CVC tells RBI, banks to track small forex deals
■ Small forex payments may be used for money- laundering
New Delhi, Oct. 23: The CVC has asked RBI and 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 in the wake of alleged ` 6,100- crore foreign remittance scam through Bank of Baroda, a top official said on Friday.
“We have written to Reserve Bank of India ( RBI) to say that if smaller forex transactions of less than $ 1 lakh are being made than it should come to your notice,” Vigilance Commissioner T. M. Bhasin told reporters here.
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 RBI and 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. “IBA has also been asked to tell all memberbanks that they follow Know Your Customer ( KYC) and Anti- Money laundering ( AML) guidelines so as to check reoccurence of such ( Bank of Baroda case) incidents,” he said.
On the recent forex scam in which about ` 6,100 crore were remitted to Hong Kong allegedly misusing Bank of Baroda, Mr Bhasin said Enforcement Directorate ( ED) has been asked to look into the matter and if these were not genuine transactions then they should work on repatriation of the money.
Mr Bhasin said as soon as the BoB incident was reported to the Central Vigilance Commission, requests for probe was made to the CBI and ED.
“The Commission personally spoke to CBI and ED directors. The 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 24x7 basis,” he said.
The bank has not lost any money, said Mr Bhasin, who is also a former chairman and managing director 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 realtime, he said.
“Wherever loopholes are found, they are being plugged,” the vigilance commissioner claimed.
Both the CBI and ED are probing transactions of ` 6,100 crore to Hong Kong from the Bank of Baroda’s Ashok Vihar branch in Delhi. The huge transaction is believed to be tradebased money laundering as the amount was transferred in the garb of payments for imports, that never took place.
As per CBI probe so far, ` 6,100 crore were transferred through nearly 8,000 transactions done between July, 2014 and July 2015. The CVC has sought a report from BoB and CBI on this case.
We have written to RBI to say that if smaller forex transactions of less than $ 1 lakh are being made than it should come to your notice — T. M. BHASIN,
CVC