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Wednesday, July 18, 2018

CVC to RBI, banks: Red flag multiple forex transactions

At present, alert is generated only for forex remittances worth over $1 lakh

By: Express News Service | New Delhi | Published: October 24, 2015 12:39:27 am
Forex scam, Bank of Baroda, IBA, fraudulent forex transactions, Red flag forex transactions, business news As soon as the BoB incident was reported to the Central Vigilance Commission, requests for probe was made to the Central Bureau of Investigation (CBI) and the ED.

Taking cognizance of the alleged Rs 6,100 crore Bank of Baroda forex scam, the Central Vigilance Commission (CVC) has asked the Reserve Bank and the 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.

“We have written to Reserve Bank of India (RBI) to say that if smaller forex transactions of less than $1 lakh are being made, then it should come to your notice,” vigilance commissioner TM Bhasin said.

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 the RBI and the 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 $1 lakh. In the BoB case, the accused allegedly sent all the money abroad in tranches of less than $1 lakh so as not to arouse suspicion.

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“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 reoccurrence of such (Bank of Baroda case) incidents,” he said.

On the alleged forex scam in which about Rs 6,100 crore were remitted to Hong Kong allegedly misusing Bank of Baroda, Bhasin said the Enforcement Directorate (ED) has been asked to probe 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 Central Bureau of Investigation (CBI) and the ED.

“Commission personally spoke to the 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 a 24×7 basis,” he said.

The bank has not lost any money, said Bhasin, the former CMD 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 CBI and ED are probing transactions of Rs 6,100 crore to Hong Kong from Bank of Baroda’s Ashok Vihar branch in Delhi.

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

As per the 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 the CBI in this regard.

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