KARACHI, 11 December — At least four of the Pakistani banks, operating in America, will be hit by a latest directive of the US government to regulate cash outflow to terrorist organizations in the world.
According to sources here, the National Bank of Pakistan, the United Bank, Habib Bank, and Habib Bank AG Zurich, have been asked to stop day-to-day transactions. A number of banks from Muslim countries too have been ordered the same.
A report in the Dawn newspaper from its New York correspondent said the banks are allowed to issue certified checks, money orders or personal checks only, but have been forbidden to transact cash business.
Since the directive was not very clear, some of the Pakistani banks in US have put up notices informing customers of their inability to be of help to them. In fact, the main National Bank of Pakistan, which is also the treasury bank of the country, has stopped functioning at UN Plaza. It has merged itself with its regional office at the Wall Street.
Managers of other banks have sought clarifications from their headquarters in Karachi. They appear confused and probably think that their functions from now on will be considerably limited.
According to the directive, issued on Dec. 1, Secretary of the Treasury Paul Neil has been vested with sweeping powers to close the door for 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, and many other high-risk businesses. Whether the government in Islamabad will act in time to save these banks from crisis, had not been spelled out till yesterday.
