Bank of Baroda money

laundering case: HDFC Bank

official among 4 arrested
by ED
Four persons, including an HDFC bank employee, were today arrested
by Enforcement Directorate (ED) under money laundering charges in
the Rs 6,000 crore...
By: PTI | New Delhi | October 13, 2015 6:31 PM
124

6 G+5

Bank of Baroda money laundering case: ED sources said that all the accused were alleged middlemen for at least 15
fake companies, out of the total 59 which were involved in the perpetrating of the economic crime unearthed recently
and also being probed by the CBI. (Reuters)

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Four persons, including an HDFC bank employee, were today arrested by Enforcement
Directorate (ED) under money laundering charges in the Rs 6,000 crore suspicious remittances
case at a Bank of Baroda (BoB) branch in the national capital.
Calling it a case of trade-based money laundering, where accused traders evade custom duties
and taxes to generate slush funds, the agency arrested Kamal Kalra, working with the foreign
exchange division of HDFC bank, Chandan Bhatia, Gurucharan Singh Dhawan and Sanjay
Aggarwal after marathon questioning at its office here.
Emails sent to HDFC bank for its reaction did not elicit a response.
All the accused, ED sources said, were alleged middlemen for at least 15 fake companies, out of
the total 59 which were involved in the perpetrating of the economic crime unearthed recently
and also being probed by the CBI.
Sources said the four allegedly connived with each other in forming fake companies and
business entities in Hong Kong by over valuing the export value and subsequently claiming
duty drawbacks.
While ED investigations under the Prevention of Money Laundering Act (PMLA) claimed that
the HDFC employee was allegedly helping Bhatia and Aggarwal for remitting the amount
through BoB against a commission of 30-50 paise per US dollar remitted abroad, Bhatia was
allegedly instrumental in forming the companies in India and used to remit money to companies
based at Hong Kong and was working with Dhawan, an exporter of readymade garments.
They alleged Aggarwal was successful in sending tainted foreign remittances worth Rs 430 crore
through the BoB branch in Ashok Vihar in a short span of time.
Sources said more arrests of similar middlemen and other operatives, including BoB employees,
could take place in the near future.
The agency is also probing the case for forex contraventions under the Foreign Exchange
Management Act (FEMA).
The agency said BoB yesterday informed it that the total amount deposited in the 59 accounts is
Rs 5,151 crore and only 6.66 per cent (Rs 343 crore) of this amount has been deposited in cash in
the bank while remaining amount of Rs 4,808 crore came through other banking channels.

Reserve Bank of India (RBI) is also looking into a case of suspected money laundering
by a branch of state-run lender Bank of Baroda, RBI Deputy Governor S.S. Mundra said
on Thursday.

The comments come as Central Bureau of

Investigation (CBI) and the Directorate of Enforcement,
which is responsible for fighting financial crime, are
probing whether there was illegal transfers of money
outside the country using the Bank of Baroda branch.
Bank of Baroda has suspended two employees at the
branch involved in the case, and has said as far as it
was aware any loss would be insignificant as a result of
the case.
"As far as Bank of Baroda matter is concerned, right
now investigations are going on (that a) couple of
agencies are working on," said Mundra.
"This being the case, we are also looking into the
matter from our side."
Mundra and Rajan were addressing a news briefing
after the conclusion of the RBI board meeting in the
northeastern state of Mizoram.
The allegedly illegal transactions came to light after BoB noticed its Ashok Vihar branch in
the national capital had unusually heavy foreign exchange transactions.
Between May 2014 and August 2015, 5,853 outward foreign remittances, amounting to Rs
3,500 crore, primarily for advance remittances for import were recorded. In a
communication to stock exchanges, the bank said the funds were transferred through 38
current accounts to foreign parties, numbering 400, primarily based in Hong Kong, and one

in the UAE.
The branch did not adhere to FEMA (Foreign Exchange Management Act) guidelines, the
bank said, adding the matter came to its notice in mid-July, after which it ordered an internal
investigation. The bank had mailed cash transaction reports of 33 accounts to the Financial
Intelligence Unit (FIU). Subsequently, the matter was reported to the central bank.
Of the total amount involved, only 10 per cent has been by way of cash deposits with our
branches the rest was received by real time gross settlement (RTGS)/national electronic
fund transfer (NEFT) from banks numbering about 30, BoB said.
While the central bank has ruled out systemic implications and said the incident is a one-off,
it is likely to quiz several banks from which money was transferred. A BoB official said the
funds were transferred from public sector, private and foreign banks.
RBI sources say the incident might prompt the banking regulator to tighten anti-money
laundering norms.
The central bank has voiced concern over adherence to banking guidelines. RBI has a
zero-tolerance policy on violations of money-laundering or know-your-customer (KYC)
norms.
A similar problem has also been observed in meeting the KYC/AML (anti-money
laundering) norms. Not only is there a general lack of sensitivity about KYC/AML
compliance needs, the adherence to norms at the field level is often sidestepped on
account of a lack of skill set, time or performance pressure, RBI Deputy Governor S S
Mundra had said at an event earlier this month. My sense is a centralised, technologysupported surveillance system will perhaps serve better for ensuring compliance to
KYC/AML norms.
BoB has clarified the alleged violations havent led to any financial loss to the bank. On
Monday, however, the BoB stock fell 5.5 per cent to close at Rs 176.8 on the BSE, against
the Sensexs 0.65 per cent fall.

Money laundering
From Wikipedia, the free encyclopedia

"Dirty money" redirects here. For other uses, see Dirty Money (disambiguation).

[hide]This article has multiple issues. Please help improve it or discuss the
This article may be in need of reorganization to comply with Wikipedia's

This article's introduction may be too long for the overall article length.
This article is outdated.

(March 2014)

Placing "dirty" money in a service company, where it is layered with legitimate income and then integrated into
the flow of money, is a common form of money laundering.

Money laundering is the process of transforming the proceeds of crime into ostensibly legitimate
money or other assets.[1] However, in a number of legal and regulatory systems, the term money
laundering has become conflated with other forms of financial crime, and sometimes used more
generally to include misuse of the financial system (involving things such as securities, digital
currencies, credit cards, and traditional currency), including terrorism financing and evasion
of international sanctions. Most anti-money laundering laws openly conflate money laundering
(which is concerned with source of funds) with terrorism financing (which is concerned
with destinationof funds) when regulating the financial system.[2]
According to the United States Treasury Department:
Money laundering is the process of making illegally-gained proceeds (i.e. "dirty money") appear legal
(i.e. "clean"). Typically, it involves three steps: placement, layering and integration. First, the
illegitimate funds are furtively introduced into the legitimate financial system. Then, the money is
moved around to create confusion, sometimes by wiring or transferring through numerous accounts.
Finally, it is integrated into the financial system through additional transactions until the "dirty money"
appears "clean."[3]
Money obtained from certain crimes, such as extortion, insider trading, drug trafficking and illegal
gambling is "dirty". It needs to be cleaned to appear to have been derived from legal activities so that
banks and other financial institutions will deal with it without suspicion. Money can be laundered by
many methods, which vary in complexity and sophistication.
Different countries may or may not treat payments in breach of international sanctions as money
laundering. Some jurisdictions differentiate these for definition purposes, and others do not. Some

jurisdictions define money laundering as obfuscating sources of money, either intentionally or by

merely using financial systems or services that do not identify or track sources or destinations.
Other jurisdictions define money laundering to include money from activity that would have been a
crime in that jurisdiction, even if it were legal where the actual conduct occurred. This broad brush of
applying the term "money laundering" to merely incidental, extraterritorial, or simply privacy-seeking
behaviors has led some to label it "financialthoughtcrime".[4]
Many regulatory and governmental authorities issue estimates each year for the amount of money
laundered, either worldwide or within their national economy. In 1996, theInternational Monetary
Fund estimated that two to five percent of the worldwide global economy involved laundered money.
The Financial Action Task Force on Money Laundering (FATF), an intergovernmental body set up to
combat money laundering, stated, "Overall, it is absolutely impossible to produce a reliable estimate
of the amount of money laundered and therefore the FATF does not publish any figures in this
regard."[5] Academic commentators have likewise been unable to estimate the volume of money with
any degree of assurance.[6] Various estimates of the scale of global money laundering are sometimes
repeated often enough to make some people regard them as factualbut no researcher has
overcome the inherent difficulty of measuring an actively concealed practice.
Regardless of the difficulty in measurement, the amount of money laundered each year is in
the billions (US dollars) and poses a significant policy concern for governments. [6] As a result,
governments and international bodies have undertaken efforts to deter, prevent, and apprehend
money launderers. Financial institutions have likewise undertaken efforts to prevent and detect
transactions involving dirty money, both as a result of government requirements and to avoid the
reputational risk involved. Issues relating to money laundering have existed as long as there have
been large scale criminal enterprises. Modern anti-money laundering laws have developed along

CBI, ED arrest 6 persons in BoB money

laundering case
with the modern War on D

TNN | Oct 14, 2015, 05.42AM IST

An official of AGM rank and the head of foreign exchange of BoB's Ashok Vihar branch are among those held. (Representative image)

NEW DELHI: The Enforcement Directorate and CBI have arrested six people in connection
with alleged illegal remittances amounting to Rs 6000 crore from a branch of state-run
Bank of Baroda in the capital. While CBI arrested two bank officials, the ED arrested four
persons, including an HDFC Bank employee, on charges of money laundering.
Days after conducting raids, the CBI arrested AGM rank official S K Garg and Jainish
Dubey, who headed the foreign exchange division at the bank's Ashok Vihar branch. The
two officials allegedly facilitated opening of accounts and transfer of money to Hong Kong.
They have been booked for criminal conspiracy, cheating and under provisions of the
Prevention of Corruption Act.
"It is a case of trade-based money laundering where several modules were engaged in
registration of shell companies abroad and in Delhi and indulged in fake import and
exports," said Karnal Singh, ED's acting director.
rugs.[7]In more recent times anti-money laundering legislation is seen as adjunct to the financial crime
of terrorist financing in that both crimes usually involve the transmission of funds through the
financial system (although money laundering relates to where the money has come from, and
terrorist financing relating to where the money is going to).

BoB laundering case: HDFC official among 4

arrested by ED
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organized crime

The CBI and the Enforcement Directorate have arrested six persons, including two officials of a Bank
of Baroda branch in Delhi in connection with Rs 6,000 crore alleged illegal remittances to Hong
Kong through the bank.
The CBI sources said AGM S.K. Garg and Jainish Dubey, who headed the foreign exchange division
at BoBs branch in Ashok Vihar were arrested for criminal conspiracy, cheating and provisions of the
Prevention of Corruption Act.
On the other side, the Enforcement Directorate (ED) arrested four persons, including an HDFC bank
employee, in connection with the case.
The ED arrested Kamal Kalra, working with the foreign exchange division of HDFC bank, Chandan
Bhatia, Gurucharan Singh Dhawan and Sanjay Aggarwal in Delhi.
The CBI FIR had alleged that 59 current account holders and unknown bank officials conspired to
send overseas remittances, mostly to Hong Kong, of foreign exchange worth approximately Rs 6,000
crore in illegal and irregular manner in violation of established banking norms under the garb of
payments towards suspected non-existent imports.
The CBI sources had found that the Ashok Vihar branch of the bank was a relatively new one, which
had got the permission to entertain forex transactions only in 2013.
The agency had said these remittances were sent by splitting them into amounts below one lakh USD
to avoid automatic detection by software used by banks to alert them about such transactions.
The CBI found that an estimated Rs 6,000 crore was transferred through nearly 8,000 transactions
done between July, 2014 and July, 2015.