Six state-run banks fined for violating KYC, AML norms

Collective fine for these banks is Rs 6 crore, highest penalty of Rs 2 crore was levied on Dena Bank

In the third set of action on banks for violating the Know Your Customer and anti-money laundering guidelines, RBI on Friday penalised six public sector banks. Collective fines of Rs 6 crore have been imposed on these banks, and the highest penalty of Rs 2 crore was slapped on Dena Bank. The other banks are Allahabad Bank, Bank of Maharashtra, Corporation Bank, IDBI Bank and Indian Bank.    

IndusInd Bank’s reply to RBI’s showcause notice was found satisfactory and no violation of serious nature was established. RBI decided to issue a cautionary letter to the bank and did not impose any fine. RBI had carried inspections of books of the banks after online portal Cobrapost’s sting operation showed bank employees offering to launder clients’ money.     

In the first part of the sting operations, the portal showed videotapes of employees from top three private banks – ICICI Bank, HDFC Bank and Axis Bank – indulging in illegal transactions. In the second part, it exposed many public sector banks and insurers.

On the basis of investigation, RBI in June had imposed a collective penalty of Rs 10.5 crore on ICICI Bank, HDFC Bank and Axis Bank. In July, the central bank imposed penalties on 22 public and private banks and issued cautionary letters to six foreign banks and one public sector bank.

RBI reiterated that there was no prima facie evidence of money laundering.

It, however, said that any conclusive inference in this regard can be drawn only by an end-to-end investigation of the transactions by tax and enforcement agencies.