NEW DELHI: An internal investigation into the scam in Citibank's Gurgaon branch in May has shown that there were serious lapses within the bank that was responsible for one of the country's biggest fraud involving a multinational bank.
The bank and its staff had either failed to detect or ignored the illegal activities of its relationship manager Shivraj Puri.
The Citi Security and Investigative Services (CSIS) report available with TOI found that a full review of the account was not triggered even though about Rs 405 crore flowed through a savings account of a 92-year-old account holder - Prem Nath.
This account was used as "custodian" account to route investments of Puri's clients in the stock market. The investigation also says that Puri was allowed to manage Nath's account despite being his relative.
The report shows how senior officials in the branch did not review the daily large transaction report of the branches which was meant to check and highlight large flow of funds.
The review by the bank's own investigator identified that even as there were several alerts on high volume transactions, these were disposed of.
This was done despite the fact that they were not supported by adequate details by the branch operation and service head (BOSH) and relationship manager (RM).
It also says that the anti-money laundering (AML) and know your customer (KYC) staff closed the alerts despite the inadequacy and even certain red flags were ignored.
The CSIS report mentions that account inquiry requests (AIR) for alerts raised in October and November 2010 for transactions from September to November - 80% of the transactions in the account of Prem Nath - were sent to RM and BOSH only on December 3, 2010.
KYC concerns were also identified in 12 accounts opened by Puri during 2009 and 2010.
The holders of these accounts were related and were in taxi services. Field verifications disclosed that the companies did not exist at the provided address in case of 11 accounts.
The service relationship manager (SRM) Roma Narang and Shivraj were identified to have updated the system notepad confirming that welcome and RM calls were made by them, although no calls had been made.
The investigation found that Puri's savings accounts variances during November 2010 showed significant fluctuations.
On November 20 in 2010 it was Rs 5.55 crore and only two days later it had increased to Rs 20.55 crore. This issue was not investigated by the bank. Puri's customers were not met by anyone else including his manager as part of an established process.
indiatimes.com
The bank and its staff had either failed to detect or ignored the illegal activities of its relationship manager Shivraj Puri.
The Citi Security and Investigative Services (CSIS) report available with TOI found that a full review of the account was not triggered even though about Rs 405 crore flowed through a savings account of a 92-year-old account holder - Prem Nath.
This account was used as "custodian" account to route investments of Puri's clients in the stock market. The investigation also says that Puri was allowed to manage Nath's account despite being his relative.
The report shows how senior officials in the branch did not review the daily large transaction report of the branches which was meant to check and highlight large flow of funds.
The review by the bank's own investigator identified that even as there were several alerts on high volume transactions, these were disposed of.
This was done despite the fact that they were not supported by adequate details by the branch operation and service head (BOSH) and relationship manager (RM).
It also says that the anti-money laundering (AML) and know your customer (KYC) staff closed the alerts despite the inadequacy and even certain red flags were ignored.
The CSIS report mentions that account inquiry requests (AIR) for alerts raised in October and November 2010 for transactions from September to November - 80% of the transactions in the account of Prem Nath - were sent to RM and BOSH only on December 3, 2010.
KYC concerns were also identified in 12 accounts opened by Puri during 2009 and 2010.
The holders of these accounts were related and were in taxi services. Field verifications disclosed that the companies did not exist at the provided address in case of 11 accounts.
The service relationship manager (SRM) Roma Narang and Shivraj were identified to have updated the system notepad confirming that welcome and RM calls were made by them, although no calls had been made.
The investigation found that Puri's savings accounts variances during November 2010 showed significant fluctuations.
On November 20 in 2010 it was Rs 5.55 crore and only two days later it had increased to Rs 20.55 crore. This issue was not investigated by the bank. Puri's customers were not met by anyone else including his manager as part of an established process.
indiatimes.com
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