Axis Bank fined ₹1.66 crore for failing to detect and report fraud NSG account and transaction

An Axis Bank manager was alleged to have been part of a large-scale fraud and corruption scandal in this case.

Axis Bank has been fined more than ₹1.66 crore by the Financial Intelligence Unit (FIU) for "failing" to place a mechanism to detect and report suspicious transactions, following one such incident at one of its branches involving a fraudulent account in the name of counter-terrorist commando force NSG (National Security Guard), PTI reported.

Representational (Reuters)

An Axis Bank manager was alleged to have been part of a large-scale fraud and corruption scandal in the case of this transaction, according to the FIU summary order accessed by PTI.

A total fine of ₹1,66,25,000 was issued by the FIU against the bank on alleged charges of violating the anti-money laundering law, the order said.

Officials told PTI the case actually dates to 2021 and took place in Gurugram in Haryana. The local police and the Enforcement Directorate (ED) had been investigating the case for some years now.

The ED, last year, attached assets worth ₹45 crore of an accused NSG officer on deputation from the BSF (Border security force) and his family members, including his sister who was working as a manager in Axis Bank.

The order said Axis Bank was being fined as it "failed" to put in place a system to detect and report suspicious transactions; its "apparent failure" to properly investigate and close alerts based on application of mind and apparent failure to address alerts and close them within a reasonable period of time.

The bank was also charged for failing to file suspicious transaction reports (STRs) with the FIU in respect of transactions in the fraudulent account which did not appear to be in line with the profile of the account and which were not subject to any verification or checks, violating the PMLA Act and Rules and also for failure to properly verify if the accused bank employee was authorised to act on behalf of the NSG.

The FIU said that the bank, in this case, furnished "disorganised data dumps, which led to unnecessary confusion and hindered the scrutiny process."

The bank has been asked by the FIU to provide a certification, within 90 days, of steps taken by it for implementing a “robust transaction monitoring mechanism,” according to the report.