Stung private banks start internal probe

Three private banks have got into damage control mode after their employees were shown aiding money laundering in a sting operation by online magazine Cobrapost.

HDFC Bank on Saturday announced that it has appointed accounting and audit firm Deloitte Touche Tohmatsu India to carry out an independent forensic enquiry into allegations of some of its officials facilitating money laundering activities.

HDFC Bank said in a statement it has also appointed Amarchand & Mangaldas & Suresh A Shroff & Co to examine breaches, if any, of the bank's code of conduct & ethical standards, by any of its officials. 

These apart, HDFC Bank said internal departmental enquiry was underway to verify the truth or untruth or correctness, as the case may be, in the reported tapings of bank officials. The process has been initiated without prejudice to the authentication of the video recordings or electronic data, it added.

At the same time, country's leading private sector lender, ICICI Bank on Saturday said it has suspended 18 employees as it investigates an alleged money laundering case, while the third private sector lender Axis Bank—also figured in the sting operation of Cobrapost—observed that a thorough internal probe is on and 16 of its employees are under the scanner.

It may be noted that earlier this week, online magazine “Cobrapost” had played contents of a purported video recording of officials of private banks, including HDFC Bank, allegedly agreeing to receive unverified sums of cash and put them in their investment schemes and benami accounts in violation of anti-money laundering laws.

The sting operation named “Operation Red Spider,” showed a number of senior executives of the banks verbally agreeing to take huge amounts of cash from the undercover reporter and putting them into a variety of long-term investment plans to convert black money into white.

However, neither any account was opened nor any cash deposited for the purpose in these banks. Cobrapost claimed that the nationwide operation shows how private banking and insurance affiliates launder money as part of standard procedures. Services that amount to money laundering are easily offered even to walk-in customers. The Cobrapost sting also showed that a variety of options are being offered.