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Rediff News  All News  » News » RBI probes banking gaints on money laundering charges

RBI probes banking gaints on money laundering charges

August 27, 2012 14:29 IST
A shocking revelation that banking giants HSBC and Standard Chartered are suspected to have laundered money for drug cartels has prompted an in-depth inquiry by Indian investigation agencies.

The Reserve Bank of India with the support of the revenue intelligence wing has found that some elements within these banks had helped in criminal transactions.

However, the probe is far from complete, as the role of the Indian subsidiaries of these banks is also suspected.   

The probe at first was specific to HSBC and Standard Chartered, but it has now been widened to a host of other banks for alleged money laundering.  

Money earned from drug trade, betting, fake currency, hawala has all found its way to these banks, say investigators.   

The probe points out to a lot of international transactions, which are non-explanatory in nature. And such transactions have shot up over the past three years after hawala transactions came under intense scrutiny.

Hawala had been a safe passage for criminals, but bigger names in the crime world no longer rely on it. In fact, they use aliases and open accounts in banks. 

IB officials say a considerable amount of money has been used to fund terror and illegal businesses. However, accounts are opened in banks with a minimum deposit of Rs 5 crore, say insiders. 

Indian agencies have widened the ambit of the probe as they suspect involvement of more banks. While the United States has pointed out flaws in two financial institutions, Indian investigators say that other banks are also under the scanner. Regular inspections are being carried out in all banks to ensure that they have complied with anti-money laundering norms.

With the Union cabinet approving amendments to expand the definition of "terrorist act" to bring into its ambit activities like money laundering, terror financing and circulation of fake currency notes, the Unlawful Activities (Prevention) Act will get more teeth.

The act could be made applicable to this probe as well, say sources. While it was originally coined to deal with the circulation of fake currency, its ambit could be widened to all acts of money laundering, officials pointed out.

Vicky Nanjappa