Banks in Hyderabad turn detectives: Data specialists to analyse transactions
Hyderabad: Reporting of suspicious banking transactions by banks to the Financial Intelligence Unit of the Reserve Bank of India to detect financial crimes has come to focus again after demonetisation of Rs 500 and Rs 1,000 notes.
Banks which are using the software and system to analyse the huge number of transactions and customer data are approaching data companies for a foolproof analysis and for improvising detection post demonetisation.
Banks which are not using the transactions data analytics system are seeking information about the same. Though banks are not regulators and can’t stop transactions of customers, they have to monitor suspicious transactions under the Prevention of Money Laundering Act or face a penalty.
Section 13 of the Prevention of Money Laundering Act, 2002, empowers the RBI’s Financial Intelligence Unit to impose fines on any banking company, financial institution or intermediary for failure to comply with the obligations of maintenance of records, furnishing information and verifying the identity of clients. Sanctions include both administrative action and monetary fine, which may vary between Rs 10,000 and Rs 1 lakh for each failure.
Mr Satya Prakash Mishra of Quantam Data Engines of Hyderabad, which serves several banks like Kotak Mahindra Bank, Saraswat Bank, Bank of Ceylon, May Bank, Mahindra Finance, Amana Bank of Sri Lanka said, “Banks are obligated under the Prevention of Money Laundering Act to monitor transactions of a suspicious nature for the purpose of reporting it to FIU.
It is humanly not possible with the naked eye. We have built a software solution on the Java platform which processes customer data and transaction data. “Tax evasion, money laundering, terror financing and all financial crimes can be detected,” he added.
According to RBI sources, while several banks are detecting suspicious transactions by systems that run into lakhs, only a few are being reported.
“For instance in 2011-12, the ICICI Bank system generated 5.4 lakh alerts about suspicious transactions, but only 3,677 were reported to the FIU. Around 11 lakh suspected transactions were detected by HDFC but only 932 were reported; Axis Bank system generated 29.6 lakh alerts but only 764 were reported,” he said.
At least four banks have been penalised in 2016 so far, as per a Cobra Post sting operation.
