New Delhi, May 6 : An investigative website Cobrapost Monday alleged that at least 23 top public and private banks and insurance companies have been doing large-scale money laundering. Several of the firms named denied the allegation.
"Money laundering practices are part and parcel of banking and insurance business across the board. Even a walk-in customer can avail of such services that help him launder all his unaccounted cash," Cobrapost said in a press release.
The website claimed that it found large-scale wrongdoing by banks and financial institutions through an undercover operation run for nearly six months in various states and union territories including Delhi, Uttar Pradesh, Rajasthan, Haryana, Andhra Pradesh and Karnataka.
It has named 23 public and private sector banks and insurance companies. Public sector firms include State Bank of India, Bank of Baroda, Punjab National Bank, Canara Bank, Indian Bank, Indian Overseas Bank, IDBI Bank, Oriental Bank of Commerce, Dena Bank, Corporation Bank, Allahabad Bank, Central Bank of India, and their insurance associates.
Private sector firms include Yes Bank, Dhanlaxmi Bank, Federal Bank, DCB Bank, HDFC Bank, ICICI Bank and Axis Bank, and their insurance arms.
The website has also named LIC of India, Reliance Life Insurance, Birla Sunlife, and Tata AIG.
Several of these firms denied the allegations. SBI chairman Pratip Chaudhuri said: "As far as we have understood, there is nothing serious."
"We have zero tolerance for money laundering and will take action on those found to be flouting norms," Chaudhuri said reacting to the allegations.
Reliance Capital termed the allegations baseless.
"We categorically deny the baseless allegations in relation to any involvement of the Company in money-laundering by customers of our life insurance business," Reliance Capital said in a statement.
"Reliance Life adheres to strict internal controls, processes and best practices and is in full compliance with the KYC norms and regulatory framework," it said.
PTI adds: Within hours of online portal Cobrapost alleged money laundering by financial institutions, the Finance Ministry asked PSU banks and LIC to take immediate action against employees "appears to be advising" customers on ways of violating KYC and other regulatory norms.
"An inquiry must be initiated and completed expeditiously," Financial Services Secretary Rajiv Takru asked heads of several state-owned banks and Life Insurance Corporation (LIC) today.
Takru's communication has been sent to SBI and its associate banks, LIC, PNB, BoB, Canara Bank, BoI, Allahabad Bank, Andhra Bank, Bank of Maharashtra, Central Bank of India, Dena Bank, Indian Overseas Bank, Punjab & Sind Bank, UCO Bank, United Bank of India, Vijaya Bank, Indian Bank, Corporation Bank, Union Bank of India, IDBI Bank, Syndicate Bank and Oriental Bank of Commerce.
In its expose earlier in the day, Cobrapost has named as many as 23 public and private sector banks and insurance companies for allegedly "running a nation-wide money laundering racket, blatantly violating laws of the land." They are alleged to have violated the ‘Know Your Customer' (KYC) and 'Anti Money Laundering' Guideline.
The Financial Services Secretary asked the CMDs to place under suspension with immediate effect officers and employees "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".
The banks, the ministry said, should also "initiate a detailed scrutiny of such officer's work and institute a special audit, if necessary, for this purpose".
Takru has also asked the banks to divest the officials concerned of their current portfolio and advise them to proceed voluntarily on leave pending investigations.
Besides, the Finance Ministry has sought a detailed reports from the financial institutions about names of erring employees, their designations and action taken against them.
