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RBI penalises 6 PSBs for violating KYC, anti-money laundering norms

24 August 2013

MUMBAI: The Reserve Bank of India on Friday penalised six banks for violation of know-your-customer (KYC) and anti-money laundering (AML) norms.

Penalties ranging from 50 lakh to 2 crore were imposed on public sector banks. The central bank also issued a cautionary letter to IndusInd Bank. The action follows scrutiny of bank books, internal control and compliance systems and processes of officers during April and May 2013, after online portal Cobrapost alleged rampant violation of KYC and anti-money laundering rules in bank branches in their sting operation. Allahabad Bank was fined 50 lakh,Bank of Maharashtra 50.1 lakh, Corporation Bank 1.5 crore,IDBI Bank 1 crore, Dena Bank 2 crore and Indian Bank 1 crore.

In the scrutiny of the books of the public sector banks, the regulator found "non-adherence to guidelines like customer identification procedure, risk categorisation, periodical review of risk profiling of account holders, periodical KYC updation.''

The RBI clarified that its investigation did not reveal any prima facie evidence of money laundering. However, any conclusive inference in this regard can be drawn only after the completion of the investigation of transactions by tax and enforcement agencies.

Apart from circumventing KYC and AML norms, banks have also been found to have sold gold coins for cash beyond 50,000, non-adherence to instructions on import of gold on consignment basis, violation of KYC for walk-in customers in sale of third-party products and omission in filing of cash transaction reports with respect to certain transactions, among others.

The penalties have been imposed in exercise of powers vested in the Reserve Bank under the provisions of Section 47(A)(1)( c ) read with Section 46(4)(i) of the Banking Regulation Act, 1949, said the RBI. It also issued a cautionary letter to IndusInd Bank as norm violation of a serious nature could not be established.
Published by: The Economic Times