New Delhi: As many as 23 public and private sector banks and insurance companies were Monday accused of "running a nation-wide money laundering racket, blatantly violating laws of the land" by online portal Cobrapost.
"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.
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.
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.
This is the second expose by Cobrapost. Earlier on March 14, it had alleged money laundering by top private sector banks -- HDFC Bank, ICICI Bank and Axis Bank.
Taking note of the development, Financial Services Secretary Rajiv Takru said, "I have asked Indian Banks Association (IBA) to look into Cobrapost allegations...There is a need to examine allegations." He said three senior officials have been asked to look into the issue.
Talking to reporters, State Bank of India (SBI) Chairman Pratip Chaudhuri said the bank would investigate the allegations and take severe action against those found guilty.
"So far, it does not indicate if KYC violations have been done. But if they have been done, the people would be severely punished," he said. "We are very clear that there is zero tolerance for any money laundering or working around the KYC."
On misuse of lockers to store black money, Chaudhuri said banks do not keep a check on what customers keep in their lockers.
"I cannot have content (of the locker). I don't know what is there in your locker...We are under no obligation to check," he said, adding that as most banks can try to find out whether the items stored are not explosives or drugs.
Denying the Cobrapost allegations, Reliance Life said: "As part of its ongoing compliance efforts, Reliance Life will continue to examine any specific instances that come to light for appropriate remedial action, if any."
Bank of Baroda General Manager D D Singla said: "We are in the process of investigating the whole event...Instances of deviation will be sternly dealt with as per our established procedure."
"We are reviewing the contents and making our internal inquiries. The bank does not allow or accept any breach of rules and regulations," a DCB Bank official said.
Cobrapost in its press release said, "Operation Red Spider 2 establishes beyond doubt that money laundering is not confined to private banks, and is not an aberration.
"It is rather endemic overarching the entire banking system and insurance sector, without exception, however shocking it might be. The scale is vast and unfathomable," the portal added.
After the first expose in March, the Reserve Bank had initiated an inquiry into the allegations against ICICI Bank, HDFC Bank and Axis Bank.
"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 had said while unveiling its monetary policy for the current fiscal last week.
First Published: Monday, May 6, 2013, 12:57