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Money laundering: Banks on a damage control spree

Mar 16, 2013 03:49 PM IST India India

New Delhi: Private banks are in damage control mode after their employees were shown aiding money laundering in a sting operation by online magazine Cobrapost. While ICICI Bank has suspended 18 employees pending an investigation, HDFC Bank says it has ordered a probe by independent agencies on the expose.

HDFC Bank has also decided to do a special audit of all its branches shown in the expose. Meanwhile, Axis Bank has saoid that a thorough internal enquiry is on and that 16 employees are under the scanner.

However, Kotak Mahindra Bank said that it has found no evidence of black money transactions. The developments come a day after CNN-IBN accessed a copy of a govt report which shows several private banks were converting black money into white.

In a statement, HDFC Bank said, "The Bank has taken steps to appoint Deloitte Touche Tohmatsu to carry out forensic enquiry into the allegations, and M/s Amarchand & Mangaldas and Suresh A Shroff to examine breaches by bank officials."

Cobrapost's sting operation on private banks showed brazen money laundering across various branches of private financial institutions, including HDFC Bank, ICICI Bank and Axis Bank. The sting operation showed how bank employees are accepting black money from customers to convert them into white money.

Cobrapost claims that the nationwide operation shows how private banking and insurance affiliates launder money as part of standard procedures. Services that amount to money laundering are easily offered even to walk in customers. The Cobrapost sting shows that a variety of options are being offered.