Money laundering: HDFC Bank says probe into Cobrapost expose yet to find irregularities

25 staff to remain suspended till completion of investigation

HDFC Bank today said it was yet to find a transaction which had breached the country’s anti-money laundering rules.

The country’s second largest private sector lender is investigating allegations that it was one of three  banks to be operating a money laundering racket. Cobrapost, an online magazine, had secretly taped as many as 25 employees seemingly offering money laundering as a product to undercover journalists.

While the bank is doing an internal audit in some of its branches, it has also appointed Deloitte Touche Tohmatsu India to conduct an independent enquiry. The Reserve Bank of India has also examined transactions in some of HDFC Bank’s branches.

“The issue is being reviewed and investigated from multiple quarters. Clearly, all the investigations have shown that there have been no instances of transactions actually taking place. Our belief is that the existing processes seem to have worked in not allowing these transactions to happen,” said Paresh Sukthankar, executive director of HDFC Bank.

He clarified the investigation process was not over,  as the bank was examining “lakhs of transactions” across 20-25 branches in the past year. “We want to be as thorough with our examinations as possible. We expect it to be over in the next few weeks,” he said.

The bank would strengthen its internal controls if it found any weaknesses. The 25 employees on videotape remain suspended.

“This was to ensure that the investigation can be conducted fairly and independently. They will remain suspended till investigation is over. We will give them a fair hearing and some of them may come out clean. If any employee is found to have violated the code of conduct, we will take action. It is too premature to make further comments,” said Sukthankar.

The bank has also called in the legal firm of Amarchand & Mangaldas & Suresh A Shroff & Co, to examine if any of its employees violated the bank’s code of conduct and ethical standards.