Reserve Bank of India has imposed monetary penalty on ICICI Bank and Bank of Baroda for violation of its instructions on KYC
RBI (Reserve Bank of India) imposed a penalty of Rs50 lakh on ICICI Bank and Rs25 lakh on Bank of Baroda for violation of KYC (Know Your Customer) norms after they allowed opening of accounts in the name of a statutory body by fraudsters.
The Reserve Bank also cautioned SBI, Axis Bank and State Bank of Patiala in the same case.
"The RBI has imposed monetary penalty on the two banks for violation of its instructions, among other things, on know your customer/anti money laundering Know Your Customer (KYC) /Anti Money Laundering (AML)," the central bank said in statement.
Giving details, RBI said it had received a complaint from a "reputed statutory organisation" in August, 2013 through which the details of a fraud perpetrated in five banks -- SBI, ICICI Bank, Bank of Baroda (BoB), Axis Bank and State Bank of Patiala -- with the connivance of certain officials of the statutory organisation were brought to its notice.
The fraudsters, it said, had managed to open fictitious accounts in the name of the statutory organisation in the five banks.
The accounts were mainly operated for encashing cheques/ demand drafts/postal orders of which they were not the rightful owners, for periods ranging from one month to two years, without being detected by the banks.
A scrutiny was undertaken in the five banks in January, 2014 and based on the findings, the RBI issued a show cause notice to each of these banks. The individual banks submitted written replies.
"After considering the facts...The RBI came to the conclusion that some of the violations of serious nature were substantiated and warranted imposition of monetary penalty... on two banks, namely, ICICI Bank Ltd. And Bank of Baroda.
"Failure on the part of these banks to take timely remedial measures had aggravated the seriousness of the contraventions and their impact," the statement said.
In case of the three remaining banks, RBI said it was decided not to impose any monetary penalty as the "banks' explanations regarding the circumstances which led to the fictitious accounts getting opened and operated without detection, was judged to be reasonable".
However, these banks have been cautioned to put in place appropriate measures and review them from time to time to ensure strict compliance of KYC requirements, RBI said.
RBI said its scrutiny of the banks revealed violation of certain regulatory guidelines, including non-adherence to certain aspects of KYC norms like customer identification and acceptance procedure and non-adherence to instructions on monitoring of transactions in customer accounts.
A top official in the New York State Comptroller’s Office has urged regulators to require more transparency on charter-school finances. The response has been nonexistent.
Add another voice to those warning about the lack of financial oversight for charter schools. One of New York state's top fiscal monitors told ProPublica that audits by his office have found "practices that are questionable at best, illegal at worst" at some charter schools.
Pete Grannis, New York State's First Deputy Comptroller, contacted ProPublica after reading our story last week about how some charter schools have turned over nearly all their public funds and significant control to private, often for-profit firms that handle their day-to-day operations. The arrangements can limit the ability of auditors and charter-school regulators to follow how public money is spent – especially when the firms refuse to divulge financial details when asked.
Such setups are a real problem, Grannis said. And the way he sees it, there's a very simple solution. As a condition for agreeing to approve a new charter school or renew an existing one, charter regulators could require schools and their management companies to agree to provide any and all financial records related to the school.
"Clearly, the need for fiscal oversight of charter schools has intensified," he wrote in a letter to New York City Mayor Bill de Blasio last week. "Put schools on notice that relevant financial records cannot be shielded from oversight bodies of state and local governmental entities."
It's a plea that Grannis has made before. Last year, he sent a similar letter to the state's major charter-school regulators – New York City's Department of Education, the New York State Education Department, and the State University of New York.
He never heard back from any of them. "No response whatsoever," Grannis said. Not even, he added, a "'Thank you for your letter, we'll look into it.' That would have been the normal bureaucratic response."
We contacted all three of these agencies and the mayor's office for comment. None of them got back to us.
Courtesy : ProPublica.org
This is the third time that a government agency in the US has taken action against a major wireless carrier for practice called cramming
In July, the Federal Trade Commission (FTC) filed a lawsuit against T-Mobile accusing the carrier of bilking hundreds of millions of dollars from customers by hiding unauthorized charges in their phone bills.
In October, AT&T agreed to pay out $105 million to settle similar charges. At the time, federal and state officials said that the AT&T settlement was the largest of its kind regarding cramming allegations.
Now, it’s the Consumer Financial Protection Bureau (CFPB) accusing Sprint of operating an illegal billing system wherein the carrier allowed third parties (described below as merchants) to “cram” unauthorized charges onto customers’ bills — all while pocketing a chunk of the revenue themselves and ignoring consumer complaints about the practice.