Bank of Baroda on Monday said the Reserve Bank of India has imposed a penalty of Rs 5 crore on it.
The penalty follows the RBI carrying out investigation and noting deficiencies which were reflective of weaknesses and failures in intemal control mechanisms in respect of certain AML (anti-money laundering) provisions such as monitoring of transactions, timely reporting to FIU (Financial Intelligence Unit), and assigning of UCIC (unique customer identification code) to customers, the public sector bank said in a notice to the BSE.
Referring to on-going investigation of a case relating to alleged violation of banking norms in overseas remittance of foreign exchange, the Central Bureau of Investigation, in a statement in March 2016 said, it was alleged that 59 current account holders and unknown bank officials conspired to send overseas remittances, mostly to Hong Kong, of Foreign Exchange worth approximately Rs.6000 crore in an illegal & irregular manner in violation of established banking norms under the garb of payments towards suspected non-existent imports.
Searches were conducted at around 53 locations including Bank of Baroda, Ashok Vihar Branch, Delhi; various companies/firms and other accused persons. It was also alleged that the amount remitted in each transaction would be kept at less than $100,000. All the remittances were made to Hong Kong.
“The amount was remitted as advance for import and in most of the cases, the beneficiary was the same. Most of the foreign exchange related transactions were carried out in newly opened current accounts wherein heavy cash receipts were observed but the branch did not generate Exceptional Transaction Report (ETR) and did not monitor the high value transactions,” the CBI said
In the notice to BSE, the public sector bank said pursuant to its internal audit, the Reserve Bank of India and investigative agencies in October 2015 were advised by the bank of certain irregularities observed.
The bank said it has fully cooperated with the RBI during the process, leading to the conclusion of its findings.
