RBI Fines ICICI, Bank of Baroda Over Know Your Customer Norms

Reserve Bank of India (RBI) has imposed monetary penalty on two banks (ICICI Bank and Bank of Baroda) and cautioned three banks (State Bank of India, Axis Bank and State Bank of Patiala) for violating Know Your Customer (KYC)/ Anti Money Laundering (AML) instructions.

ICICI Bank and Bank of Baroda (BoB) have been slapped with penalty of Rs 50 lakh and Rs 25 lakh, respectively, according to a central bank statement.

RBI said it had received a complaint from a reputed statutory organisation in August, 2013 through which the details of a fraud perpetrated in five banks -- State Bank of India (SBI), ICICI Bank Ltd, BoB, Axis Bank Ltd, and State Bank of Patiala (SBP), with the connivance of certain officials of the organisation were brought to the its notice.

“The fraudsters had managed to open fictitious accounts in the name of the statutory organisation in the above five banks and operated the accounts mainly for encashing cheques/ demand drafts/ postal orders of which they were not the rightful owners, for periods ranging from one month to two years, without being detected by the banks,” RBI said.

A scrutiny by the central bank revealed violation of certain regulatory guidelines -- non-adherence to certain aspects of KYC norms like customer identification and acceptance procedure; internal norms regarding customer identification procedure of a bank being violative of KYC directions issued by Reserve Bank; and non-adherence to instructions on monitoring of transactions in customer accounts. (The Hindu Business)