The income tax authorities have ordered a probe into allegations of widespread money laundering by the country’s top three private banks after a sting operation by Cobrapost, a news website, alleged the complicity of ICICI Bank, HDFC Bank and Axis Bank in facilitating money laundering deals.
CBDT member (investigations) KV Chowdary told agencies in Mumbai that the department has “taken cognizance of the Cobrapost story and have begun a probe.”
The three banks have also ordered probes after the revelations of the sting operation, undertaken for more than five months and extending across dozens of bank branches in 18 states, were revealed in a press conference on Thursday.
ICICI Bank said it has constituted a high-level inquiry committee to investigate into the matter that will submit its findings in two weeks.
HDFC Bank was investigating the matter on “top priority” even as Axis Bank promised a thorough investigation.
Many executives and officials of the three banks were caught on videotape explaining to an undercover reporter, pretending to work for a fictitious politician, various methods on how to transform black money into white in ways that were “imaginative in their range and brazen in their approach.”
The methods included investing the black money in long-term deposits, insurance and investment products sold by the banks.
“These illegal transactions are violative of income tax laws, Prevention of Money Laundering Act (PMLA), Foreign Exchange Management Act (FEMA), RBI regulations including violation of Know-Your-Customer (KYC) norms,” Aniruddha Bahal of Cobrapost said.
“Our sting shows the banks are ready to take cash and invest them in their numerous investment schemes and under benami names.”