Banks appoint audit firms,panel to probe allegations

Banks appoint audit firms,panel to probe allegations

Money laundering ICICI,Axis,HDFC Bank start internal probe; RBI examines sting video

Top private sector lenders ICICI Bank,HDFC Bank and Axis Bank have started investigating the allegation of money laundering at some of their branches. Banking regulator Reserve Bank of India (RBI) has also commenced its probe into the matter.

The allegations were made by web portal Cobrapost after it conducted a sting operation and played the purported video recording of officials of the three banks seemingly agreeing to receive unverified sums of cash and put them in their investment schemes and ‘benami’ accounts. However,no account was opened nor any cash deposited.

HDFC Bank has appointed Deloitte Touche Tohmatsu India,an accounting and audit firm,to carry out “an independent forensic enquiry” into the allegations and reported statements,as made by Cobrapost representatives,when secretly taping bank officials.

The bank has also asked Amarchand & Mangaldas & Suresh A Shroff & Co to examine the breaches,if any,of the bank’s code of conduct and ethical standards,by any bank officials. This will be done in association with the bank’s internal departmental enquiry. It will also carry out special audit of some of its branches,where the reported videotaping was done.


Axis Bank said a thorough internal enquiry is already underway to look into all aspects of the matter and the findings are expected shortly. Pending the enquiry,the bank has advised 16 concerned employees to report to respective administrative offices.

The banks also set up a senior level committee to monitor and supervise the entire investigation process on a daily basis,Axis Bank said.

ICICI Bank has suspended 18 employees pending an inquiry into suspected money laundering,the bank said in a statement. It has constituted a high-level inquiry committee to investigate into the matter and submit its findings in two weeks.

The RBI is collecting information regarding the alleged acts of money laundering by the three largest private sector banks. The RBI will examine the video clips and investigate whether these banks followed the ‘know your client’ (KYC) regulations.”We’re looking into the matter,” an RBI official said.

HDFC Bank said it’s also proceeding to detail out the internal checks and balances and procedural safeguards already in place to report on the robustness of the compliance of regulatory guidelines and internal procedures,which would prevent,trap or enable pre-fact or post-fact discovery of violation of KYC norms and of money laundering activity.

“The bank is also detailing the efficacy of induction and ongoing training provided for ingraining ethical behaviour and conduct rules,as preventive and protective measures,” it said.