Scam
20:04
Showing posts with label Scam. Show all posts
Showing posts with label Scam. Show all posts
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Tuesday, 16 February 2016
Scam
07:22
Bank of Baroda forex scam: RBI finds irregularities in bank's transactions
Bank of Baroda forex scam: RBI finds irregularities in bank's transactions
Various irregularities by banks such as non-submission and inordinate delays in filing of Suspicious Transaction Reports (STRs), besides opening of accounts by several entities without fulfilling KYC norms, have been noticed by Reserve Bank of India.
The observation came as part of inspection done by the central bank after last year's Bank of Baroda case in which Rs 6,100-crore import remittances were effected by its Ashok Vihar branch here.
Both CBI and the Enforcement Directorate are probing the huge remittances to Hong Kong from the bank. The amount was allegedly transferred in the garb of payments for imports that never took place, investigators say.
After the BoB case, RBI wrote a confidential letter to chairmen and chief executives of all commercial banks asking them to review existing policies and effect necessary improvements where warranted to avoid recurrence of such irregularities.
"While some banks have filed Cash Transaction Reports (CTRs) and STRs with Financial Intelligence Unit in time, in several cases either the CTRs or STRs were not filed or filed with inordinate delay or closed at the bank level without proper verification and regard to frequency of reporting in such accounts.
"Current accounts have been opened by several entities with banks, often even without fulfilling the KYC requirements. Several instances of banks not exercising proper due diligence have come to our notice," it said in the letter, copy of which was received in reply to an RTI query filed by PTI.
After observing some of the transactions of select banks, RBI found that risk categorisation of accounts as well as transaction processes was not done in a proper way.
"Advance import remittances have been permitted without verifying the bonafide of transactions and without carrying out proper due diligence of both the Indian clients as well as overseas suppliers, despite clear instructions in this regard from Foreign Exchange Department, RBI," it said.
Several structured remittances in the range of USD 80,000 -99,900 have been made by the same account holder very frequently from select authorised dealer branches, the central bank said.
It added: "In many banks neither the concurrent auditors nor the internal auditors could find out irregularities in such a large scale, raising questions about the scope, coverage and capability of the internal control mechanisms.
"What was more disquieting was the fact that the abnormal spurt in import transactions in these branches vis-a-vis the performance in previous periods has not caught the attention of the controlling or head office of the bank."
Considering the "scale and spread of such transactions", banks were advised to immediately initiate a detailed internal audit of Authorised Dealers branches where such remittances have gone up significantly during the past two to three years.
"The scope of audit also may cover the current accounts with huge number of inward or outward Real-time gross settlement (RTGS) and National Electronic Funds Transfer (NEFT) transactions, not in sync with the declared turnover or business, KYC processes followed etc," it said.
In reply to the RTI application, RBI has said that it is in the process of receiving the internal audit report from various banks.
Source:BankingUpdates
Monday, 19 October 2015
Scam
11:11
HDFC Bank suspends official involved in Bank of Baroda scam
HDFC Bank suspends official involved in Bank of Baroda scam
Amid the alleged involvement of HDFC Bank official Kamal Kalra in the Rs 6,000-crore illegal remittances, the private sector bank has suspended Kalra pending the investigation.
The scam involves Rs 6,000 crore illegal remittances that have suspected to be flown out from Bank of Baroda's Ashok Vihar branch in New Delhi to Hong Kong and Dubai.
In a statement, HDFC Bank said, “The bank has a zero-tolerance policy for any misconduct on the part of its staff and any deviation from its clearly defined processes is viewed very seriously. Swift action is taken both at an organizational and employee level, and as per process the employee in question has been suspended pending the outcome of the investigation.”
”In response to reports relating to investigations against one of our employees, we would like to state that the matter is being examined internally on top priority. The Bank is also extending its full cooperation and support to the authorities as they conduct their investigations,” the statement further adds.
As per the investigation so far, both Central Bureau of Investigation and Enforcement Directorate have arrested six persons including Kalra, who is HDFC Bank’s Forex Sales Manager in the forex department, for the alleged money laundering.
While CBI arrested Suresh Kumar Garg, the assistant general manager of Ashok Vihar Branch and Jainis Dubey, the foreign exchange head, the persons arrested by the Enforcement Directorate include Kamal Kalra, Chandan Bhatia, Gurucharan Singh and Sanjay Aggarwal, who were allegedly involved in the transaction of 15 accounts.
Bhatia, Singh and Aggarwal are said to be owners of companies based in Hong Kong and Dubai towards which the money was being transferred through 59 accounts at the bank's Ashok Vihar branch.
Meanwhile, Bank of Baroda’s internal investigation had detected irregularities in foreign exchange transfers from said branch and also suspended five officers. The public sector bank has also changed the concurrent auditor firm of the specific branch.
“The investigation currently underway pertains to 59 current accounts, which were opened during the period between May 13, 2014 to June 20, 2015 and were used for outward foreign remittance transactions aggregating to $576 million (Rs 3,672.30 crore) predominantly for the purpose as “Advance remittance for imports” to overseas parties numbering about 418, mainly based in Hong Kong,” Bank of Baroda had said on Tuesday.
“It is pertinent to note that less than 10 per cent (Rs 343 crore) of the amount involved had been deposited in these accounts by way of cash and balance 90 per cent amount had been received through RTGS / NEFT from 51 different banks. Bank would also like to clarify that while the investigations are underway, at the current stage, it does not envisage significant financial losses on account of this incident,” it added.
There are many unanswered questions which continue to be probed, such as opening of current accounts in spite of inconclusive KYC process in some cases, individual failure of detection of irregularities, non-follow up of system alerts to track exceptional transactions and reasons for the long lead time to identify these irregularities.
The newly appointed MD & CEO, P.S. Jayakumar said, “My utmost priority is to examine the current situation and bring about the necessary changes within the bank to ensure such unfortunate incidents do not recur. This will include the appointment of an external accounting firm for full review of our KYC norms and its effectiveness across all branches…”
Friday, 16 October 2015
Scam
08:09
Forex scam traced to HDFC Bank Accounts
Forex scam traced to HDFC Bank Accounts
Investigative agencies have traced the Rs.6,000-crore money laundering scam involving Bank of Baroda (BoB) to 11 accounts of HDFC Bank, where the fraud might have actually commenced. More arrests of those involved in the case, besides six made by the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED), are expected in the coming days. The investigative agencies have found that the transactions through the 11 HDFC Bank accounts started way back in January, 2014, while those from BoB began sometime in August that year.
The amounts were transferred from HDFC Bank to BoB for making advanced remittances for imports that never took place. Meanwhile, ED is also investigating whether HDFC Bank accounts were used to make foreign transfers. "This is just one chain involving 26 accounts of HDFC Bank and Bank of Baroda. There are three or four more such chains, but the game is the same of over-claiming duty drawback and evading customs duty. More searches will take place in the coming days," said a finance ministry official
.
ED is expected to investigate the employees of HDFC bank's Netaji Subhash Place branch in New Delhi and has already arrested its employee Kamal Kalra, who worked at the bank's forex department and facilitated illegal transactions. Real-time gross settlement (RTGS) transfers were, however, made through many other banks as well. "Banks would per se not be involved in case of RTGS, but it has brought to light how weak the Know Your Customer (KYC) norms are," said the finance ministry official.
The department of financial services is expected to instruct banks to tighten the implementation of KYC norms. Bank of Baroda has contended that only 6.7 per cent (Rs 343 crore) of the Rs 6,000 crore was deposited in cash in the bank, while the remaining Rs 4,808 crore came through other banking channels. "The question is not how money has come, but is sending money abroad illegally, from where import has not taken place and advance remittances were done," the official added.
The 11 bank accounts of HDFC bank in question were of Sanjay Aggarwal and Chandan Bhatia, who acted as middlemen for such transactions having shell companies in Hong Kong and Dubai. While five of the 11 accounts were of Bhatia, six belonged to Aggarwal, sources said. The two have already been arrested along with Kalra.
ED investigations under the Prevention of Money Laundering Act claimed that the HDFC Bank employee was allegedly helping Bhatia and Aggarwal in remitting the amount through Bank of Baroda against a commission of 30-50 paise per dollar remitted abroad. The agency is also probing a case for forex contraventions under the Foreign Exchange Management Act.
Both CBI and ED pursued the case after an internal investigation by BoB showed Rs 6,172 crore was sent from India to Hong Kong for import of cashew nuts, pulses and rice, but nothing was imported and the money was deposited in 59 bank accounts of several companies.
Bhatia was a middleman and also an exporter who had shell companies in India that used to remit money to the companies based in Hong Kong. He also formed companies in Hong Kong. He has so far revealed that he had sent foreign remittances to the tune of Rs 420 crore.
Aggarwal was working in tandem with importers and had formed many firms in India from where he used to send foreign remittance in advance from BoB in lieu of the imports that never happened. He had formed companies in Hong Kong and Dubai to transfer the difference in import value to save customs duty in the bank account of the importers. During this period, he had sent foreign remittances to the tune of Rs 430 crore.
source:Bankingupdates
source:Bankingupdates
Scam
08:06
Internal audit bringing Bank of Baroda fraud to light is welcome
Internal audit bringing Bank of Baroda fraud to light is welcome
The alleged trade-based money laundering in the Bank of Baroda (BoB) shows that procedures at the bank were clearly wanting as money was remitted against imports that perhaps were not made. The accused, allegedly in connivance with bank officials, reportedly created a fraudulent trade circuit: the Indian companies exported overvalued products by generating fake bills and the shell companies in Hong Kong submitted fake import bills to claim duty drawback.
The difference in the bills and actual value was moved through the banking channel, in violation of the anti-money laundering rules.
That an internal audit brought the fraud to light is welcome. While no system is fully foolproof, in this case, controlling offices are to blame for failure to verify the shipments from customs authorities.
Customs issues bills of entry, giving details of the exporter and the consignment, and a bill of lading, detailing the shipment of merchandise. Officials in BoB appear to have ignored the requirement of bill of entry and bill of lading, besides bills or receipts of the exporter as evidence of purchase despite the abnormal volume of remittances. The anti-money laundering law requires a bank to report suspicious transactions, but that was not done.
Nor was the authenticity of documents verified. The lack of due diligence by the controlling offices is baffling. And that too with consignment verification becoming far simpler now, through Customs Electronic Commerce/Electronic Data interchange gateway.
Six people that include bank officials have been arrested. Both the Enforcement Directorate and the Central Bureau of Investigation are probing the scam. Exemplary punishment to fraudsters can act as a deterrent, but there is no substitute for eternal vigilance by banks to curb money laundering.
Source:Bankingupdates
Tuesday, 13 October 2015
Scam
12:43
Bank of Baroda Forex scam: CBI conducts raids, questions suspects
Bank of Baroda Forex scam: CBI conducts raids, questions suspects
New Delhi: CBI teams Sunday swooped down at 50 locations in Delhi in connection with its probe into alleged spurious transactions of Rs 6,000 crore to Hong Kong from a Bank of Baroda branch in the garb of purported payments of "non-existent" imports.
CBI sources said agency has found that Ashok Vihar branch of the bank was a relatively new one which has got the permission to entertain forex transactions only in 2013.
They said that Rs 6,000 crore were transferred through nearly 8,000 transactions done between July, 2014 and July, 2015.
Giving details of the case, CBI spokesperson Devpreet Singh said here today it was alleged that the amount remitted in each transaction would be kept at less than USD one lakh.
"All the remittances were made to Hong Kong. The amount was remitted as advance for import and in most of the cases, the beneficiary was the same," the spokesperson said.
Most of the foreign exchange-related transactions were carried out in newly opened current accounts wherein heavy cash receipts were observed but the branch did not generate Exceptional Transaction Report (ETR) and did not monitor the high value transactions, she said.
The sources said these remittances were sent by splitting them into amounts below one lakh USD to avoid automatic detection by software used by banks to alert them about such transactions.
They said in taxation language the technique is known as smurfing and holders were able to skip the scrutiny of such transactions.
The sources said most of the 59 accused have been identified by the agency which today carried out searches at 50 locations in a massive operation involving about 200 officers.
"It was revealed that most of the addresses given by the companies / firms were either false or the companies / firms did not exist at the said addresses. Most of the accused persons allegedly involved in perpetration of the said crime have been identified and their interrogation is underway," she said.
CBI is tight-lipped about accused and beneficiary in the case claiming that probe which is in a delicate state is not jeopardised.
CBI has registered a case under section 120-B (criminal conspiracy) read with 420 (cheating) of IPC and Section 13(2) read with13(1)(d) of Prevention of Corruption Act, 1988 against 59 current account holders and unknown bank officials and private persons on a complaint from Bank of Baroda.
The FIR alleged that "59 current account holders and unknown bank officials conspired to send overseas remittances, mostly to Hong Kong, of Foreign Exchange worth approximately Rs 6,000 crores in illegal and irregular manner in violation of established banking norms under the garb of payments towards suspected non-existent imports."
The Enforcement Directorate has also registered a case and carried out searches in this connection. Yesterday, Congress had demanded an inquiry in to the matter.
"It was strange that the money was sent to buy cashew, pulses and rice from Hong Kong," Congress spokesperson RPN Singh had said.
The bank which had carried out an internal probe, after audit red flagged nearly 8000 transactions done from Ashok Vihar branch of the Bank, found that there was failure on their part to report these suspicious transactions, they said.
They said the account holders who were allegedly sending these payments to Hong Kong had claimed that these were advances for imports of cashew, rice etc whereas no such imports ever took place.
PTI
First Published: Sunday, October 11, 2015 - 14:18
Source :IndianBankKumar.blogspot.in
