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Axis Bank: Fined Over Rs 1.66 Crore for Fraud Account

21 June 20243 mins read by Angel One
An Axis Bank Manager was alleged to have been a part of large-scale fraud resulting in Axis Bank being fined Rs. 1.66 Crore for failure to detect and report fraud NSG account.
Axis Bank: Fined Over Rs 1.66 Crore for Fraud Account
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Axis Bank is fined a total amount of Rs. 1,66,25,000 by the Financial Intelligence Unit (FIU) on a case that dates back to 2021. The fine was imposed on the bank due to its failure to place a mechanism for detecting and reporting suspicious transactions. The order issued by the agency also highlighted the failure to address the alert within a reasonable time period.

How did this happen?

An Axis Bank manager of a Gurugram branch in Haryana was alleged to be a part of a large-scale fraud and corruption scandal in the case of the transaction. After years of investigation by the local police and the Enforcement Directorate, they were able to find out that an Axis bank manager had helped in the creation of a fraudulent bank account in the name of the National Security Guard (NSG), a government agency. Not only this, the ED was able to attach assets worth Rs. 45 Cr to an accused NSG officer, deputed from the BSF, and his family members which included his sister who worked as a manager in Axis Bank. The manager’s purpose is reported to be aggregating illicit funds.

Implication on the bank:

As per Section 13 of the Prevention of Money Laundering Act (PMLA), the FIU has directed several corrective measures to the bank. Axis Bank must now review its current transaction system to understand the failure in the generation of alerts and ensure compliance from customers. It is required to present a certification confirming steps taken to establish a robust transaction monitoring system within 90 days. With the criticism of disorganized data dumps, the bank has been ordered to streamline its data-sharing practices to regulatory authorities. Based on the manager’s actions, stringent measures have to be taken by the bank for the screening of its employees.

This penalty serves as a reminder for financial institutions to ensure the establishment of robust mechanisms to detect and report suspicious transactions to safeguard themselves as well as the nation against fraud and corruption.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions

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