A recent press report said that the Reserve Bank of India has penalised Citibank for violation of Know Your Customer (KYC) and Anti-Money Laundering (AML) norms while opening accounts, which led to perpetration of fraud at its Gurgaon branch.
The Reserve Bank of India has imposed a monetary penalty of ` 25.00 lakh (Rupees twenty five lakh only) on Citibank N.A., in exercise of powers vested in it under the provisions of Section 47(A) (1) (b) of the Banking Regulation Act, 1949 for contravention of various guidelines and instructions relating to Know Your Bank (KYC)/Anti Money Laundering (AML) issued by the Reserve Bank of India. The failure in following the KYC/AML guidelines while opening accounts led to the perpetration of a fraud at its Gurgaon branch.
The Reserve Bank of India had issued a show cause notice to the bank on April 21, 2011, in response to which the bank submitted a written reply dated May 6, 2011. After considering the facts of the case and the bank’s reply and also oral submissions made during the personal hearings held on June 7, 2011, the Reserve Bank of India came to the conclusion that the violations were substantiated and warranted imposition of the penalty.