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Banks flouting KYC norms to be issued showcause notices

All exposures by online portal Cobrapost were related to know your customer (KYC) norms, RBI said

May 07, 2013 12:04 IST | India Infoline News Service
Reserve Bank of India (RBI) Deputy Governor KC Chakrabarty on Monday disapproved money laundering charges levelled against various banks, and said that all exposures by online portal Cobrapost were related to know your customer (KYC) norms.

Cobrapost’s expose on money laundering has now spread to encompass 23 banks and insurance companies. Cobrapost alleged that there was violation on PMLA (Prevention of Money laundering Act), KYC (know your customer) and banking norms. Among the banks accused in money laundering included SBI, IDBI, OBC, Dena Bank, IOB, Yes Bank, Dhanalaxmi Bank, PNB, ICICI Bank, Axis Bank, Canara and BoB.

Meanwhile in the post policy conference call RBI Governor Dr D Subbarao said, “We don’t believe that this involves any money laundering, if you understand money laundering as money involved in crime; however, there have been transgressions of KYC norms.”

What we have done is to talk to those banks, calls those CEOs for a meeting, role them about what the deficiencies are and they have gone back and implemented some of the systemic improvements. We have talked to the forensic auditors pointed by those banks, now we will be issuing them “Show Cause” notices and on the basis of that we will take action, Dr Subbarao added. 


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