Money laundering by pvt banks, claims sting

The Central Board of Direct Taxes (CBDT) has ordered an inquiry after an online portal claimed that three private banks of the country were indulging in money laundering.

As the portal Cobrapost’s expose caused a flutter, CBDT Member (Investigations) K V Chowdary said in Mumbai that the Board has “taken cognisance of the Cobrapost (which conducted a sting operation) story and have begun a probe in the matter.”

The portal accused the three banks - HDFC, ICICI and Axis – of receiving unverified sums of cash and putting them in their investment schemes and benami accounts in violation of anti-money laundering laws.

While all the three banks said they have held inquiry into the allegations, Finance Minister P Chidambaram said two of the banks have denied the charges and added the government would not jump to conclusions.

Revealing its investigation at a press conference, Cobrapost editor Aniruddha Bahal said the banks agreed to receive unverified sums of cash and put them in their investment schemes and benami accounts in violation of anti-money laundering laws.

Bahal said: “Our sting shows the banks are ready to take cash and invest them in their numerous investment schemes and under benami names…The banks are in clear violation of anti-money laundering and Income Tax rules in the country. They are running a parallel economy and doing the criminal act of converting black money into white.”
Not bothered

The bank officials, the sting shows, were also not keen to know the source of income of the cash even if it was from ministers and politicians and would waive the requirements of KYC norms or PAN card.

Reacting to the sting, opposition parties called for a thorough probe into the scam. Said CPM leader Sitaram Yechuri: “We had been opposing opening up of the Indian banking sector. We had feared this then itself and hence had opposed it. Now the government should probe the entire scam thoroughly.” The “Operation Red Spider” as the undercover operation was titled, purportedly shows a number of senior executives of the three banks verbally agreeing to take huge amounts of cash from the undercover reporter and putting them into a variety of long-term investment plans so that the black money ultimately is converted into white. No account, however, was opened nor any cash deposited in these banks.

On their part, the three banks issued statements saying they will investigate the charges.