Alleged Fraud and Corruption Scandal at Axis Bank, FIU Imposes Fine for Failure to Detect Suspicious Transactions

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Recently, an Axis Bank manager has been implicated in a significant fraud and corruption scandal. The Financial Intelligence Unit (FIU) has fined Axis Bank over ₹1.66 crore for its failure to establish a system capable of detecting and reporting suspicious transactions. This penalty comes in response to an incident that took place at one of the bank’s branches involving a fraudulent account under the name of the National Security Guard (NSG), a counter-terrorist commando force.

According to the FIU summary order, the Axis Bank manager in question is believed to have played a role in this large-scale fraud and corruption scandal. The order indicates that the bank has been fined a total of ₹1,66,25,000 for allegedly violating anti-money laundering laws.

Investigation and Asset Attachments

Authorities have been investigating this case for several years now. The incident occurred in Gurugram, Haryana in 2021. The local police and the Enforcement Directorate (ED) have been diligently working on the investigation. As part of their efforts, the ED has already attached assets worth ₹45 crore, including assets belonging to a NSG officer on deputation from the Border Security Force (BSF) and his family members. Interestingly, the officer’s sister was employed as a manager at Axis Bank.

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Failures on the Part of Axis Bank

The FIU’s order imposes fines on Axis Bank for several reasons. First, the bank is accused of failing to establish a system capable of identifying and reporting suspicious transactions. Additionally, the order highlights the bank’s apparent failure to thoroughly investigate and close alerts promptly. The bank is also criticized for its failure to file suspicious transaction reports (STRs) with the FIU regarding transactions in the fraudulent account. The FIU found that these transactions did not align with the account’s profile and lacked proper verification or checks. Furthermore, the bank is accused of inadequately verifying whether the accused bank employee was authorized to act on behalf of the NSG.

Disorganized Data and Certification Requirement

The FIU expressed dissatisfaction with the data provided by Axis Bank during the investigation, describing it as “disorganized data dumps” that caused unnecessary confusion and impeded the scrutiny process. As a result, the FIU has demanded that Axis Bank, within 90 days, provide a certification outlining the steps taken to implement a robust transaction monitoring mechanism.

It is important to note that the information provided here is based on the available reports and does not represent the final outcome of any legal proceedings. The investigation is ongoing, and further developments may arise in the future.

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