New Delhi: The
government Monday asked top financial institutions, including
State Bank of India, Punjab National Bank and the Life Insurance
Corporation, to probe into the allegations of money laundering as
exposed in a sting operation by an investigative website Cobrapost.
Financial Services Secretary Rajiv Takru has asked the
chairman-cum-managing directors of various Public Sector Banks (PSBs)
to probe the allegations, the finance ministry said in a
"Any officer/employee of your bank/institution who clearly appears
to be advising potential customers along lines that would be an
infringement of the legal process/could facilitate money
laundering/could defeat the KYC norms or the norms of due
diligence prescribed by RBI and the law from time to time, may be
placed under suspension with immediate effect pending inquiry,” it
"The bank may initiate a detailed scrutiny of such officer’s work
and institute a special audit, if necessary, for this purpose. The
inquiry must be initiated and completed expeditiously.” it added.
Cobrapost has alleged in a sting operation that at least 23 top
public and private banks and insurance companies have been doing
large-scale money laundering. Several of the firms named denied
"Money laundering practices are part and parcel of banking and
insurance business across the board. Even a walk-in customer can
avail of such services that help him launder all his unaccounted
cash," Cobrapost said in a press release.
The website claimed that it found large-scale wrongdoing by banks
and financial institutions through an undercover operation run for
nearly six months in various states and union territories,
including Delhi, Uttar Pradesh, Rajasthan, Haryana, Andhra Pradesh
It has named 23 public and private sector banks and insurance
companies. Public sector firms include State Bank of India, Bank
of Baroda, Punjab National Bank, Canara Bank, Indian Bank, Indian
Overseas Bank, IDBI Bank, Oriental Bank of Commerce, Dena Bank,
Corporation Bank, Allahabad Bank, Central Bank of India, and their
Private sector firms include Yes Bank, Dhanlaxmi Bank, Federal
Bank, DCB Bank, HDFC Bank, ICICI Bank and Axis Bank, and their
The website has also named LIC of India, Reliance Life Insurance,
Birla Sunlife, and Tata AIG.
Several of these firms denied the allegations. SBI chairman Pratip
Chaudhuri said: "As far as we have understood, there is nothing
"We have zero tolerance for money laundering and will take action
on those found to be flouting norms," Chaudhuri said reacting to
Reliance Capital termed the allegations baseless.
"We categorically deny the baseless allegations in relation to any
involvement of the Company in money-laundering by customers of our
life insurance business," Reliance Capital said in a statement.
"Reliance Life adheres to strict internal controls, processes and
best practices and is in full compliance with the KYC norms and
regulatory framework," it said.