India’s oldest joint stock bank has been censured by the country’s Financial Intelligence Unit (FIU) for incorrect reporting of red flag indicators of trade based money laundering (TBML) as well as failing to file suspicious transaction reports (STRs) and cash transaction reports.

Allahabad Bank also failed to adhere to anti-money laundering regulations and incorrectly reported transactions involving non-profit organisations according to the FIU.

Multiple failings

The FIU said that while the bank has developed a system for red flagging indicators of TBML, it had failed to implement this system due to software issues.

During the last five financial years, the bank’s system produced more than 5 million red flags but the financial institution issued just 492 STRs.

Beneficial ownership concerns

The public sector bank with more than 3,000 branches across India admitted that it had not determined the beneficial ownership of its 50 largest accounts in the name of trusts and societies opened in just one year.

The bank has admitted that the top 50 accounts opened during the previous financial year in the name of companies were also not examined to determine beneficial ownership.

In February the Reserve Bank of India fined Allahabad Bank the equivalent of US$225,000 for breaches of its directives on know your customer norms and anti-money laundering standards.

Categories: Trade Based Financial crimes News