RBI penalises 22 banks for violation of KYC norms

Federal Bank, SBI, Central Bank of India, Canara Bank and Indian Overseas Bank are penalised with the amount of Rs. 3 crore each

July 15, 2013 1:41 IST | India Infoline News Service
The Reserve Bank of India (RBI) on Monday has imposed monetary penalty on 22 banks for violation of its instructions, among other things, on Know Your Customer / Anti Money Laundering.

These banks include Andhra Bank, Bank of Baroda, Bank of India, Canara Bank, Central Bank of India, Deutsche Bank, Development Credit Bank, Dhanlaxmi Bank, Indian Overseas Bank, ING Vysya Bank and Yes Bank among others.

Federal Bank, State Bank of India, Central Bank of India, Canara Bank and Indian Overseas Bank are penalised with the amount of Rs. 3 crore each.
Yes Bank, Dhanlaxmi Bank, Vijaya Bank, Oriental Bank have been penalised with the amount of Rs. 2 crore.

The 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, namely, 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.

The central banks also observed that some banks are not following KYC rules 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.

Based on the findings of the scrutiny, the 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, the 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, 2013.

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