RBI to look into HSBC lapses revealed by US senate committee
19 July 2012
HSBC has come under the Reserve Bank of India's investigation after a US senate committee said the bank's Indian staff mishandled checks that were meant to ensure the global banking giant was following norms that guard against money-laundering and terror-funding.
According to home secretary, R K Singh, any financial institution that did not follow the specified norms was making the nation vulnerable. The issue would be studied by the RBI as a regulatory matter, according to department of financial services secretary D K Mittal.
Mittal said he was confident that the RBI was looking at the HSBC issue and it was very conscious of it, speaking to reporters. He added, the finance ministry would assist the RBI with the required inputs.
"HSBC is a regulatory issue. It is for RBI to comment. If they need any input from us they will have to tell us," Mittal said.
According to a US Senate committee, the global banking giant failed to prevent money laundering by drug cartels and terrorists not only in the US, but also in other parts of the world, possibly including India (See: HSBC exposed US, India to terror funds: US senate panel).
In its 340-page report, the committee further said the lender's Anti-Money Laundering (AML) Compliance Department, which included employees in India, was poorly staffed and the Indian staff involved in the process porduced sub-standard results. It pointed out that nearly a third of the "alerts" flagged for review had to be re-done by the OCC (the US Office of the Comptroller of the Currency, which is the banking sector's primary federal regulator in the US).