MY BIZ: Money laundering investigation hits big banks

Investigative journalist Anirudh Bahl”s secret recordings showing HDFC Bank employees facilitating laundering black to white money.
March 14, 2013
Money laundering by pvt banks, claims investigation
March 14, 2013

MY BIZ: Money laundering investigation hits big banks

The Finance ministry and the Reserve Bank of India (RBI) have decided to investigate allegations of widespread money laundering against the country’s three biggest private sector banks – ICICI Bank, HDFC Bank and Axis Bank.

The allegations were levelled on Thursday by news website, which claims to have carried out a investigation operation on the three banks.

Banking secretary Rajiv Takru said: “We need to ascertain the identity of the employees involved. We will also review the videotape.”

Takru also disclosed that the private banks have submitted their preliminary report in this regard.

Central Board of Direct Taxes member (Investigations) K.V. Choudhary said in Mumbai that the department has taken cognisance of the Cobrapost story and has kicked off a probe into the matter.

Cobrapost played the contents of purported video recording of officials of HDFC, ICICI and Axis banks allegedly agreeing to receive unaccounted sums of cash as deposits in their investment schemes and benami accounts in violation of anti-money laundering laws. However, no account was opened nor any cash deposited in these banks.

Cobrapost founder and editor-in-chief Aniruddha Bahal said that the sting was conducted over a period of five to six months by a single reporter across dozens of branches of these banks in various cities.

The bank officials, the sting alleged, were also not bothered about the source of income of the cash even if it was from ministers and politicians and were ready to waive the requirements of ‘know your customer’ (KYC) norms or PAN card.

Bahal said that the undercover reporter approached the bank officials as a frontman for politicians and the banks were even ready to send an agent to collect the cash from the house.

In his reaction, finance minister P. Chidambaram said that he had spoken to chairpersons and managing directors of two banks who told him that this is a completely incorrect story.

ICICI Bank said: “We have constituted a high-level inquiry committee to investigate into the matter and submit its findings in two weeks. ICICI Group conducts its business with the highest level of compliance to legal and regulatory requirements. All employees of the Group are trained and required to adhere strictly to the Group code of conduct.”

HDFC Bank said: “Any deviation is viewed very seriously and stringent action is taken both at organisational and employee level.”

Axis Bank said that it has systems and processes that are robust and fully compliant with extant regulations.

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