ICICI Bank sets up committee to probe money laundering allegations
Key takeouts from CobraPost sting on HDFC, Axis and ICICI

Corporate Mar 14, 2013

Here is how CobraPost alleges private banks laundered money

By Firstbiz Staff

A sting operation carried out by online magazine Cobrapost across various branches of private banks has revealed that banks are involved in money laundering.

Apart from HDFC Bank, Cobrapost also names Axis Bank and ICICI. ( Read ICICI's response here)

At the time of writingFirstposthad no way of authenticating the validity of the sting

Cobrapost alleges that banks launder black money in the following manner:

1. Accept cash and invest it in insurance products and gold.

2. Open an account to route the cash into various investment schemes of the bank.

Reuters

Reuters

3. Do it even without the mandatory PAN card or adhering to the KYC norms laid down by RBI.

4. Split the money into tranches to get it into the banking system without being detected.

5. Use "benami" accounts to facilitate the conversion of black money.

6. Use accounts of other customers to channelize the black money into the system for a fee.

7. Get demand drafts made for the client either from their own banks or from other banks to facilitate investment without it showing up in the client's account.

8. Keep the identity of the investor/depositor secret.

9. Open multiple accounts and close them at will to facilitate the investment of black money.

10. Invest black money in multiple instruments in the names of different individuals, not necessarily drawn from among the family.

11. Allot lockers for the safekeeping of the illegitimate cash, including special large size lockers to accommodate crores of hard cash.

12. Personally come to the residence of the client to take the black money deal forward and collect the cash, even bring along counting machine.

13. Use provisions like Form 60 to deposit the illegitimate cash into the account to route it into investment.

14. Help the client to transfer black money abroad through NRE (Non-Resident External)/NRO (Non-Resident Ordinary) account; transfer the money telegraphically or through means other than regular banking procedures.

Read more here

by Firstbiz Staff

Related Stories.