RBI imposes monetary penalty on two banks; cautions three banks for violating KYC/AML Instructions

Case Brief

The Reserve Bank of India imposed a monetary penalty of Rs 5 lakh on ICICI Bank Ltd. and Rs 2.5 lakh on Bank of Baroda for violations of RBI instructions relating to KYC/AML compliance. The action followed scrutiny triggered by a complaint about fictitious accounts opened in the name of a statutory organisation and used to encash instruments without detection. RBI found non-adherence to customer identification and acceptance procedures, internal customer-identification norms, and monitoring of transactions in customer accounts. The penalties were imposed under Section 47(A)(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949. In the same release, RBI stated that State Bank of India, Axis Bank Ltd., and State Bank of Patiala were cautioned to strengthen KYC controls, but no monetary penalty was imposed on them.