Better compliance of KYC norms needed: RBI on Cobrapost expose

Tags: News
Amid allegations of money laundering by top three private banks, the RBI today said that its probe into their activities revealed the banks did not follow KYC norms while selling third party products.

"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.

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • Banks must learn from past mistakes to promote financial inclusion

    Prime minister Narendra Modi launched a massive financial inclusion programme yesterday titled “pradhan mantri jan dhan yojana’ (PMJDY), that will

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Chander Mohan Sethi

CMD, Reckitt Benckiser India

COLUMNIST

Tushar Gandhi

Could prohibition mean profiteering?

In the mid 1930s, an American journalist asked Bapu if ...

Zehra Naqvi

The five universal languages of love

Love is a universal language. Don’t we all believe that? ...

Dharmendra Khandal

Time to protect our endangered wildlife species

After 65 million years of existence, the earth’s biodiversity is ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture