Fake accounts+middlemen+illegal funds: The unholy trinity

Terrorist groups and drug mafias often use middlemen, who open several accounts in a bank under a number of assumed identities, says Vicky Nanjappa

The HSBC case has revealed exactly how vulnerable financial institutions are to the subversive plans of a crime cartel.

The Intelligence Bureau points out that parking money in reputed financial institutions is a way of hoodwinking security agencies.

While HSBC has been accused of exposing the United States to terror funding and money laundering risks, Indian banks have been grappling with this issue for a while.

Banks are often chosen by terror elements, drug traffickers, money launderers etc as these institutions don't attract too much attention from the authorities and many transactions go unscrutinised because of the large number of customers.

Banks often don't quiz their customers too much about their accounts or track fund transfers, unless they receive a specific intelligence input. Banks guard the account details of their customers zealously and have even demanded court orders in specific cases before handing over such data.

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In India, dubious outfits have often parked funds in banks under fake identities. Revenue officials claim that when the remittance is high, many banks do not bother following the guidelines set by the Reserve Bank of India to check if they are from a benaami source.

Terrorist groups and drug mafias often use middlemen, who open several accounts in a bank under a number of assumed identities. They deposit a large amount of money and give fake documents about a non-existent company to the bank.

The moment these transactions come under scrutiny by the authorities, the middlemen close the account and move on to another bank.

IB officials feel that bank officials need to be more stringent about checking suspicious transactions and verifying details about their customers. If they suspect that something is amiss, they should immediately report the matter to the RBI.

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IB sleuths point out that in many cases, the middlemen team up with a bank employee to operate their account with impunity. This helps them open accounts and also transact with ease.

While tracking these bank accounts, investigating agencies can find out who the middleman is, but they often fail to reach the kingpin of the operation. The middleman ensures that the chief operator of the racket is never directly connected to the account.

IB officials say that it is vital for banks to cooperative with probe agencies, keep a track of suspicious transactions and report them in time. If a bank is found to deliberately withhold information about a customer, it can face criminal action.

"While questioning these middlemen, we realise that they too don't get to know who they are working for. This is a major stumbling block in our investigation as we can never trace the money trail to its source," said an IB official.

Current trends indicate that such criminals prefer global banks as then they can carry out financial transactions from anywhere in the world.

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