FIU imposes Rs 68 lakh fine on banks for failure to file STRs

Suspicious transactions and money laundering in bank branches were brought to light by a sting operation in 2013

Over a dozen public and private sector banks have been slapped a fine of Rs 68 lakh for their "failure" to report attempts of suspicious transactions and money laundering in their branches which were brought to light by a sting operation conducted in 2013.

Financial Intelligence Unit (FIU), the elite snoop wing under the Finance Ministry, recently concluded the long-running exercise of examining these cases and issued multiple penalty orders against a total of 13 banks between January and September this year.

These penalty orders are appealable before the Appellate Authority of the Prevention of Money Laundering Act (PMLA) in 45 days.

All the banks, in records accessed by PTI, have been penalised under section 13 of the PMLA for their "failure to detect and report attempts of suspicious transactions" in their select branches in the country which were covered under the sting operation.

A news portal had made public a sting operation in 2013 in which its reporters, acting as decoy customers, met senior bank executives and officials expressing desire to stash and subsequently launder a huge amount of money at the behest of a politician and minister by hoodwinking tax authorities.

The FIU, an empowered agency under the PMLA, has fined HDFC bank Rs 26 lakh, ICICI Rs 14 lakh, Axis Bank Rs 13 lakh, Oriental Bank of Commerce and Corporation Bank Rs 1 lakh each, Bank of Maharashtra, Central Bank of India and The Federal Bank Limited Rs 2 lakh each, Dhanlaxmi Bank Limited, Development Credit Bank Ltd, Indian Bank and Dena Bank Rs 1 lakh each and ING Vysya Rs 3 lakh at the rate of Rs 1 lakh for each branch.

Under anti-money laundering laws, the FIU Director is authorised to slap a maximum penalty of Rs 1 lakh on a bank for its failure to submit Suspicious Transaction Reports (STRs) to it.

An STR pertains to those transactions which have been done in unjustified complexity or without a bonafide reason giving rise to a suspicion about their intent or are suspected to be used for money laundering or terrorist financing activities.

The banks are bound under law to file STRs to FIU under anti-money laundering laws on a time bound basis.

In its exhaustive orders, the FIU rubbished the banks' argument that the customers featuring in the sting had not actually carried out the transactions but merely expressed their desire to do so which cannot be construed as the bank's failure to comply with laid down rules.

"That the theft did not occur or the trespasser did not have the intention to trespass is no justification for the guards to be asleep," the FIU said, while nailing the role of the bank employees for not reporting such activities and instead encouraging the customers to use illegal means to hide their black money.