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Govt to begin probe in money laundering allegations against banks

Press Trust of India
May 06, 2013 at 09:48pm IST

New Delhi: As many as 23 public and private sector banks and insurance companies were on Monday accused of "running a nation-wide money laundering racket" by online portal Cobrapost, prompting the Finance Ministry and regulator IRDA to initiate independent investigations into the matter.

In its second expose, Cobrapost accused country's leading banks and insurance companies of "running a nation-wide money laundering racket, blatantly violating laws of the land".

ALSO SEE 23 banks including SBI and PNB engaged in money laundering: Cobrapost

Those named in the expose include SBI, LIC, 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 and Birla Sun Life.

Money laundering by banks: Govt to begin probe

Cobrapost alleged that the banks offered to open bank accounts and lockers for customers without following KYC norms.

Cobrapost alleged that 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.

"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.

Within hours of the expose, Financial Services Secretary Rajiv Takru asked the heads of several state-owned banks and LIC to take immediate action against employees "appears to be advising" customers on ways of violating KYC and other regulatory norms.

"The inquiry must be initiated and completed expeditiously", he said. Taking note of the expose, Insurance Regulator and Development Authority (IRDA) said it will examine the allegations of money laundering against insurance companies which include LIC, Reliance Life, Tata AIA and Birla Sunlife.

"The insurance companies concerned have been asked to file a report on the allegations. The matter is under examination and appropriate action will be taken at the earliest," IRDA said in a release.

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