RBI fines Axis, ICICI, HDFC on KYC norms, says no money laundering

According to the notification posted on the Reserve Bank of India’s website, “The Reserve Bank has imposed a monetary penalty on Axis Bank, HDFC Bank and ICICI Bank for violating Reserve Bank of India instructions.”

The penalties are as follows: For Axis Bank - Rs 5 crore, for HDFC bank -Rs 4.5 crore and for ICICI Bank -Rs 1 crore. Recently the apex bank had scrutinized these three banks books of accounts, internal control, compliance systems and processes of their corporate offices and some branches. This scrutiny comes after the Cobrapost released a video of alleged money laundering.

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The central bank found that though there was no prima facie evidence of money laundering by these banks, they did fall short on a number of occasions to comply with the regulatory requirements.

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For instance, there was a violation of certain safeguards in respect of arrangement of “at par” payment of cheques drawn by cooperative banks. These banks also did not adhere to certain aspects of know your customer (KYC) norms and anti money laundering (AML) guidelines. These banks violated the regulatory requirement of obtaining PAN number of form 60/61 on various occasions.

In fact for few NRO accounts, these banks did not even verify the source of funds. These were a few parameters on which these three banks fell short of meeting the regulatory requirements.

Read the whole apex banks notification here.