Red Flag Multiple Forex Transactions: CVC To RBI, IBA

Red Flag Multiple Forex Transactions: CVC To RBI, IBA

The CVC has asked RBI and Indian Banks' Association (IBA) to red flag multiple transactions of smaller amounts from a single account and ensure compliance of KYC norms to check fraudulent forex transactions in the wake of alleged Rs 6,100 crore foreign remittance scam through Bank of Baroda, a top official said on Friday (23 October).

"We have written to Reserve Bank of India (RBI) to say that if smaller forex transactions of less than one lakh dollars are being made than it should come to your notice," Vigilance Commissioner T M Bhasin told reporters here.

He said similar communication has been sent to IBA chief, saying there may be "attempts to camouflage generation of alerts by sending small amount of money through multiple transactions of foreign exchange abroad. We have told RBI and IBA that they should tell banks to red flag transactions of smaller amount from one account."

At present, an alert is generated only when foreign exchange (forex) remittance is over one lakh dollars.

"IBA has also been asked to tell all member banks that they follow Know Your Customer (KYC) and Anti-Money laundering (AML) guidelines so as to check reoccurence of such (Bank of Baroda case) incidents," he said.

On the recent forex scam in which about Rs 6,100 crore were remitted to Hong Kong allegedly misusing Bank of Baroda, Bhasin said Enforcement Directorate (ED) has been asked to look into the matter and if these were not genuine transactions then they should work on repatriation of the money.

Bhasin said as soon as the BoB incident was reported to the Central Vigilance Commission, requests for probe was made to the CBI and ED.

"Commission personally spoke to CBI and ED Directors.

Very next day of the CVC's communication, Bank of Baroda's Ashok Vihar branch was raided by the CBI. They also conducted raids at 59 places and arrests were made. Today also investigation in the case is going on 24x7 basis," he said.

The bank has not lost any money, said Bhasin, former Chairman and Managing Director of Indian Bank.

The transactions were made in about a period of about 14 months and 90 per cent of them were through Real-Time Gross Settlement (RTGS) system, in which transactions are settled on real-time, he said.

"Wherever loopholes are found, they are being plugged," the Vigilance Commissioner claimed.

Both the Central Bureau of Investigation (CBI) and ED are probing transactions of Rs 6,100 crore to Hong Kong from a Bank of Baroda's Ashok Vihar branch here.

The huge transaction is believed to be trade-based money laundering as the amount was transferred in the garb of payments for imports, that never took place.

As per CBI probe so far, Rs 6,100 crore were transferred through nearly 8,000 transactions done between July, 2014 and July, this year.

The Commission has sought a report from BoB and CBI in this regard.