RBI fines BoB, HDFC Bank & PNB for violating KYC norms

The Reserve Bank of India (RBI) has slapped a penalty on Bank of Baroda (BoB) and HDFC Bank for violating know your customer (KYC)/anti-money laundering (AML) norms. While Bank of Baroda has been fined Rs 5 crore, HDFC Bank has been penalised Rs 2 crore.

“The RBI has imposed a penalty of Rs 20 million (Rs 2 crore) on the bank on account of pendency in receipt of bills of entry relating to advance import remittances made and lapse in adhering to KYC/AML guidelines,” said HDFC Bank in a notice to the exchanges. The lender added it has also implemented a corrective action plan to strengthen the internal control mechanism to avoid such incidents in the future.
 
“The RBI carried out the investigation and noted the deficiencies which were reflective of weaknesses and failures in internal control mechanisms in respect of certain AML provisions such as monitoring of transactions, timely reporting to Financial Intelligence Unit, and assigning of Unique Customer Identification Code to customers,” said BoB in a notice to the exchanges.

Delhi-based public sector lender Punjab National Bank also in notice to exchanges said RBI has imposed an aggregate penalty of Rs 3 crore. It has taken necessary preventive measures/ comprehensive action plan to avoid its recurrence, PNB said.

Last year, a Rs 6,000-crore foreign exchange scam was unearthed at BoB. However, later these accounts were traced to HDFC Bank where the fraud was believed to have started. As part of this scam, funds were transferred to accounts in Hong Kong for certain import transactions that were not carried out.

Earlier this year, RBI had asked all banks to conduct an internal audit of their KYC/AML mechanism to prevent such lapses. In fact, BoB had also appointed an external auditor to find out the loopholes in its system and suggest ways to plug it. Apart from the banking regulator, the case is also being investigated by the Central Bureau of Investigation and Enforcement Directorate.

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PENALTIES TO BE PAID

• Bank of Baroda (BoB) has been fined Rs 5 crore
   
• HDFC Bank has been penalised Rs 2 crore
   
• Punjab National Bank said RBI has imposed an aggregate penalty of Rs 3 crore
  

 

Last year, a Rs 6,000-crore foreign exchange scam was unearthed at BoB
 

These accounts were later traced to HDFC Bank
 

RBI had asked all banks to conduct an internal audit of their KYC/AML mechanism to prevent such lapses