SBI, LIC facilitated money laundering: Cobrapost

From aiding customers to invest unaccounted money in insurance policies to advising them on ways to avoid coming under the income-tax scanner, officials of the banks have been caught on tape violating the so-called KYC norms, says Cobrapost. Photo: Pradeep Gaur/Mint
Live Mint : Remya Nair : Mon, May 06 2013. 10 43 AM IST
In its latest expose, Cobrapost accuses more than a dozen public banks, financial institutions of money laundering

New Delhi: State Bank of India (SBI), Life Insurance Corporation of India (LIC), Bank of Baroda and Punjab National Bank are among more than a dozen state-owned banks and financial institutions that have been accused of money laundering by online magazine Cobrapost.com in its latest expose.

Cobrapost has also accused private sector banks and financial institutions such as Yes Bank Ltd, Reliance Capital Ltd and Birla Sunlife, and some politicians of indulging in money laundering.

From aiding customers to invest unaccounted money in insurance policies to advising them on ways to avoid coming under the income-tax scanner, officials of these banks have been caught on tape violating the so-called KYC (know your customer) norms put in place to prevent tax evasion and also various laws under the Prevention of Money Laundering Act and the Income Tax Act, Cobrapost said.

Other banks named include Canara Bank, Oriental Bank of Commerce, Indian Bank, Indian Overseas Bank, Dena Bank, Allahabad Bank, Corporation Bank, IDBI Bank Ltd, Central Bank of India, Dhanlaxmi Bank Ltd and Development Credit Bank Ltd.

Cobrapost had alleged in March that ICICI Bank Ltd, Axis Bank Ltd and HDFC Bank Ltd were involved in money laundering.

Subsequently, the central bank along and other government agencies initiated investigations to probe the allegations.

The Reserve Bank of India’s investigation revealed certain lapses on the part of these banks pertaining to KYC guidelines and also raised some systemic issues that needed to be addressed, financial services secretary Rajiv Takru said last month.

Cobrapost has released transcripts of conversations involving executives at banks and finance companies where they are shown to be all-to-eager to gain business, even at the cost of violating the country’s laws. Mint hasn’t seen the original recordings and cannot vouch for their authenticity.

Mint is also in the process of reaching out to the banks and finance companies named for their response.