The Reserve Bank of India has imposed penalties on three banks for their involvement in a foreign exchange scam unearthed in 2015. Bank of Baroda was fined Rs 5 crore, Punjab national bank, Rs 3 crore and HDFC Bank Rs 2 crore. The central bank said the penalties have been levied for weaknesses and failures in internal control mechanisms in respect of certain anti-money laundering provisions such as monitoring of transactions, timely reporting to Financial Intelligence Unit and assigning of unique customer identification code to customers, according to a stock exchange notification that Bank of Baroda released. A forex scam was unearthed at Bank of Baroda and a number of public and private sector banks were found to be affected by it. In January 2016, the central bank had asked all public and private sector lenders involved in the matter to conduct internal audits and present a report to their audit committees. The three concerned banks have implemented a comprehensive corrective action plan, to strengthen internal controls and to ensure that such incidents do not recur, they said in their respective notifications. In October 2015, the CBI had conducted raids across bank branches, including those of Bank of Baroda and HDFC Bank, as part of the foreign exchange scam, where bank employees had allegedly liaised with certain people to illegally transfer funds to various accounts in Hong Kong and the UAE, flouting foreign exchange norms set by the central bank.
