RBI study finds 34 banks violating KYC norms - Daily News & Analysis

An ongoing study by the Reserve Bank of India (RBI) to verify charges of money laundering by banks has found several violations of know-your-customer (KYC) norms. This could have possibly aided tax evasion by customers, said an RBI official familiar with the study. The study covers 34 banks spanning the public and private sectors, including foreign banks in India, that are active in selling gold coins and wealth management products. The RBI is separately probing ICICI Bank, HDFC Bank and Axis Bank which have accused by an online magazine of money laundering. It is learnt the RBI study found that bank branches do not diligently follow the central bank's guidelines on demanding a PAN card while selling gold coins worth more than Rs 50,000 or enabling cash transactions of a similar amount. Apparently, all bank officers do not ask customers seeking to open new accounts whether they already have an existing account. This could have led to multiple accounts held by a single customer wanting to avoid income tax department scrutiny. Banks were also not reviewing KYC documents every five years, and were failing to recognise suspicious transactions by customers, the official said. There were instances of customers' stated profiles not being in tune with high transaction activity in the account, pointing to a possibility of surrogate accounts or obsolete profiles. Similar KYC violations were discovered by the RBI during its annual financial inspection. In the mad scramble for more customers and higher business, banks tend to dilute KYC norms, the official said. The official sought to differentiate tax evasion from money laundering which has a criminal connotation to it. via Business - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNGWQlXML7N5XwyM15VZqNsHq-lNNQ&url=http://www.dnaindia.com/money/1826676/report-rbi-study-finds-34-banks-violating-kyc-norms

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