The Weekend Leader - Banking and Laundering

These banks offer to do banking and more services

P C Vinoj Kumar


Vol 4 | Issue 10

Investigative news website Cobrapost announced that it has unearthed a vast, nation-wide money laundering racket in an undercover investigation that spanned several months. The website named three private sector banks, HDFC, ICICI and Axis, as being involved in the illegal activity.

The whole operation has been recorded in hidden cameras, and the video footage, running into hundreds of hours, are available with the website.

Mission accomplished: Cobrapost Editor, Aniruddha Bahal

HDFC, ICIC, and Axis have been accused of “channelizing vast amounts of black money into the regular banking system as laundered white money.”

Codenamed ‘Operation Red Spider’, associate editor, Syed Masroor Hasan had approached the banks under the name of Rajeev Sharma. He had requested the banks to help launder a huge sum of black money belonging to a fictitious politician.

“Nowhere was he disappointed. Nowhere was he turned away. Almost every banker that he came across was willing to help launder the black money of the fictitious politician Masroor was supposedly working for. The discussions on how to launder the money went up the management hierarchy,” said Aniruddha Bahal, Editor, Cobrapost.

Bahal said their investigation revealed that these banks were offering money laundering services to even walk-in customers. .

According to the website, the following suggestions were made by the bankers to launder black money:

* “Accept huge amounts of cash and invest it in insurance products and gold.

* Open an account to route the cash into various investment schemes of the bank.

* Do it even without the mandatory PAN card or adhering to the KYC norms laid down by RBI.

* Split the money into tranches to get it into the banking system without being detected.

* Use “benami” accounts to facilitate the conversion of black money.

* Use accounts of other customers to channelize the black money into the system for a fee.

* Get demand drafts made for the client either from their own banks or from other banks to facilitate investment without it showing up in the client’s account.

* Keep the identity of the investor/depositor secret.

* Open multiple accounts and close them at will to facilitate the investment of black money.

* Invest black money in multiple instruments in the names of different individuals, not necessarily drawn from among the family.

* Allot lockers for the safekeeping of the illegitimate cash, including special large size lockers to accommodate crores of hard cash.

* Personally come to the residence of the client to take the black money deal forward and collect the cash, even bring along counting machine.

* Use provisions like Form 60 to deposit the illegitimate cash into the account to route it into investment.

* Help the client to transfer black money abroad through NRE (Non-Resident External)/NRO (Non-Resident Ordinary) account; transfer the money telegraphically or through means other than regular banking procedures.

One of the officials caught on hidden camera

Bahal said, “ICICI Bank officials were ready to make a suitable profile for the client, such as showing him as an agriculturist or engaged in some business, so as to make the investment unquestionable.

On the other hand, Axis Bank officials proved to be a notch above in inventing fraudulent means. Use “sundry” accounts of the bank, they suggested, to deposit all the illegal cash from where it is to be routed into investment.”

Bahal, formerly with Tehelka, was part of the magazine's famous sting codenamed ‘Operation West End’ that exposed corruption in defence deals during the NDA regime.”

Videos of bank officials caught on hidden camera in ‘Operation Red Spider’ are showcased on their website

“We have done our job. There is nothing else we can do now,” Bahal told The Weekend Leader, not willing to speculate on the possible fallout of the expose.

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