After exposing top financial institutions including public sector banks and Insurance companies involved in money laundering on Monday by an investigating media website Cobrapost in its "Red Spider-2"sting operation, the government has asked the Chairman-cum-Managing Directors (CMDs) of Public Sector Banks (PSBs) and LIC to initiate immediate action against those who were exposed.
Financial Services Secretary Rajiv Takru has asked the chairman-cum-managing directors of various Public Sector Banks (PSBs) including State Bank of India, Punjab National Bank and biggest public sector insurance company Life Insurance Corporation (LIC) of India to probe the allegations, the finance ministry said in a statement.
The govt has asked to take immediate action as follows:
(i) Any officer/employee of your bank/institution who clearly appears to be advising potential customers along lines that would be an infringement of the legal process/could facilitate money laundering/could defeat the KYC norms or the norms of due diligence prescribed by RBI and the law from time to time, may be placed under suspension with immediate effect pending inquiry. The bank may initiate a detailed scrutiny of such officer's work and institute a special audit, if necessary, for this purpose. The inquiry must be initiated and completed expeditiously.
(ii) In case where the behaviour and conduct of the officer / agent is not such as would attract point (i) above but fails to meet the standards of conduct and behaviour expected of an officer / employee / agent of a public sector institution and/or brings the institution or is likely to bring the institution into disrepute, such person may immediately be divested of their work / portfolio and advised to voluntarily proceed on leave while a detailed examination on the same lines as above is conducted.
Beside compliance on above points, the Secretary, Financial Services has also asked for a detailed report on utmost priority with the name of the employee/designation and action taken.
Cobrapost has alleged in a sting operation that at least 23 top public and private banks and insurance companies have been doing large-scale money laundering. Several of the firms named denied the allegation.
"Money laundering practices are part and parcel of banking and insurance business across the board. Even a walk-in customer can avail of such services that help him launder all his unaccounted cash," Cobrapost said in a press release.
The website claimed that it found large-scale wrongdoing by banks and financial institutions through an undercover operation run for nearly six months in various states and union territories, including Delhi, Uttar Pradesh, Rajasthan, Haryana, Andhra Pradesh and Karnataka.
It has named 23 public and private sector banks and insurance companies. Public sector firms include Allahabad Bank, Andhra Bank, Bank of Baroda, Bank of India, Bank of Maharashtra, Central Bank of India, Dena Bank, Indian Overseas Bank, Punjab and Sind Bank, Punjab National Bank, UCO Bank , United Bank of India, Vijaya Bank, State Bank of India, State Bank of Bikaner and Jaipur, State Bank of Patiala, State Bank of Hyderabad, State Bank of Travancore, Indian Bank, Corporation Bank, Union Bank of India, Canara Bank, IDBI Bank, Syndicate Bank, Oriental Bank of Commerce and State Bank of Mysore and their insurance associates.
Private sector firms include Yes Bank, Dhanlaxmi Bank, Federal Bank, DCB Bank, HDFC Bank, ICICI Bank and Axis Bank, and their insurance arms.
The website has also named LIC of India, Reliance Life Insurance, Birla Sunlife, and Tata AIG.
Several of these firms denied the allegations. SBI chairman Pratip Chaudhuri said, "As far as we have understood, there is nothing serious."
"We have zero tolerance for money laundering and will take action on those found to be flouting norms," Chaudhuri said reacting to the allegations.
Reliance Capital termed the allegations baseless.
"We categorically deny the baseless allegations in relation to any involvement of the Company in money-laundering by customers of our life insurance business," Reliance Capital said in a statement.
"Reliance Life adheres to strict internal controls, processes and best practices and is in full compliance with the KYC norms and regulatory framework," it said.
--With Agencies Inputs--
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