Reserve bank of India imposes penalty on ICICI bank and Bank Of Baroda for violation to Know Your Customer (KYC) norms and as well as anti money laundering (AML) norms.
RBI has also cautioned SBI, Axis and State bank of Patiala to put in place appropriate measures and review them from time to time to ensure strict compliance to KYC norms.
RBI took this action on the basis of a complaint received from a reputed statutory organization in August 2013. In which five banks namely, SBI, ICICI, Bank of Baroda, Axis and State Bank of Patiala with participation of some officials has committed frauds by opening bank accounts.
As per the complain, by opening bank accounts in these five banks, fraudsters are able to manage to operate accounts for encashing cheques/demand drafts/postal orders of which they were not the rightful owners. This practice has been carried out for one month to two years without being detected by the banks.
On the basis of complaint, RBI has undertaken scrutiny in January 2014 which revealed violation of certain guidelines issued by RBI, namely;
- non-adherence to certain aspects of know your customer Know Your Customer(KYC) norms like customer identification and acceptance procedure
- internal norms regarding customer identification procedure of a bank being violative of Know Your Customer (KYC) directions issued by Reserve Bank
- non-adherence to instructions on monitoring of transactions in customer accounts
In a reply to the show cause notice issued by RBI on above matters, individual banks submitted written replies to RBI. After considering replies, documents furnished and other details, RBI has found serious violation in the case of ICICI bank ltd and Bank of Baroda and charged penalty of 50 lakhs on ICICI bank ltd and 25 lakhs on Bank of Baroda.
Most recently in June 2013, RBI had imposed monetary penalty of Rupees 500 lakhs, 400 lakhs and 100 lakhs on Axis, HDFC and ICICI banks respectively for violating RBI instructions related to KYC and AML guidelines.