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US imposes curbs on Pakistan banks: Day-to-day cash transactions

US imposes curbs on Pakistan banks: Day-to-day cash transactions

Author: Masood Haider
Publication: The Dawn
Date: December 10, 2001

All Pakistani banks operating in the United States have been asked to stop day to day financial transactions in accordance with new laws enacted by the United States following Sept 11 attacks which endeavour to stop flow of money to the terrorist organizations.

Besides Pakistan many banks of other Muslim countries have been asked to suspend their daily cash transactions. The orders came into effect as of Dec 1.

The banks are now allowed to issue certified cheques, money orders or personal cheques only. All cash money transactions are banned. Also include prohibiting transactions in foreign exchange, transfers of credits to foreign banks and importing and exporting currency or securities.

Pakistan's major banks - National Bank, Habib Bank, United Bank, Habib Bank AG Zurich have received orders from the US Federal Reserve Bank to stop cash transactions. National Bank of Pakistan's major branch at one UN Plaza has stopped functioning and has been merged with its Regional head office situated at Wall Street New York.

According to the new law the US Secretary of the Treasury Paul Neil now has sweeping powers to close the door to the United States to foreign financial institutions and nations that serve as conduits or depositories of terrorist funds or do not cut off the money flow to terrorist groups.

In consultation with the State Department and Justice Department, the Treasury Department is authorized "to employ all powers granted to the President" under the International Emergency Economic Powers Act (IEEPA). The powers include prohibiting transactions in foreign exchange, transfers of credits to foreign banks and importing and exporting currency or securities.

The New Law stipulates that US Treasury department has existing power to require cash, suspicious activity reports from aviation schools, crop dusters, many other high-risk businesses. Money Laundering Alert provides specific actions that Congress and all US agencies need to take to build permanent reforms to stop the financial nourishment of terrorists. One of the primary actions needed is an overhaul of the Treasury's Financial Crimes Enforcement Network.

The MLA provides key analysis of the US money laundering law as it relates to terrorists. The law lists 176 "specified unlawful activities." Three of them deal with terrorism, including one that deals with "providing material support to terrorists" (Title 18, USC Sec. 2339A).

All Pakistani banks operating in New York had signs posted outside the branches telling customers it could no longer provide them any services.

Pakistani bank managers say that it is not clear how long they would be able to function in the United States if they are not allowed to open doors to general public. They have sought intervention from the Pakistan government.
 


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