Lok Sabha Question No. 1677 (UNSTARRED), answered on 2017-03-10
Subject: Money Laundering Cases
Ministry: FINANCE
Asked by: RAMSINH PATALYABHAI RATHWA

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE

## LOK SABHA UNSTARRED QUESTION NO. 1677

## TO BE ANSWERED ON FRIDAY, THE 10 TH  MARCH, 2017 PHALGUNA 19, 1938 (SAKA)

## Money Laundering Cases

## 1677. SHRI RAMSINH RATHWA:

Will the Minister of FINANCE be pleased to state:

- (a) the  number  of  money  laundering  cases  against  domestic  banks  taken  into cognizance by Government during each of the last three years and current year and the amount involved therein, bank and State-wise;
- (b) whether the Government has taken any decision of handing over the investigation of these cases to the Financial Intelligence Unit (FIU) and if so, the details thereof; and
- (c) the  corrective  steps  taken/being  taken  by  the  Government  to  curb  menace  of money laundering in banks?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI SANTOSH KUMAR GANGWAR)

- (a) & (b) FIU-IND is responsible for receiving, analysing and disseminating suspicious  transaction  reports  (STRs)  to  various  Law  Enforcement  Agencies  (LEAs) relating  to  money  laundering  (ML)  and  financing  of  terrorism  (TF),  after  receipt  of reports  from  its  reporting  entities  that  comprise  financial  institutions  and  Designated Non-Financial Businesses and Professions. Whether a case involves Money Laundering (ML) can be known only after investigation by the relevant law enforcement agency.  FIU-IND  does  not  have  powers  for  investigation.  However,  reporting  entities including  banks  are  obligated  under  section  12  of  the  PMLA  to  maintain  record  and furnish  specified  regular  reports  to  FIU-IND  in  the  specified  time  frame.  FIU-IND  has taken action under section 13 of PMLA against various banks for their violations relating to  reporting  obligations  during  last  3  years  and  current  year,  details  of  which  are enclosed at Annexure - 'A'.
- (c) In  order  to  prevent  banks  from  being  used,  intentionally  or  unintentionally,  by criminal elements for money laundering or terrorist financing activities, RBI has issued instructions  to  all  Scheduled  Commercial  Banks  (including  RRBs),  Local  Area  Banks, Primary  (Urban)  Co-operative  Banks,  State  and  Central  Co-operative  Banks  vide  its Master Circular regarding Know Your Customer (KYC) norms / Anti-Money Laundering (AML) standards / Combating Financing of Terrorism (CFT) / Obligation of banks and financial institutions under PMLA, 2002.
- The instructions have been issued under Section 35A of the Banking Regulation Act, 1949 and Rule 9(14) of Prevention of Money-laundering (Maintenance of Records) Rules, 2005.  Any contravention or non-compliance attracts penalties under the Banking Regulation Act, 1949.
- Banks  and  financial  institutions  (Fls)  have  been  advised  to  follow  certain customer identification procedure for opening of accounts and monitor transactions of suspicious nature for the purpose of reporting the same to appropriate authority.
- These 'Know Your Customer' (KYC) guidelines have been revisited in the context of  the  recommendations  made  by  the  Financial  Action  Task  Force  (FATF)  on  Anti Money Laundering (AML) standards and on Combating Financing of Terrorism (CFT).
- Detailed  guidelines  based  on  the  recommendations  of  FATF  and  the  paper issued  on  Customer  Due  Diligence  (CDD)  for  banks  by  the  Basel  Committee  on Banking Supervision (BCBS), with suggestions wherever considered necessary, have been issued.
- Banks/  financial  institutions  (Fls)  have  been  advised  to  ensure  that  a  proper policy  framework  on  'Know  Your  Customer'  and  Anti-Money  Laundering  measures  is formulated and put in place with the approval of their Boards.

## (i) Year 2014

|   S.no | Name of RE                         | Fine Imposed   | Issue Involved                                          |
|--------|------------------------------------|----------------|---------------------------------------------------------|
|      1 | Allahabad Bank Ltd                 | Rs 5.10 Lac    | Non-compliance of provisions of Section 12 of PMLA 2002 |
|      2 | Latur Urban Cooperative Bank Ltd   | Rs 0.90 Lac    | as above                                                |
|      3 | United Bank Of India               | Rs 5.70 Lac    | as above                                                |
|      4 | Star Union dai-ichi life insurance | Rs 1 Lac       | as above                                                |

## (ii) Year 2015

|   1. | HDFC Bank                   | Rs 26 Lac     | as above                                                |
|------|-----------------------------|---------------|---------------------------------------------------------|
|    2 | ICICI Bank                  | Rs 14 Lac     | as above                                                |
|    3 | Axis Bank                   | Rs 13 Lac     | as above                                                |
|    4 | Oriental Bank Of Commerce   | Rs 1 Lac      | as above                                                |
|    5 | Corporation Bank            | Rs 1 Lac      | as above                                                |
|    6 | Bank of Maharashtra         | Rs 2 Lac      | as above                                                |
|    7 | Central Bank of India       | Rs 2 Lac      | as above                                                |
|    8 | Dhanlaxmi Bank Ltd          | Rs1 Lac       | Non-compliance of provisions of Section 12 of PMLA 2002 |
|    9 | Development Credit Bank Ltd | Rs 1 Lac      | as above                                                |
|   10 | Federal Bank Ltd.           | Rs 2 Lac      | as above                                                |
|   11 | Indian Bank                 | Rs 1 Lac      | as above                                                |
|   12 | Dena Bank                   | Rs 1 Lac      | as above                                                |
|   13 | ING Vysa Bank Ltd           | Rs 3 Lac      | as above                                                |
|   14 | Bank of India               | Rs 2 Lac      | as above                                                |
|   15 | IndusInd Bank Ltd           | Rs 4 Lac      | as above                                                |
|   16 | Punjab National Bank        | Rs 3 Lac      | as above                                                |
|   17 | Indian Overseas Bank        | Rs 2 Lac      | as above                                                |
|   18 | Bank of Baroda              | Rs 3 Lac      | as above                                                |
|   19 | IDBI Bank                   | Rs 2 Lac      | as above                                                |
|   20 | Allahabad Bank              | Rs 3 Lac      | as above                                                |
|   21 | State Bank of India         | Rs 5 Lac      | Non-compliance of provisions of Section 12 of PMLA 2002 |
|   22 | Canara Bank                 | Rs 3 Lac      | as above                                                |
|   23 | National Spot Exchange Ltd. | Rs 1.66 Crore | as above                                                |

## (iii) Year 2016

|   1. | YES Bank Ltd                     | Rs 3 Lac      | as above   |
|------|----------------------------------|---------------|------------|
|    2 | Mahila Vikas Cooperative Bank    | Rs 79.60 Lac  | as above   |
|    3 | Mahamedha Urban Cooperative Bank | Rs 1.03 Crore | as above   |
|    4 | Axis Bank                        | Rs 264.30 Lac | as above   |

## (iv)  Year 2017 - NIL

## Annexure - 'A'