Cobrapost: FinMin for immediate action against staff

Within hours of online portal Cobrapost alleged money laundering by financial institutions, the Finance Ministry asked PSU banks and LIC to take immediate action against employees "appears to be advising" customers on ways of violating KYC and other regulatory norms.

"An inquiry must be initiated and completed expeditiously," Financial Services Secretary Rajiv Takru asked heads of several state-owned banks and Life Insurance Corporation (LIC) today.

Takru's communication has been sent to SBI and its associate banks, LIC, PNB, BoB, Canara Bank, BoI, Allahabad Bank, Andhra Bank, Bank of Maharashtra, Central Bank of India, Dena Bank, Indian Overseas Bank, Punjab & Sind Bank, UCO Bank, United Bank of India, Vijaya Bank, Indian Bank, Corporation Bank, Union Bank of India, IDBI Bank, Syndicate Bank and Oriental Bank of Commerce.

In its expose earlier in the day, Cobrapost has named as many as 23 public and private sector banks and insurance companies for allegedly "running a nation-wide money laundering racket, blatantly violating laws of the land." They are alleged to have violated the ‘Know Your Customer’ (KYC) and 'Anti Money Laundering' Guideline.

The Financial Services Secretary asked the CMDs to place under suspension with immediate effect officers and employees "who clearly appears to be advising potential customers along lines that would be an infringement of the legal process/could facilitate money laundering/could defeat the KYC norms or the norms of due diligence prescribed by RBI and the law".

The banks, the ministry said, should also "initiate a detailed scrutiny of such officer's work and institute a special audit, if necessary, for this purpose".


Takru has also asked the banks to disvest the officials concerned of their current portfolio and advise them to proceed voluntarily on leave pending investigations.
Besides, the Finance Ministry has sought a detailed reports from the financial institutions about names of erring employees, their designations and action taken against them.