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RBI penalises 22 banks for violation of KYC and anti-money laundering norms

Defaulters include large lenders such as State Bank of India, Punjab National Bank and Bank of Baroda.

The Reserve Bank of India (RBI) has penalised 22 banks for violation of its instructions, including know your customer (KYC) and anti-money laundering (AML) norms. The penalty varies from Rs 50 lakh to Rs 3 crore. The defaulters include large lenders such as State Bank of India, Punjab National Bank and Bank of Baroda.

The central bank has imposed a total penalty of Rs 49.5 crore on the defaulters which largely include public sector banks besides a few new and old private sector banks. The list of banks also includes PE-backed banks such as
Development Credit Bank Ltd, Dhanlaxmi Bank Ltd, ING Vysya Bank Ltd, Kotak Mahindra Bank Ltd, The Federal Bank Ltd and The Ratnakar Bank Ltd. These banks have been penalised for a total of Rs 12 crore.

However, based on the scrutinies on seven other banks, the RBI has said their explanation has been found to be satisfactory or no violation of serious nature has been established. These include banks such as Standard Chartered Bank, Citibank NA and BNP Paribas. The RBI has, therefore, decided not to impose any monetary penalty but to issue only cautionary letters to these banks.

A similar scrutiny was conducted in the case of seven other banks during April and May 2013 and a follow-up action is at different stages of completion.

It may be recalled that RBI carried out a scrutiny of books of accounts, internal control, compliance systems and processes of these banks at their offices. A sting operation conducted by an online portal Cobrapost, which exposed the violation of KYC and AML norms in a few banks, resulted in RBI’s decision to scrutinise the entire banking sector.

The scrutiny of these banks revealed violation of RBI regulations, including non-adherence to certain aspects of
KYC and AML guidelines such as non-adherence of KYC for walk in customers, omission in filing of cash transaction reports (CTRs) and sale of gold coins for cash beyond Rs 50,000.

According to RBI, the investigation has not revealed any prima facie evidence of money laundering. However, any conclusive inference in this regard can be drawn only by an end of the investigation of the transactions by tax and enforcement agencies, it said.

RBI penalised the first lot of three banks— Axis Bank, HDFC Bank and ICICI Bank—on June 10, 2013.

(Edited by Joby Puthuparampil Johnson)

Punjab National Bank Ltd. is engaged in providing banking services. It offers personal banking products and services which includes savings accounts, current accounts, fixed deposits, nomination facilities and debit cards. It also provides housing loans, car finance, personal loans, professional loans, educational loans, mortgage loans and other corporate credit and micro credit schemes. The firm also offers corporate banking products and services, such as loans against future lease rentals, export-import finance, cash management services and gold card schemes. The company was founded in 1894 and is based in New Delhi, India.

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