The UAE Central Bank has said it will take ‘appropriate action’ if a Pakistani bank is found to be violating money laundering laws, in a statement issued on 19 February.
“We are in close contact with the home regulator of the Pakistani bank, the State Bank of Pakistan, and will take appropriate regulatory action once we have verified the findings reported in the media to confirm if there was any violation to UAE’s Anti-Money Laundering and Combat of Financing of Terrorism (AML/CFT) laws and procedures”, the UAE regulator said.
Earlier, State Bank of Pakistan, the country’s central bank, had said in a finding that there were “significant irregularities” in Habib Bank Ltd’s (HBL) dealing with politically exposed clients and screening some transactions in the Middle East.
The inspection was carried out as part of the Financial Action Task Force (FATF).
Crackdown on misuse of home loans
In a separate move, the UAE Central Bank also issued a notice to lenders “to stop certain unacceptable practices” involving mortgages, which enabled some borrowers to use home loans for purposes other than “constructing, purchasing or renovating a house for owner occupier or investment purposes.”
It said: “Any form of personal loans granted by banks or finance companies using property as collateral” shouldn’t be classified as mortgages, the regulator said in a statement. Lenders shouldn’t provide personal loans for longer than four years and lenders “must not take private houses as security” for this type of borrowing.”
