With reference to the report, "Money laundering scandal: From Vikaspuri to Hong Kong" (October 15), the trade-based money laundering in the Bank of Baroda shows that both export trade officials in India and import trade officials in Hong Kong compromised rules. As the transactions were big-ticket deals, even the Reserve Bank of India, to whom such transactions are reported on a post facto basis, did not detect them.
Given that there are several control documents in the form of bill of entry and bill of lading, it is surprising that the fraudulent transactions went unnoticed. Even the purchase orders received by exporters do not appear to have been verified by the bank. Another surprise is the involvement of HDFC Bank staff in the fraud. The bank is known to have a rigorous system of checks and balances. In the wake of this episode, risk management practices at all banks need to be revisited.
K V Rao Bengaluru
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