Banks keeping tabs on 'unusual activity' in certain accounts

Gaurav Choudhury

The government may change the norms of Annual Information Reports (AIRs) filed by banks on suspicious transactions as part of the broad plan to clamp down on people seeking to obscure hidden assets through multiple banking channels.

AIRs, introduced in 2004, mandate banks to file reports with the Reserve Bank of India (RBI) and the Financial Intelligence Unit (FIU) on suspicious transactions in their banks to prevent money laundering.

The norms for filing AIRs may be made more stringent in an attempt to identify those transactions where tax evaders, in connivance with some bank staff, may have converted black money into white following the demonetisation exercise.

The government expects a rise in the value of suspicious transactions reports (STRs) filed by banks and financial institutions (FIs) with the FIU.

The FIU, created by the Finance Ministry in 2004 to monitor money laundering, is preparing a list of doubtful bank transactions after the government announced the amnesty scheme IDS in April and the demonetisation drive in November.

The FIU will specifically focus on those cases where large number of accounts having a common account holder, introducer or authorised signatory.

Anybody found to have carried out “unexplained transfers between multiple accounts with no rationale,” will come under special scrutiny, sources indicated.

Banks have also been asked to report accounts that show “unusual activity compared with past transactions,” sudden activity in dormant accounts, and fund movement in accounts that are inconsistent, with what would be expected from declared business.

Banks have also been asked to report cases of frequent purchases of drafts or other negotiable instruments with cash, repeated value of cash deposits just under Rs 50,000 the reporting threshold amount in an apparent attempt to avoid reporting, instances of investment proceeds transferred to a third party, and other use of different accounts by client alternatively.

The FIU and the RBI will also closely examine the cash transaction reports (CTRs) that banks file annually.

According to the rules, banks and FIs have to file with the FIU information on all cash transactions of the value of more than Rs 10 lakh.In addition, all series of cash transactions totalling more than Rs 10 lakh a month that banks believe could be integrally connected also feature in the cash transactions report.

Gujarat realtor Mahesh Shah who declared Rs 13,000 crore as undisclosed amount now and now claims he was merely fronting for people. Also, an Ajmer family has declared Rs 2 lakh crore under IDS are pointers of potential funneling of slush funds.

Intelligence agencies, tax authorities, enforcement agencies and regulators will anlayse the end use of these transactions, many of which might have been invested in stock markets, real estate deals, insurance premium and or used for terror financing. 

“The FIU has developed capabilities to ensure that all related information available about an account holder can be viewed on a single page,” a source told Moneycontrol.

“Clusters of information based on common name, address, PAN or other criteria will be culled out these databases,” the source said.