HDFC Bank appoints Deloitte for forensic probe into allegations

Last Updated: Sun, Mar 17, 2013 05:36 hrs

HDFC Bank today said it had appointed Deloitte Touche Tohmatsu India to conduct an independent forensic investigation into allegations of money laundering against the bank. The private lender also roped in Amarchand & Mangaldas & Suresh A Shroff to examine whether any of its employees had violated the bank’s code of conduct and ethical standards.

The bank is also conducting an internal investigation into the matter. It would also carry out a special audit of some of its branches, which allegedly offered money laundering as a product to customers.

“The internal and external audits and inspections undertaken previously and the action-taken reports in this regard are being compiled and reviewed once again. This is to enable the bank to reiterate the internal checks and balances and processes for ensuring compliance with KYC (know-your-customer) norms and for prevention and detection of, and protection against money laundering activity are robust and adequate,” HDFC Bank said in a statement.

This follows Cobrapost, an online magazine, claiming its undercover investigation had revealed ICICI Bank, HDFC Bank and Axis Bank had violated several provisions of the Income Tax Act, the Foreign Exchange Management Act, the Prevention of Money Laundering Act and Reserve Bank of India (RBI) regulations. Cobrapost’s journalists had visited 20 HDFC Bank branches, 19 ICICI Bank branches and nine Axis Bank branches across the country’s five zones. Several employees at these branches were caught on video camera offering money laundering as a product to the undercover journalists.

It is believed HDFC Bank would suspend the employees caught on camera, pending investigation. “The bank is also detailing the efficacy of induction and ongoing training provided for ingraining ethical behaviour and conduct rules, as preventive and protective measures,” the bank said in a statement.

ICICI Bank has already suspended 18 employees, pending enquiry, and formed a high-level inquiry committee to investigate the allegations. The committee would submit a report in two weeks.

Axis Bank has also removed from key roles the employees allegedly involved in the money laundering racket. It has relocated them to the bank’s administrative offices. “A thorough internal enquiry is already underway to look into all aspects of the matter. The findings are expected soon. Pending enquiry, the bank has advised the 16 employees concerned to report to their respective administrative offices. A senior-level committee has been constituted to monitor and supervise the entire investigation process on a daily basis,” the bank said in a statement.

RBI has asked the three banks to submit details of their findings. Cobrapost has said it is ready to hand over its video footage to any authorised law enforcement agency for investigation.

  • The second-largest private lender in the country will also carry out special audit of some of its branches, which allegedly offered money laundering as a product to customers
  • It is believed that HDFC Bank is likely to suspend the employees, pending investigation, who were captured on the video tape
  • The moves come after Cobrapost, an online magazine, claimed that its undercover investigation revealed that ICICI Bank, HDFC Bank, and Axis Bank violated several RBI regulations

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