Indian tribunal strikes down penalties on 15 banks

A tribunal has struck down penalties imposed on 15 banks by the Financial Intelligence Unit for allegedly facilitating money laundering, as claimed by digital magazine Cobrapost four years ago.

The appellate tribunal under the Prevention of Money Laundering Act, in an 88-page order, set aside the penalties, saying the FIU failed to probe the charges against the banks and relied solely on electronic evidence, which was not admissible.

“It is evident that the director (FIU), before passing the impugned order, even failed to investigate beyond the edited tapes and transcripts,” the tribunal said in the order.

“Admittedly, the FIU till date has not received the complete and unedited tapes. Thus, it is apparent that the respondent has failed to establish its case on electronic evidence. The transcripts uploaded online are not admissible and authorised under the law.”

The tribunal held that the transcripts and videos were edited versions and could not be considered proof of actual conversations. Cobrapost had recorded some bank executives supposedly offering to convert unaccounted money.

It alleged in March 2013 that banks were systematically and deliberately violating provisions of various laws, including the Income Tax Act, Prevention of Money Laundering Act and know-your-customer norms, driven by their desire to boost deposits and increase profit.

The FIU found banks guilty for not reporting suspicious transactions and levied fines on 15 banks, including Rs 26 lakh on HDFC Bank, Rs 14 lakh on ICICI Bank, Rs 5 lakh on State Bank of India and Rs 13 lakh on Axis Bank. The banks challenged the penalties in the appellate tribunal.

The tribunal pulled up the banks for not reporting these attempted suspicious transactions and held that in future, they and their employees should be careful and report such discussions.

Re-disseminated by The Asian Banker from The Economic Times

Diary of Activities
China Private Wealth
06 December 2017 | China
The Future of Finance, Vietnam
12 January 2018 | Vietnam
Malaysia Innovation Tour
20 - 21 March 2018 | Malaysia
Excellence in Digital Finance Convention
22 March 2018 | Malaysia
The Future of Finance, West Africa
19 April 2018 | Nigeria