Anti-money laundering norms: RBI scrutinising systems of HSBC and Standard Chartered bank

NEW DELHI: The Government today said the Reserve Bank is scrutinising the "systems" of HSBC Bank and Standard Chartered Bank related with anti-money laundering (AML) and KYC norms.

" RBI is scrutinising the AML/ Know Your Customer (KYC) systems of two banks (HSBC Bank and Standard Chartered Bank)", Minister of State for Finance S S Palanimanickam said in a written reply to the Lok Sabha.

The Financial Intelligence Unit-India (FIU-IND), of the Finance Ministry, has also initiated a "fact finding exercise" relating to HSBC's operations in the country and compliance with Indian AML and Counter Financing of Terrorism (CFT) regime.

The Minister said the scrutiny follows news reports of involvement of HSBC, USA, in money laundering activities and of Standard Chartered Bank, USA, for violating sanctions imposed on Iran by US Government.

Palanimanickam, however, said the government has not come across any instance "where it has been conclusively established that foreign banks have not properly followed measures to check money laundering and consequently helped anti-national elements engaged in terrorist and other illegal activities".

The minister further said the FIU-IND has been receiving 'Suspicious Transaction Reports (STRs)', Cash Transaction Reports (CTRs) and other prescribed reports from various banks including private foreign banks operating in India.

Earlier this month, the New York State Department of Financial Services had accused Standard Chartered of hiding about 60,000 secret transactions with the Iranian government, involving a whopping USD 250 billion, and exposing the US financial system to terrorists, weapon dealers and drug kingpins.