The Reserve Bank has widened its probe into the affairs of British banking giants HSBC and Standard Chartered to a host of other foreign banks for alleged breach of controls against money laundering and terror financing.
Besides, capital market regulator Sebi may also join the investigations, as there are concerns of funds from these banks being routed to the stock market through foreign investors and other entities, sources said.
Standard Chartered Bank (StanChart) is listed in the Indian stock market.
A senior regulatory authority official said the inspections are being conducted to ensure these banks’ compliance to various fair banking norms in the wake of certain global events.
However, executives at some of the banks admitted that queries being raised by the regulators are serious in nature and particularly aimed at ensuring effective controls against money laundering and financing of terrorism, among others.
The investigations by Indian agencies follow developments in the US, where a host of European banks, besides StanChart and HSBC, are being investigated for their alleged role in exposing the American financial system to money laundering and terror financing risks.
Sources said Indian investigations would not be affected by the recent settlement reached by StanChart in the US, wherein it agreed to pay $340 million to settle charges that it entered into secret transactions involving $250 billion with Iran despite sanctions against that country.
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