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IRDA probes money laundering allegations against insurers

The insurers concerned have been asked to file a report on the allegations, IRDA said

May 07, 2013 9:57 IST | India Infoline News Service
Insurance Regulator and Development Authority (IRDA) on Monday said it will examine the allegations of money laundering against insurance companies which include LIC, Reliance Life, Tata AIA and Birla Sunlife.

"The insurance companies concerned have been asked to file a report on the allegations. The matter is under examination and appropriate action will be taken at the earliest," IRDA said in a release.

In its expose earlier in the day, the online portal Cobrapost alleged that there was violation on PMLA (Prevention of Money laundering Act), KYC (know your customer) and banking norms.

Investigative journalist and editor of Cobrapost, Aniruddha Bahal said, money laundering is done via virtual products. Around 23 private and PSU banks are involved in money laundering.

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, Bahal said today.

Banks accept unaccounted cash and invest in insurance products. Insurers such as Reliance Insurance, Tata AIG, Birla Sun Life are also involved in money laundering, Bahal further said.

The Cobrapost editor alleged that banks treated unaccounted cash as agriculture income to avoid income detection.

According to the expose, banks provide facilities to customers such as multiple lockers and machines to count money. For money laundering, banks enable creation of forged pan cards and multiple accounts, Bahal pointed out. Banks advise investors to maintain fake accounts for seven years saying that all details vanish after this period.

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