Sting operation exposes money laundering activities undertaken by these banks
The stocks of Axis Bank, ICICI Bank and HDFC Bank fell in the morning trades following an expose by an online newspaper Cobrapost that these banks allegedly indulged in money laundering.
ICICI Bank stock was down by 1.38%, while HDFC Bank was down by 1.12%. Axis Bank was down by 1.74%. Cobrapost said the brazen criminal activity by these banks is channelizing vast amounts of black money into the regular banking system as laundered white money. "Our investigation, conducted across dozens and dozens of branches of these banks and their insurance affiliates, across all five zones of the country, revealed these shocking facts that these money laundering practices are part of a standard set of procedures within these banks," the web site editor, Anirudha Bahal said in a news conference in New Delhi.
When contacted a ICICI statement said: “ICICI Group conducts its business with the highest level of compliance to legal and regulatory requirements. All employees of the Group are trained and required to adhere strictly to the Group Code of Conduct, including AML and KYC norms. We have demonstrated our commitment to this by following a zero tolerance policy towards any violation. ICICI Group conducts its business with the highest level of compliance to legal and regulatory requirements."
The bank further said: "We want to assure our customers and all stakeholders that we are committed towards adherence to the high standards of business conduct, which is expected of us. We have constituted a high level inquiry committee to investigate into the matter and submit its findings in 2 weeks.”
Cobrapost alleged that these money laundering services are being openly offered to even walk-in customers who wish to launder their illicit money and a variety of options for laundering ill-gotten cash are being offered brazenly. The post said these these money laundering services are being offered practically as a standard product across the country. "This huge money-laundering racket being run by these banks has been captured by Cobrapost, on video-tape, running into hundreds of hours. The evidence is graphic, crystal-clear and clinching," the site said.
The investigation by Cobrapost finds the banks and their managements systematically and deliberately violating several provisions of the Income Tax Act, FEMA, RBI regulations, KYC norms, the Banking Act and Prevention of Money laundering Act (PMLA) with utter disregard to consequences, driven by their desire to boost cheap deposits and thereby increasing their profits.
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