BoB scam: CVC tells RBI to red flag multiple forex transactions

In the wake of alleged Rs 6,100 crore foreign remittance scam through Bank of Baroda (BoB), the Central Vigilance Commission (CVC) has asked the Reserve Bank of India (RBI) and Indian Banks' Association (IBA) to red flag multiple transactions of smaller amounts from a single account, ensuring compliance of KYC norms to check fraudulent forex transactions.

Vigilance Commissioner T M Bhasin has sent a letter to the central bank that if smaller forex transactions of less than one lakh dollars are being made than it should come to its notice.

Similar communication has also been sent to IBA chief, saying there may be "attempts to camouflage generation of alerts by sending small amount of money through multiple transactions of foreign exchange abroad.”

At present, an alert is generated only when foreign exchange (forex) remittance is over one lakh dollars.

IBA has also been asked to inform all member banks that they follow Know Your Customer (KYC) and Anti-Money laundering (AML) guidelines so as to check re-occurence of incidents such as Bank of Baroda case.

The Enforcement Directorate (ED) has been asked to handle the case of about Rs 6,100 crore foreign remittance scam and if these were not genuine transactions then they should work on repatriation of the money.

As soon as the BoB incident was reported to the CVC, requests for probe was made to the CBI and ED.

The transactions were made in about a period of about 14 months and 90% of them were through Real-Time Gross Settlement (RTGS) system, in which transactions are settled on real-time.

Both the Central Bureau of Investigation (CBI) and ED are probing transactions of Rs 6,100 crore to Hong Kong from a Bank of Baroda's Ashok Vihar branch here.

The huge transaction is believed to be trade-based money laundering as the amount was transferred in the garb of payments for imports, that never took place.

As per CBI probe so far, Rs 6,100 crore were transferred through nearly 8,000 transactions done between July, 2014 and July, this year.

(Image: Indiatimes)