Bank got commission out of money laundering unwittingly?

In a novel white collar crime, a group of self-styled businessmen floated 19 shell companies and routed crores of rupees to foreign accounts through the Punjab National Bank here. While the bank got a commission of about ₹17 lakh in the case of alleged money laundering, the Government of India lost ₹421.58 crore in foreign exchange, the Central Bureau of Investigation (CBI) says in its First Information Report.

Interestingly, neither the bank authorities nor any government agency lodged any complaint.

The CBI’s Anti-Corruption Branch registered a case on charges of criminal conspiracy and cheating against unknown bank officials and others based on specific intelligence. Since connivance of bank officials is strongly suspected, the investigation agency has also invoked provisions under the Prevention of Corruption Act, 1988, against the accused persons.

The case is that 19 shell companies opened current accounts in Punjab National Bank’s Mint Street Branch here, which is authorised to deal in foreign exchange. With the bank officials deliberately not verifying the genuineness of transactions, the suspects managed to source funds from different financial institutions, mostly credit cooperative societies in Mumbai, into their accounts against quotation from foreign suppliers.

The money was transferred to bank accounts in the United Arab Emirates, Hong Kong and Taiwan. Punjab National Bank routed the funds through its NOSTRO account operated by the HSBC Bank, New York.

700 remittances

To avoid Reserve Bank of India regulations, the funds sent were kept under $1,00,000 per transaction. To whose accounts the money was transferred and how the suspects who floated the shell companies were linked to them remain to be investigated.

“It is clearly a case of money laundering because there was no import of any goods for the money sent to foreign accounts. In a period of five months, 700 advance remittances were made totalling ₹424.58 crore and the bank got commission…

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