Technoglitch
Core Member
Perpetrators have been using the country’s banking channels for transaction of unaccounted cash allegedly for several years now and one wouldn’t know how many more banks have been subjected to similar frauds. It is quite possible that more skeletons would tumble out of the closet as the investigations progress.
Until now, in most cases, unaccounted cash or black money has changed hands through hawala channels. But, rampant use of formal banking channels in this scale is unheard of in the recent past. It indeed raises serious concerns.
The modus operandi in the BoB case is interesting. The perpetrators opened some 59 accounts in BoB’s Ashok Vihar branch under the names of various companies and initiated multiple remittance transactions in these accounts. Finally, the bank was asked to transfer this amount to certain companies abroad as advance remittance for imports.
Since several accounts were opened and the funds were split into small units, the transactions probably didn’t come to the notice of the Reserve Bank of India (RBI) or agencies like the Financial Intelligence Unit (FIU), which typically filters large transactions. According to the investigators, no transaction exceeded $1 lakh to avoid automatic detection tools.
Investigators have found that many company addresses used to open accounts that didn’t actually exist. According to ED, transactions were initiated for fake imports and exports, meaning no real movement of goods happened.
True, in the BoB case, the bank’s auditors themselves had detected the fraud and reported to CBI and ED. But, the question is why it took so long for BoB to detect the chain of transactions. Also, going by the findings of investigators, the bank has clearly failed to do its KYC due diligence with respect to both end of its customers in this particular series of transactions — importers and the foreign exporters.
This couldn’t have been done without the connivance of the bank officials.
One reason why the bank acted late could be that it didn’t have to incur any losses in these particular transactions.
The black money blackhole: BoB fraud shows our banks are legit route for illegitimate stash - Firstpost
Until now, in most cases, unaccounted cash or black money has changed hands through hawala channels. But, rampant use of formal banking channels in this scale is unheard of in the recent past. It indeed raises serious concerns.
The modus operandi in the BoB case is interesting. The perpetrators opened some 59 accounts in BoB’s Ashok Vihar branch under the names of various companies and initiated multiple remittance transactions in these accounts. Finally, the bank was asked to transfer this amount to certain companies abroad as advance remittance for imports.
Since several accounts were opened and the funds were split into small units, the transactions probably didn’t come to the notice of the Reserve Bank of India (RBI) or agencies like the Financial Intelligence Unit (FIU), which typically filters large transactions. According to the investigators, no transaction exceeded $1 lakh to avoid automatic detection tools.
Investigators have found that many company addresses used to open accounts that didn’t actually exist. According to ED, transactions were initiated for fake imports and exports, meaning no real movement of goods happened.
True, in the BoB case, the bank’s auditors themselves had detected the fraud and reported to CBI and ED. But, the question is why it took so long for BoB to detect the chain of transactions. Also, going by the findings of investigators, the bank has clearly failed to do its KYC due diligence with respect to both end of its customers in this particular series of transactions — importers and the foreign exporters.
This couldn’t have been done without the connivance of the bank officials.
One reason why the bank acted late could be that it didn’t have to incur any losses in these particular transactions.
The black money blackhole: BoB fraud shows our banks are legit route for illegitimate stash - Firstpost
