RBI penalises 22 banks for KYC violation, money laundering

A penalty of Rs 3 crore each has been imposed on State Bank of India (SBI), Bank of India, Canara Bank, Bank of Baroda, Central Bank of India, Indian Overseas Bank and Federal Bank.

Last Updated: Jul 16, 2013, 08:52 AM IST

New Delhi: RBI on Monday imposed fines totalling Rs 49.5 crore on 22 private and public sector banks including SBI, PNB and Yes Bank for violating KYC/anti-money laundering norms.

It also gave cautionary letters to seven including Citibank and Stanchart following an expose made by an online portal.

"After considering the facts of each case...Reserve Bank came to conclusion that some of the violations were substantiated and warranted imposition of monetary penalty..." the central bank said in a statement.

A penalty of Rs 3 crore each has been imposed on State Bank of India (SBI), Bank of India, Canara Bank, Bank of Baroda, Central Bank of India, Indian Overseas Bank and Federal Bank.

United Bank of India, Lakshmi Vilas Bank, Punjab National Bank, Jammu & Kashmir Bank and Andhra Bank were slapped a penalty of Rs 2.5 crore each.

A penalty of Rs 2 crore each was imposed on Yes Bank, Vijaya Bank, Oriental Bank of Commerce and Dhanlaxmi Bank. The other banks which were penalised by the RBI include Deutsche Bank, Development Credit Bank, ING Vysya Bank, Kotak Mahindra Bank and Ratnakar Bank.

Besides, Reserve Bank has issued cautionary letters to Citibank, Standard Chartered Bank, Barclays
Bank, BNP Paribas, Royal Bank of Scotland, Bank of Tokyo Mitsubishi and State Bank of Patiala.

Following probe into charges levelled by an online portal Cobrapost, RBI has earlier imposed fines totalling Rs 10.5 crore on top three private lenders - Axis Bank, HDFC Bank and ICICI Bank.

Although the investigation did not reveal any prima facie evidence of money laundering, RBI said that "any conclusive inference in this regard can be drawn only by an end-to-end investigation of the transactions by tax and enforcement agencies".

RBI said it had conducted probe into allegations against seven other banks during April and May, 2013 and the follow up action were at different stages.

The penalty on 22 banks follows scrutiny carried out by RBI of books of accounts, internal control, compliance systems and processes of these banks at their corporate offices and some branches during April 2013.

The scrutiny was conducted to probe allegations of contravention of Know Your Customer (KYC)/anti-money laundering guidelines against them following the expose.

The scrutiny of these banks, RBI said, revealed violation of certain regulations and instructions issued by it.

They did not adhere to the KYC norms for walk-in customers for sale of third party products and failed to file cash transaction reports in respect of some cash transactions and sale of gold coins for cash beyond Rs 50,000.

The violation also include non-adherence to instructions on import of gold on consignment basis, limits on remittances under Liberalised Remittance Scheme and repatriation of funds from non-resident ordinary (NRO) account.

RBI had launched the investigation into the working of banks following the expose by Cobrapost which purportedly showed some bankers giving suggestions to customers on ways to bypass regulatory norms.

The first expose had named ICICI Bank, Axis Bank and HDFC Bank. Later, many other public and private sector banks and insurance companies figured in the expose.