The Reserve Bank on Monday imposed a penalty of Rs 25 lakh on US-based Citibank for not following account opening and anti-money laundering norms at its Gurgaon branch, which witnessed a fraud of Rs 461 crore last year.
"The failure in following the Know-Your Customer (KYC)/Anti-Money Laundering (AML) guidelines while opening accounts led to the perpetration of a fraud at its Gurgaon branch," the central bank said.
Several depositors and high-networth individuals (HNIs) were duped in the Rs 460.91 crore fraud, engineered by a Citibank's Global Wealth Manager Shivraj Puri who was working at Gurgaon branch of the bank.
Following investigations, the RBI came to the conclusion "that the violations (at Gurgoan branch of Citibank) were substantiated and warranted imposition of the penalty".
No immediate comments could be obtained from Citibank.
The RBI had earlier issued a show cause notice to the bank in April and heard the bank officals on the issue last month.
The Haryana police has filed chargesheet against the fraud accused and capital market regulator Sebi too probed the matter as the fraud money was invested in the stock market.
As per a Sebi report, mastermind of Citibank fraud Shivraj Puri took an exposure of whopping Rs 1.13 lakh crore in the equity market using Rs 236 crore of 51 high networth individuals and corporates and lost everything following decline in stock markets.