Black money: pvt banks warn staff of zero tolerance

ICICI Bank reiterated it had been; would conduct its business adhering to high standards of compliance to law, regulations

A day after Cobrapost, an online magazine, made money laundering allegations against ICICI Bank, HDFC Bank and Axis Bank, several private banks have swung into action and asked their employees to strictly obey the compliance standards and desist from making illegal promises to customers to get new businesses.

In a communication to employees, ICICI Bank reiterated that it had been and would conduct its business adhering to the high standards of compliance to law and regulations. “ICICI Bank always puts 'compliance with conscience’ above anything in conducting business and has zero tolerance to any violations of its code of conduct,” a spokesperson of the bank said.

Rana Kapoor, founder, managing director and chief executive of YES Bank, wrote a letter to his employees and said he wanted to make it clear to every YES banker that even a single violation of the AML (anti-money laundering) and KYC (know your customer) regulations will be very seriously viewed by the bank's vigilance department and top management.

"I would further want retail operations and corporate operations, including operations of risk management and central vigilance reporting to Kapil Juneja to ensure that we do not have a single violation of this nature in YES Bank. I expect a clear report to be submitted to me no later by Friday, March 15," Kapoor added.

A senior executive at IndusInd Bank said "we have been doing it consistently for many years. At the end of every quarter our managing director stresses on the need to follow the compliance culture, avoid mis-selling, and adhere to ALM and KYC norms. It is an ongoing activity and in the wake of recent events it will be reiterated,"

Cobrapost had claimed that its undercover investigation revealed that top three private banks offered money laundering as product to their customers and violated several provisions of the Income Tax Act, Foreign Exchange Management Act (FEMA), Prevention of Money Laundering Act and regulations mandated by the Reserve Bank of India (RBI).

While bankers claim that employees are advised not to violate norms at periodic intervals, a fresh set of communication mandating strict adherence to compliance were sent after Cobrapost's allegations on Thursday.

"After yesterday's event, we sent a message to our employees asking them to be more vigilant. We take any violation in compliance very seriously and have zero tolerance towards offenders," N Kamakodi, managing director and chief executive officer at City Union Bank, told Business Standard.

Karur Vysya Bank's senior executives met on Thursday evening to review their systems and processes to ensure that they are alerted in case of any violation of norms.

"I am not alarmed and reasonably sure that this kind of things does not happen in our bank. But just to be cautious we are re-examining our systems and processes. We want to ensure that our system is robust enough to detect any transaction, which fails to comply with the regulations," K Venkataraman, managing director and chief executive officer at Karur Vysya Bank, said.