Check small transactions done to dodge forex alerts, CVC tells banks

Check small transactions done to dodge forex alerts, CVC tells banks

Central Vigilance Commission on Friday asked RBI and banks to install a system to detect chunks of small amounts transferred abroad from a single account to check fraudulent forex transactions.

The commission’s suggestion comes after it received a report from the CBI and Bank of Baroda in a case where Rs 6,100 crore was sent to Hong Kong fraudulently.
In a letter to the banks, the CVC raised the possibility of smaller amounts being wired abroad to hide away from alerts generated if foreign exchange (forex) transactions exceed $ 100,000.

“There is a need to review the alert process,” Central Vigilance Commissioner KV Chowdary said addressing a press conference to brief about observing vigilance week.
Chowdary expressed surprise that no alert system was in place to stop Rs 6,100 crore from leaving the country in a fraudulent manner.

 He felt at least officers two positions above the one clearing such transactions should be aware of it.

Vigilance Commissioner TM Bhasin said the Commission has written to the RBI saying it should be made aware of forex transactions below 100,000 USD when they happen.
He said similar communication has been sent to banks warning that there could be "attempts to camouflage generation of alerts by sending small amounts of money through multiple transactions of foreign exchange abroad".

The Indian Banks Association (IBA) has also been asked to instruct its members that they follow Know Your Customer (KYC) and Anti-Money laundering (AML) guidelines to ensure incidents such as the one that happened with Bank of Baroda do not take place again.
The CBI and the ED are probing the Rs 6,100 crore transactions made through a Bank of Baroda account at its Ashok Vihar branch in Delhi.

The illegal transaction is believed to be trade-based money laundering as small chunks of the amount were despatched for imports that never took place.
DH News Service

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