SPECIFIED FINANCIAL INSTITUTIONS TURNING BLACK IN TO WHITE:REPORT

In what would come as a big setback to banks in the country, a sting operation conducted by Cobrapost website has revealed that some of the largest financial institutions are indulging in money laundering.

A press release by Cobrapost claimed that some Financial Institutions were caught red-handed in its nation-wide undercover investigation called Operation Red Spider, willing to turn black money into white. They shared the video of the operation to reporters. The footages are also available on its site.

Cobrapost says: "Our investigation, conducted across dozens and dozens of branches of these banks and their insurance affiliates, across all five zones of the country, revealed these shocking facts that these money laundering practices are part of a standard set of procedures within these banks," Cobrapost Editor Anirudh Bahal told reporters.

Cobrapost alleged that these Financial Institutions launder black money in the following manners:-

1) Accept huge amounts of cash and invest it in insurance products and gold.

2) Open an account to route the cash into various investment schemes of the bank.

3) Do it even without the mandatory PAN card or adhering to the KYC norms laid down by the Reserve Bank Of India.

4) Split the money into tranches to get it into the banking system without being detected.

5) Use "benami" accounts to facilitate the conversion of black money.

6) Use accounts of other customers to channelize the black money into the system for a fee.

7) Get demand drafts made for the client either from their own banks or from other banks to facilitate investment without it showing up in the client's account.

8) Keep the identity of the investor/depositor secret.

9) Open multiple accounts and close them at will to facilitate the investment of black money.

10) Invest black money in multiple instruments in the names of different individuals, not necessarily drawn from among the family.

11) Allot lockers for the safekeeping of the illegitimate cash, including special large size lockers to accommodate crores of hard cash.

12) Personally come to the residence of the client to take the black money deal forward and collect the cash, even bring along counting machine.

13) Use provisions like Form 60 to deposit the illegitimate cash into the account to route it into investment.

14) Help the client transfer black money abroad through NRE (Non-Resident External)/NRO (Non-Resident Ordinary) account transfer.

However, such Institutions denied the allegation and said in a statement that it "conducts its business with the highest level of compliance to legal and regulatory requirements."

"All employees of the Group are trained and required to adhere strictly to the Group Code of Conduct, including AML and KYC norms. We have demonstrated our commitment to this by following a zero tolerance policy towards any violation,"

Source: Cobrapost, IBTimes
http://www.cobrapost.com/archive-expose/operation-red-spider-part-1/17


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