"We don't look down to the branch level," said Jacqueline McCormack, the chief of staff for New York Superintendent of Banks Richard Neiman.
Officials at the FDIC also said they did not know a man once accused of laundering drug money was in charge of the Los Angeles branch of the bank they insure.
After he fled to Pakistan, Shafi, a member of a prominent family with political connections, continued to work in the banking industry there.
Shafi first returned to the United States in 2003 and worked briefly at an investment firm in the Seattle area.
He later moved to the Los Angeles area and now lives with his family in Anaheim, CA.
Shafi started at the Artesia branch of Habib American but then was promoted to run the Los Angeles branch, according to a bank employee.
Its website says the bank "will adhere to the highest levels of honesty, integrity and efficiency in providing value added services to our customers."
Former Senate investigator Blum says the Shafi case raises larger questions about the quality of bank regulation by New York State and others.
"It's painful because after all the problems we've had in the banking business, for something this basic to be slipping by the regulators and the people who license banks is very distressing."