Better compliance of KYC norms needed: RBI on Cobrapost expose
May 03 2013 , Mumbai
"The RBI recently undertook investigations in the light of reported allegations that certain banks were involved in structuring transactions to aid tax evasion and fraudulent transfer of funds. The investigations revealed the need for better regulatory compliance by banks," the central bank said in its annual monetary policy statement.
ICICI bank, HDFC Bank and Axis Bank were accused of indulging in money laundering both within and outside with an online portal, Cobrapost, claiming the sting operation conducted by it had revealed a scam. The RBI statement, however did not name the banks.
"During the investigations...It was observed that banks are not carrying out customer due diligence as required under KYC/AML/CFT guidelines while marketing and distributing third party products as agents.
"Some banks are also not filing Cash Transaction Reports (CTRs) or Suspicious Transaction Reports (STRs) in such cases, wherever required," RBI said.
RBI advised banks to carry out customer due diligence as a measure of abundant precaution, maintain details of third party products sold and their records and file CTRs and STRs.
RBI observed that in some cases, banks did not have clear segregation of duties of marketing personnel and bank employees were directly receiving incentives from third parties.
Banks have been asked to ensure that their employees do not receive cash/non-cash incentives directly from insurance companies, mutual funds and other third party product providers.