India: Co-operative banks have weakest anti-money laundering mechanism, says report

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January 23 2017

Cooperative banks have the “weakest” anti-money laundering (AML) and combating terrorist financing (CFT) mechanisms, with their staff having no knowledge regarding “usefulness” of suspicious transaction report (STR), a multi-agency analysis report collated by the Enforcement Directorate (ED) has said. The findings are based on investigations carried out by agencies including Financial Intelligence Unit (FIU), ED, Income Tax department and CBI that recently started looking into large volume deposits in banks after November 8 demonetisation.

According to this report, cooperative banks constitute 3.25 per cent of the entire banking sector and the threat and vulnerability of money laundering in cooperative banks was pegged at 0.39 (medium low) on a scale of 0-10, zero being least vulnerable.