Rs.15000 Crore Banking Scam

dna impact: Banks hit by Rs 15,000 crore remittance scam seek EOW probe-DNA

Six banks, embroiled in the Rs 15,000-crore foreign remittance scam, have approached the Economic Offenses Wing (EOW) of the Mumbai police, requesting it to conduct an investigation against the dubious importers. The scam involves importers depositing fake bill of entries (of imports) in banks and remittances are made to unknown people outside India.

"Banks came to us and handed over the list of importers who have made fake entries of imports, while remitting money abroad. We are looking into the matter," a senior official of EOW told dna.

Kanika Gems, Charbhuja Diamonds, Sambhav Exports, Keshav Impex, Pulkit Impex and Yogeshwar Diamonds are among the importers who deposited fake bills of entries of imports in banks for securing advance remittances.

Five leading private banks, ICICI Bank, IndusInd Bank, ING Vysya, YES Bank and Kotak Mahindra Bank, and a public sector bank, Bank of India, were hit by the scam. ING Vysya and Kotak Mahindra are among the banks that top the fake import remittances list.
E-mail queries sent to banks by dna did not elicit any response.

It was earlier reported by dna on January 7 that the Enforcement Directorate (ED) is investigating foreign remittance scam, that is so far pegged at around Rs 4,000 crore. ED is suspecting the scam to be much bigger at Rs 15,000 crore, as per dna's report.
Subsequent to ED's investigations, the customs department in Mumbai has written to all six banks mentioning that the documents and entries made by importers are "absolutely fictitious".

"Multiple duplicates of each bill of entry were made and submitted to different banks to show legitimate imports. Hence we wrote to banks and asked for immediate action," said sources close to the development.

"We assessed the documents that were submitted by importers. We have come across forged bills of entries and other import documents to banks with the intent to fraudulently remit foreign exchange. These fake bills of import have been used for diamond import," added sources.

The Central Bureau of Investigation (CBI) has also joined the probe with the ED.
"The CBI has also sought details from Bank of India in this matter. We have given all the banks' documents and the list of importers to CBI," said ED sources.

So far, out of the Rs 15,000-crore of fake bill entries, ED has established a scam of around Rs 4,000 crore. This is based on transactions that took place between 2011 and May 2014.
The investigating agencies are in the process of probing the importers' background and checking with the banks if due diligence and 'know your customer' (KYC) norms were followed properly.
Previously too, ED had alerted banks to be more vigilant while transferring large funds. The directorate had asked the banks to plug loopholes and check the 'growing menace', in a meeting attended by top compliance officers and money-laundering reporting officers of banks.