR caught in HBL 15 people including Regional Heads Trade and Retail Lending, 3 BMS ,3 Boms, 3 Cso have been terminated. SRC Mujtaba Naqvi and 2 AMs Mirza Bilal and Junaid Ul Haq have been reprimanded.  26 more decisions are coming on Monday. All cases are referred to FIA for investigation and Bank is a party now after disowning all these people” this was the message which was circulating in among the bankers of HBL for a long time.

It was reported that FIA finalizing the investigations has arrested nine bankers and two private people.

The sources said that on the other side important and well-known business and political people are involved in the mega money laundering of over Rs 12 billion.

When this scribe contacted HBL marketing head Naveed Asghar and legal head Tahir Cheema to know the bank version they could not be reached despite several attempts.

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13 Comments
  1. Aziz Rahman says

    The State Bank is an IDIOT bank. Why is it that HBL has not been heavily punished. How come no action has been taken agsinst the departmental heads responsible for supervising the trade finance department
    What action has been taken by FUN
    Those are questions which need an answer and the govt. Itself should take severe action against the State Bank and
    HBL management

  2. Muhammad Sohail says

    Being a seasonal banker, I would like to write an article in relation to this HBL Rs 12b money laundering scam only in the larger interest of our banking industry including regulators and for necessary awareness, if you allow I may write an article that can be tweaked by your esteemed newspaper and publish it.

    Please advise how to send this article to you.

    Thanks,
    Sohail

    1. jahangir hayat says

      Dear sohail see your comments in tommorow newspaper. send your pic on jahangir.hayat@gmail.com

    2. jahangir hayat says

      In tommorow newspaper. send your pic on jahangir.hayat@gmail.com

  3. Subhanullah says

    The speedy induction without any Merit and switching from one bank to another bank is the main cause of this irrigularity. SBP need to check induction on high salary from other Bank becz such like staff switching on payment of bribe and he is justify to recover his money paid at the time of induction.

  4. Muhammad Sohail says

    Sohail Hussain

    Abu Dhabi: Went through this devastating news published in The Business dated 23-April-2019 about an over PKR 12 Billion TBML (Trade Based Money Laundering), which was undertaken by the Habib Bank Limited Import and Export Hub during the last two years as more than once the same transport document i.e., bills of lading have been used many time to make outward payments through banking system using trade finance as a conduit for this illegal activity.

    In this news, it was also pointed out that SBP had warned the HBL and stirred the bank management from the stagnation, which prompted the senior management of the bank to take action and following the SBP wake up call, HBL management involved the FIA take the action.

    Is this what has been done is enough to address this complex issue?

    Being a trade practitioner, the answer is NO. Because, until concerned officials of the bank no matter if they are senior &/or junior managers associated with trade business/operations either directly (the trade operations staff) or indirectly (core support units like Trade Sales, Risk, Credit, Compliance and Audit) should have required level of experience and expertise to precisely understand trade complexities and the inherent risk associated with it. Moreover, they should also be aware of the loop holes to close from where one can play and do such trade based financial crimes.

    Trade Finance is an ocean. It is not possible to cover the entire spectrum of controls here in this article; however, it is a small attempt, which can be taken as food for thoughts in this matter.

    Revising existing regulations for imports focusing on FEM Chapter 13 like:

    Para 6
    Comments: Considering the challenges of inching trade based financial crimes, the given facility of clean remittance should have to be revoked immediately instead only allow globally acceptable standard modes of int’l trade like Documentary Credit, Documentary Collection, Advance Payment and Open Account. This Open Account is quite vulnerable and hence can be allowed with some rationales like and MNCs to MNCs but not free for all or wide open to use as a trade conduit for TBML, as what has been happening in the int’l markets including Pakistan. We also need to air tight these trade modes with stringent and technical controls around them.

    6A (i)
    Comments: Settlement of trade transactions must be relied only upon original documents and not copy documents because if a genuine trade is take place then what are the reasons not giving original documents to the bank to allow them trade settlements only against original underlying commercial documents. Mind you, fraudsters are using fake bills of lading for the purpose of financing and capital flight. Therefore, original documents are must for trade settlements with necessary controls even against these original shipping documents to ensure that the transactions are bonafide and legitimate.

    6A (xii)
    As commented against 6 above.

    30 (ii)
    Comments: Again, this USD 10,000/- facility is a wide open to move funds out very easily under we don’t have an auto solution to catch duplicate invoices or who knows the applicants may use more than 1 bank for this facility to route outward payments from different FIs. Therefore, it should be relooked or revoked or to build a rational approach to extend the facility on a selective terms as like the payment option for industrial users under para 17(iv) of FEM Chapter 13 for spare parts – even under this facility an amount should be cap to avoid misuse of country’s valuable foreign exchange along with TBML risk.

    Apart from the above, it is critically important to digitally connect the State Bank of Pakistan, Customs, Carriers and Commercial Banks close the existing loop wholes from where the launderers are leveraging. A project was launched in 2002 from UNCTAD platform where Pakistan Customs opted to digitize their goods declaration and then SBP also linked their E Form/I Form but the carrier are still out of this arena to upload the freight bill or copy of the transport document digitally to link the entire trade transaction with precise visibility and to avoid such frauds. Fortunately, I was the lead part of that project.

    Note:

    Following may please be requested from my side:

    a) please publish in your esteemed news paper, if it is feasible.
    b) tweak this article if needed be.
    c) kindly inform me once if publish or if you don’t think it can be publish.

    Thanks,

    1. jahangir hayat says

      Dear sohail see your comments in tommorow newspaper. send your pic on jahangir.hayat@gmail.com

    2. m jahangir hayat says

      Dear sohail see your comments in tommorow newspaper. send your pic on jahangir.hayat@gmail.com

  5. Khalid sheikh says

    HBL is the partner of Sharief brother,s in money laundering

  6. Maria says

    Audit, compliance and AML division shall be held rsponsible. What were they doing and why SOP was not followed. Area Manger and BOM are last people to be questioned. First AML division and transaction monitoring.

    1. Muhammad Sohail says

      Fully agreed – what for these thick units like Audit, Compliance, AML, Financial Crime, Ops Risk etc., etc., if they cannot prevent such crimes in a bank/financial institution especially where they are already sailing in hot waters.

  7. Tariq says

    The massive grammatical mistakes and the composition of this news is pathetic. Appears it is fake news.

    1. Jahangir says

      You seem some sub-editor. Plz point out for improvement