Cobrapost expose: Govt asks banks, LIC to initiate action against ‘money laundering’

The department of financial services has asked the chairmen-cum-managing directors (CMDs) of the various public sector banks (PSBs) and state-run insurance major Life Insurance Corporation of India (LIC), to initiate action against those allegedly involved in money laundering in online portal Cobrapost's latest expose.

Cobrapost today released a list of 23 banks, including SBI, Punjab National Bank (PNB), Bank of Baroda, Canara Bank, Reliance Life, Tata AIA, Yes Bank, Indian Bank, Indian Overseas Bank, IDBI Bank, Oriental Bank of Commerce, Dena Bank, Corporation Bank, Allahabad Bank, Central Bank of India, Dhanlaxmi Bank, Federal Bank, DCB Bank, LIC and Birla Sun Life that were allegedly involved in money laundering activities.

''In its continuing undercover operation, spanning several months, Cobrapost finds dozens and dozens of major public sector banks, and many more private banks, across the country are blatantly involved in money laundering, as are major insurers. In all, 23 banks and insurance companies have been exposed,'' the portal said in a release.

According to Cobrapost, the financial sector entities offered to open bank accounts and lockers for customers without following Know Your Customer (KYC) norms, convert their black money into white and obtain fictitious PAN cards.

The department of financial services has written to CMDs of Allahabad Bank, Andhra Bank, Bank of Baroda, Bank of India, Bank of Maharashtra, Central Bank of India, Dena Bank, Indian Overseas Bank, Punjab and Sind Bank, Punjab National Bank, UCO Bank, United Bank of India, Vijaya Bank, State Bank of India, State Bank of Bikaner & Jaipur, State Bank of Patiala, State Bank of Hyderabad, State Bank of Travancore, Indian Bank, Corporation Bank, Union Bank of India, Canara Bank, IDBI Bank, Syndicate Bank, Oriental Bank of Commerce, State Bank of Mysore as well as LIC for immediate action against those officers/ employees involved in money laundering activities.

''Any officer/employee of your bank/institution who clearly appears to be advising potential customers along lines that would be an infringement of the legal process/could facilitate money laundering/could defeat the KYC norms or the norms of due diligence prescribed by RBI and the law from time to time, may be placed under suspension with immediate effect pending inquiry,'' secretary, department of financial services Rajiv Takru wrote in his letter to the state-run financial institutions.

The department has directed that individual banks may initiate detailed scrutiny of officers alleged to have involved in illegal activities and institute a special audit, if necessary, for this purpose. It also directed that the inquiry must be initiated and completed expeditiously.

Even in cases where the behaviour and conduct of the officer/agent fails to meet the standards of conduct and behaviour expected of an officer/employee/agent of a public sector institution and/or brings the institution or is likely to bring the institution into disrepute, such person may immediately be divested of their work / portfolio and advised to voluntarily proceed on leave while a detailed examination on the same lines as above is conducted, the note said.

Besides compliance on above points, the secretary, financial services has also asked for a detailed report on the name of the employee/designation and action taken.