Fines range from Rs 50 lakh to Rs 3 crore for violation of Know Your Customer / Anti Money Laundering guidelinesThe Reserve Bank of India (RBI) has imposed monetary penalty on 22 banks including State Bank of India (SBI), Bank of India and Bank of Baroda for violation of instructions, among other things on Know Your Customer (KYC)/Anti Money Laundering (AML), said a press release issued by the central bank on Monday.
The central bank also said that in respect of seven other banks, where such scrutinies have been conducted and banks’ explanation called for, the banks’ written or oral submissions were found to be satisfactory or no violation of serious nature has been established.
These include banks like Standard Chartered Bank, Citibank N A., BNP Paribas etc. According to RBI it has, therefore, been decided not to impose any monetary penalty but to issue only suitable cautionary letters.
According to RBI a similar scrutiny was also conducted in seven other banks during April and May 2013. The process of follow up action in respect of those banks is at different stages of its completion.
The penalties have been imposed in exercise of powers vested in RBI under the provisions of section 47(A)(1)( c ) read with section 46(4)(i) of the Banking Regulation Act, 1949, said the press release.
It may be recalled that RBI had carried out a scrutiny of books of accounts, internal control, compliance systems and processes of these banks at their offices during April 2013. The scrutiny of these banks revealed violation of certain regulations and instructions issued by RBI.
These include, non-adherence to certain aspects of know your customer (KYC) norms and anti money laundering (AML) guidelines like customer identification procedure, risk categorisation, periodical review of risk profiling of account holders, periodical KYC updation.
Besides that it also includes, non-adherence of KYC for walk in customers including for sale of third party products, omission in filing of cash transaction reports (CTRs) in respect of some cash transactions, sale of gold coins for cash beyond Rs 50,000, non-adherence to instructions on monitoring of transactions in customer accounts, non-adherence to instructions on classification of accounts as ‘in-operative’/dormant and lapses in monitoring of transactions in dormant accounts.
Few other regulations and instruction include, non-adherence to instructions which prohibits acceptance of cash above Rs 50,000 from customers for sale of gold coins and issue of demand drafts, etc, non-adherence to instructions on the upper limit for remittances under liberalised remittance scheme, upper limit for repatriation of funds from non resident ordinary (NRO) accounts and non-adherence to instructions on import of gold on consignment basis.
According to RBI the investigation did not reveal any prima facie evidence of money laundering. However, any conclusive inference in this regard can be drawn only by an end to end investigation of the transactions by tax and enforcement agencies.
Based on the findings of the scrutiny, RBI issued a show cause notice to each of these banks, in response to which the individual banks submitted written replies. After considering the facts of each case and individual bank’s reply, as also, personal submissions, information submitted and documents furnished, RBI came to the conclusion that some of the violations were substantiated and warranted imposition of monetary penalty. The RBI penalised the first lot of three banks, on June 10.
The Reserve Bank of India (RBI) has imposed monetary penalty on 22 banks including State Bank of India (SBI), Bank of India and Bank of Baroda for violation of instructions, among other things on Know Your Customer (KYC)/Anti Money Laundering (AML), said a press release issued by the central bank on Monday.
The central bank also said that in respect of seven other banks, where such scrutinies have been conducted and banks’ explanation called for, the banks’ written or oral submissions were found to be satisfactory or no violation of serious nature has been established.
The central bank also said that in respect of seven other banks, where such scrutinies have been conducted and banks’ explanation called for, the banks’ written or oral submissions were found to be satisfactory or no violation of serious nature has been established.
These include banks like Standard Chartered Bank, Citibank N A., BNP Paribas etc. According to RBI it has, therefore, been decided not to impose any monetary penalty but to issue only suitable cautionary letters.
According to RBI a similar scrutiny was also conducted in seven other banks during April and May 2013. The process of follow up action in respect of those banks is at different stages of its completion.
The penalties have been imposed in exercise of powers vested in RBI under the provisions of section 47(A)(1)( c ) read with section 46(4)(i) of the Banking Regulation Act, 1949, said the press release.
It may be recalled that RBI had carried out a scrutiny of books of accounts, internal control, compliance systems and processes of these banks at their offices during April 2013. The scrutiny of these banks revealed violation of certain regulations and instructions issued by RBI.
These include, non-adherence to certain aspects of know your customer (KYC) norms and anti money laundering (AML) guidelines like customer identification procedure, risk categorisation, periodical review of risk profiling of account holders, periodical KYC updation.
Besides that it also includes, non-adherence of KYC for walk in customers including for sale of third party products, omission in filing of cash transaction reports (CTRs) in respect of some cash transactions, sale of gold coins for cash beyond Rs 50,000, non-adherence to instructions on monitoring of transactions in customer accounts, non-adherence to instructions on classification of accounts as ‘in-operative’/dormant and lapses in monitoring of transactions in dormant accounts.
Few other regulations and instruction include, non-adherence to instructions which prohibits acceptance of cash above Rs 50,000 from customers for sale of gold coins and issue of demand drafts, etc, non-adherence to instructions on the upper limit for remittances under liberalised remittance scheme, upper limit for repatriation of funds from non resident ordinary (NRO) accounts and non-adherence to instructions on import of gold on consignment basis.
According to RBI the investigation did not reveal any prima facie evidence of money laundering. However, any conclusive inference in this regard can be drawn only by an end to end investigation of the transactions by tax and enforcement agencies.
Based on the findings of the scrutiny, RBI issued a show cause notice to each of these banks, in response to which the individual banks submitted written replies. After considering the facts of each case and individual bank’s reply, as also, personal submissions, information submitted and documents furnished, RBI came to the conclusion that some of the violations were substantiated and warranted imposition of monetary penalty. The RBI penalised the first lot of three banks, on June 10.
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