Cobrapost slams RBI clean chit to money laundering in banks

Taking strong exception to RBI Deputy Governor KC Chakrabarty's clean chit to banks in allegation of money laundering, Cobrapost.com, which recently exposed the nexus between black money launderers and private banks, has questioned the hurry with which Chakrabarty denounced its expose.

A week ago, the website had revealed how these banks - HDFC Bank, ICICI Bank and Axis Bank - encouraged and facilitated conversion of black money into white through a sting operation, called Operation Red Spider, on three major banks.

Aniruddha Bahal

Aniruddha Bahal, Editor, Cobrapost.com

"The manner in which the RBI Deputy Governor has rushed to issue the statement, even before the Central Bank could complete the inquest it has initiated into money laundering practices by the three banks, even before these banks could complete their own investigations into the alleged misdemeanour of their officials, and even before the Income Tax Department could come up with its own finding, is tantamount to be self-serving and is a brazen attempt on the part of the Deputy Governor to not only give these banks a clean chit but also mask the miserable failure of the banking regulatory mechanism of the RBI. One gets the impression that the RBI deputy governor has taken upon himself to become the spokesperson of the three banks concerned," a press release of the website said.

Chakrabarty, in a statement on March 21, had said that there was no scam as the Cobrapost expose claimed. "There is no scam (that) has happened ... As no transaction has taken place. Let us not unnecessarily downgrade ourselves. Our system to prevent money laundering is perfect ... absolutely nothing (wrong with it)."

Cobrapost.com refuted the statement of the RBI Deputy Governor calling it a self-laudatory exercise and something premature, presumptive and preposterous aimed at "sweeping under the carpet the alleged involvement of the banking majors in money laundering". For the RBI to say that there is no offence as there was "no transaction" is a very novice reading of the law and a willful ignorance of rules and regulations supposed to be crafted and implemented by the RBI itself, the release said.

"Let Cobrapost remind RBI that India is a signatory to FATF (Financial Action Task Force on Money Laundering) and has treaty obligations to block precisely the kind of money laundering that the Cobrapost expose shows has been happening rampantly in the country's leading three private banks. Operation Red Spider by Cobrapost clearly shows that RBI and the Financial Intelligence Unit of the Finance Ministry have failed in their jobs and instead of heads rolling there the RBI is intent on diluting the nature of what has been found and saving its own skin," the release said.

Read the full press release here.


Updated Date: Dec 20, 2014 18:04 PM

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