The central bank said based on observations reported in its Annual Financial Inspection of HSBC for 2012, it would take further action against the lender, which is under the scanner for alleged violations of money-laundering and KYC norms
The Reserve Bank of India (RBI) has said that it would take further action against HSBC based on the observations made during its Annual Financial Inspection (AFI) for 2012.
Replying to a Right to Information (RTI) application filed by Indian Police Service (IPS) officer Amitabh Thakur and social activist Dr Nutan Thakur, the central bank said the matter was examined during its AFI of HSBC.
The RBI, however, has refused to share the findings of the AFI report. It said, “The matter was examined during AFI of the bank, however, the findings of the same are received by us in a fiduciary capacity and the disclosure of the same may prejudicially affect the economic interest of the bank (HSBC). Hence the same is exempted from the disclosure in terms of Section 8(1)(d) and (e) of the RTI Act, 2005.”
Last year, the RBI started scrutinising anti-money laundering (AML) and know your customer (KYC) systems of Standard Chartered and HSBC. Besides, the Financial Intelligence Unit-India (FIU-IND) had also initiated a fact-finding exercise related to HSBC’s operations in India and its compliance to AML and counter financing of terrorism (CFT) regime.
The RBI was also seeking details from British financial sector regulator Financial Services Authority (FSA) about the two UK-based global banking giants, which have a significant presence in India and whose outsourcing of key oversight jobs to India had come under the US scanner in separate probes related to issues like money laundering and terror financing.
Last year, the Income-Tax (I-T) department probing the secret list of account holders in the Geneva branch of HSBC Bank, had approached Swiss revenue authorities for banking data of certain individuals after investigations showed some of them reportedly had other accounts under fictitious names.
India had obtained data of over 700 HSBC accounts from the French government channels last year.
Earlier, in July 2012, the US Senate's Permanent Sub-committee on Investigations said HSBC was found to be doing business with Al Rajhi Bank, whose key founder was an early financial benefactor of al Qaeda, and also have provided US dollars and services to some banks in Saudi Arabia and Bangladesh despite their links to terrorist financing.
The bank had also been accused of indulging in various questionable transactions with entities from countries like Mexico, Iran, North Korea, Saudi Arabia, Bangladesh, Syria, Cuba, Sudan, Burma, Cayman Islands, Japan and Russia.
After the report, HSBC paid a fine of $28 million to Mexican authorities for non-compliance with money laundering controls. The money-laundering issue stemmed from HSBC’s acquisition of Mexican company Grupo Financiero Bital in 2002.
A US Senate investigative committee reported that in 2007 and 2008 HSBC Mexico sent about $7 billion in cash to the United States. The committee report says that amount of cash indicated illegal drug proceeds.
HSBC Mexico acknowledged that it failed to report 39 suspicious transactions and had been late in reporting 1,729 others.
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