India: CBI launches money-laundering probe against UCO Bank employee

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May 21, 2016

A former UCO Bank employee, eight exporters and Reserve Bank of India (RBI) officials are under the scanner of the Central Bureau of Investigations (CBI) for alleged misuse of up to $3.2 billion in export advances paid by the bank against “bogus exports” to Iran.

This move comes after the Enforcement Directorate (ED) wrote to the government to look into the case where nine foreign nationals – eight from Iran and one from Azerbaijan – were found to have entered India on student visas and set up multiple shell companies to gain access to funds held by Iran’s UCO Bank account.

The respective shell companies received advance payments of at least Rs 902 crore against future exports to Iran and then diverted funds to certain private entities. “Considering the huge remittance received by the eight companies, money laundering by private persons in connivance with the bank officials is also suspected in this case.

Although there was no financial loss for UCO Bank, officials had abused their official position and committed gross irregularities in opening accounts by not verifying the export of goods against which advance payment was received from foreign buyers, thereby facilitating the alleged money-laundering by private parties, it added.