An RBI study discovered KYC and AML violations in thematic study of 30 banks.
A Reserve Bank of India study has brought into light irregularities that are plaguing the entire banking system. The recent expose by Cobrapost was limited to questionable transactions in Axis Bank, ICICI Bank and HDFC Bank, but the RBI study has found out Know Your Customer (KYC) and anti-money laundering (AML) violations in a thematic study of 30 banks, sources told Gopika Gopakumar of CNBC-TV18. These findings have been forwarded to all the 30 banks and the RBI is now looking to share the details of this report with various regulators to possibly modify the existing regulations.
On KYC and AML violations, the RBI study has found that many banks have violated with regards to multiple issue of demand draft (DD) worth over Rs 50000, some banks even had no system to monitor split cash transaction. These banks include Kotak Mahindra Bank, State Bank of India (SBI), Bank of Baroda (BoB) and Central Bank.
The other finding is with respect to sundry deposit. Sundry deposits allow customers to put cash in these deposits and issue DD, banker's cheque, gold coins etc against these. All these are issued against cash worth more than Rs 50,000 which is a violation that is seen in banks like SBI, Central bank, Canara Bank etc.
The other finding is with regards to Cash Transaction Report (CTR) and Suspicious Transaction Report (STR) violations. Many banks have failed to generate these reports because of the absence of customer identity. The RBI has been insisting that banks should give a unique customer ID to all the customers to ensure that there is no duplication. But the study has concluded that such IDs have not been created for all customers and banks are unlikely to meet the May deadline set by the RBI.
On Wednesday, the I-T department issued notices to ICICI Bank, Axis Bank and HDFC Bankafter going through two confidential reports submitted recently to the Department of Revenue by the RBI and the Financial Intelligence Unit (FIU), official sources said today.