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A banking scam in god's own country

A banking scam in god's own country

Author: Samik Dasgupta
Publication: The Times of India
Date: May 28, 2002

At a time when there's growing international concern on money laundering, another scam has been detected by the RBI following a tipoff from the enforcement directorate involving Rs 200 crore to Rs 250 crore.

The ED suspects the drug money or narcotics money has been moved through the Indian banking system. The transactions in question dates back to 1999 and were detected recently.

According to the government, one party had opened certain accounts with various branches of Kerala-based private sector banks, including Catholic Syrian Bank and Lord Krishna Bank, and was transferring huge funds to Kerala. All the operations were taking place in cash.

Moreover, these transactions were done without adhering to the normal stipulation prescribed by the apex bank.

The RBI has already conducted preliminary scrutiny of the operations of these accounts by the Kerala-based banks. Following the revelations of irregularities in the preliminary scrutiny, the RBI is conducting a detailed investigation to find out the details.

The involvement of bank staff is also suspected as close to Rs 2 crore was deposited at branches in Mumbai and the same money was transferred to Kerala on a daily basis.

What has added to the concern is that the customer is untraceable now. Under the RBI "know your customer" regulation, bank officials are supposed to know their customer and also the source and deployment of funds for amounts in excess of Rs 50,000.

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