BoB chief Jayakumar gets cracking on KYC

Bank to appoint external accounting firm to look into the policies

P S Jayakumar, who took charge as managing director and chief executive officer of state-run lender Bank of Baroda (BoB) on Tuesday, said he planned to hire an external accounting firm to look into the bank’s know-your-customer norms.

This comes amid alleged violation of anti-money laundering (AML) norms at the bank’s branch at Ashok Vihar, New Delhi. Now, the lender is preparing an action plan to avoid such instances in the future. It is expected a detailed action plan will be presented to the audit committee next week.

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“We attach extremely high seriousness and are going to work hard at it. The bank is doing diagnostic work on what went wrong and address some unanswered questions. This is top on the agenda,” Jayakumar told reporters after taking charge.

“My goal is to work with a team and make appropriate changes in the process, organisational structure and training so that we do not have a repeat of such instances,” he said. “The bank is thinking of getting an external accounting firm to look at know-your-customer policies and come up with a set of recommendations. It will look if it was a one-branch issue or a systemic matter.

“The board is very strongly engaged in the process. I hope to present to the audit committee of the board an action plan sometime early next week,” he said, adding the bank was in talks with regulatory authorities and was preparing a timeline for the implementation of various changes.

A former Citibank executive, Jayakumar was selected to head BoB in August, from private sector firm VBHC Value Homes, where he was managing director and CEO. He has been given a three-year term at BoB.

"Bank is thinking for getting external accounting firm to look at Know Your Customer policies and come up with a set of recommendations look at process. It will look if it was one branch issue or systemic matter," he said.

Between May 2014 and August 2015, 5853 outward foreign remittances amount to Rs 3,500 crore, mainly for the purpose of 'advance remittances for import' was recorded. In a communication to the stock exchanges, the bank said, funds were through 38 current accounts to various overseas parties numbering to 400, mainly based in Hong Kong and one in UAE.

"The board is very strongly engaged in the process. I hope to present to the audit committee of board action plan sometime early next week," he said.

Investigating agencies conducted searches at the Ashok Vihar branch, after the lender informed them, and four bank official have been arrested in connection with the case,

Jayakumar said the bank is in discussion with the regulatory authorities and preparing a timeline for the implementation of the changes that the bank is planning.

"The focus is on establishing the facts (of the current case). We are working closely on regulatory authorities and looking at systems and preparing a timeline for implementation," he said.

The bank had already informed the stock exchanges that there is no financial implication to the bank due to this incident.