Friday, 29 July 2011

Private Banks, Money Laundering and Frauds

Sri K. Kashivishwanath did not know that he owned a mining company. He was unaware of the continuous transactions of crore of Rupees taking place in his bank accounts. Lokayukta reports read "it has been observed that crores of rupees have been deposited in banks and also withdrawn in cash from these accounts. Such illegal money transactions have been further trailed/proceed to accounts in bank of various persons/companies/firms and others."

The same banks which creates an image that they follow a strict KYC norms by asking tens of documents for changing correspondence address legally supports illegal money laundering. One of such bank, without which this article goes incomplete is Axis Bank. Is it possible to do such transactions without the support from the bank? Definitely impossible. The banks named by the Lokayukta report are Hospet and Bellary branches of Axis Bank and
Lakshmi Vilas Bank. Times of India repor
ted "Trail of the company's Axis Bank (Bellary) accounts points to large number of suspicious cash withdrawals in denomination of Rs 9 lakh in the names of persons suspected to be benami"

Couple of years back the same leading private bank had a client Shree Om Sai Nath Car On Rent Pvt ltd. This was a chain market company, which collected a huge amount from the public. Initially cheques were duly paid by the bank. Within a year the account was freezed by the court. The bank could have shown social responsibility and could have saved hard earned money of poor people.

The similar cases also been reported by Belgaum. Sri Sai Multi Service (SMS) was another fraud company involved in the chain marketing with a full banking support from the Axis Bank, collected a huge amount from the public through its account DDs and wannabe fraudster company was raided.

I hope you have not forgotten fraud happened in City Bank in Gurgaon. The main accused of the City Bank Fixed deposit scam Sanjay Gupta of Hero Corporate Services owned two firms G2S and BG finance company. These companies were registered as consulting firms but did not have any offices. Even then these companies had accounts with Axis Bank. Police seized Rs 20 Crores from their Axis Bank account. A company no needs to have an office to open an account with Axis Bank! Finally the state run SBI officials helped the police to find the kingpin of the scam

The fraudster’s relationship with the Axis Bank does not end here. A single google search will though a lot of news of fraud companies having accounts with the Axis Bank. Kadri Police of Mangalore arrested Pravin Shetty who is said to be partner of Global Index Investment Company and seized the account with the Axis Bank. The bank which opened the account of the fraudster company was mentioned and forgotten

These banks are target driven. The top executive put immense pressure on the sales executive. Sales personals bring such customers and accounts of the fraud companies get open in the bank based on the documents submitted by them. They even satisfy the KYC norms according to the present regulation. The will power of the banker to show some social responsibility and serve the society against such frauds can only prevent such fraud accounts. In don’t think you can expect it from private banks that are running behind the numbers.

Note: This article is supported by the various news reports and the author is not influenced to write against the institutions mentioned.

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