Updated: September 24, 2020 7:09:23 am
FinCEN’s files contain a 20-page “intelligence assessment” on the mirror network and list 54 shell companies that they say moved billions of dollars annually from Russia through European stock markets to other jurisdictions starting in 2011.
At least 44 Indian banks have been identified in connection with transactions by Indian entities and individuals in a set of suspicious activity reports filed by US banks with the watchdog, Financial Crimes Enforcement Network (FinCEN). an investigation by The Indian Express sample.
According to a set of records where party-linked addresses are in India, Indian banks are listed in SARs linked to more than 2,000 transactions valued at more than $ 1 billion between 2011 and 2017. It is significant that there are thousands of linked transactions to Indian entities and entrepreneurs where the Indian senders or recipients have addresses in foreign jurisdictions.
The investigated records show that the Indian banks mentioned in the RAS include: the state-owned Punjab National Bank (290 transactions); State Bank of India (102); Bank of Baroda (93); Union Bank of India (99) and Canara Bank (190), among others.
Private banks listed in the RAS include HDFC Bank (253 transactions); ICICI Bank (57); Kotak Mahindra Bank (268); Axis Bank (41) and IndusInd Bank (117) among others.
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Foreign banks that have filed these SARs include Deutsche Bank Trust Company Americas (DBTCA), BNY Mellon, Citibank, Standard Chartered, and JP Morgan Chase, among others.
Indian banks are listed in the RAS primarily because they are “correspondent banks” of the foreign banks that have submitted these RAS and are listed in the network through which these transactions have been carried out.
There are cases, records show, in which “suspicious transactions” have been carried out through the international payment gateway of foreign banks. In others, clients have used foreign branches of Indian banks, such as a State Bank of India account in Canada and a Union Bank of India account in the United Kingdom, to carry out part of the transactions in question.
The key to this is the correspondent bank relationship, an arrangement that has been growing concern as regulators crack down on secrecy of foreign transactions.
By virtue of this, a bank (correspondent) holds deposits owned by other banks (respondents) and provides payments and other services to those surveyed banks. Through correspondent banking relationships, banks can access financial services in different jurisdictions and provide cross-border payment services to their clients.
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In these RAS, foreign banks have cited a number of reasons for flagging these transactions: “high risk jurisdiction for money laundering or other financial crimes”, adverse media / public information about customer, “unidentified” parties and the fact that “the source of the funds and the purpose of the transaction could not be determined.”
Meanwhile, there has been growing concern among banks about the idea of correspondent banking. According to a report by the Committee on Payments and Market Infrastructures (CPMI) of the Bank for International Settlements, on Correspondent Banking, prepared in 2016, the banks that provide these services are reducing their relationships.
The report states that rising costs and uncertainty about the extent to which customer due diligence must be performed to ensure regulatory compliance have been some of the key reasons for banks to downsize their correspondent relationships.
The report made several recommendations, including the standardization of KYC regulations and the use of legal entity identifiers in correspondent banking. It also recommended that global watchdogs such as the Financial Action Task Force and the Anti-Money Laundering Task Force of money should explore ways to address obstacles to information sharing, with the aim of identifying potential best practices.
While emails sent to 10 banks for their comments on the SARs did not elicit any response, an SBI spokesperson in response said: “The information requested here is not available from the Bank due to SAR confidentiality regulations. .
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The Financial Crimes Enforcement Network (FinCEN) has issued a notice that any unauthorized disclosure of a SAR is a violation of US federal law … Both civil and criminal penalties can be imposed for disclosure violations. of SAR.
“This obligation applies not only to the SAR itself, but also to the information that would reveal the existence (or non-existence) of the SAR. All State Bank of India foreign branches follow the entire process according to applicable local regulations to flag any suspicious transactions. SBI has been working with the highest level of compliance with legal and regulatory requirements not only in India but also abroad. At the same time, the bank follows a zero tolerance policy towards any breach of compliance. “
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