The US Treasury Department’s Finance Crimes Enforcement Network (FinCEN), charged with combatting money laundering, terrorism financing and financial fraud, has exposed the involvement of Indian banks, including state-owned banks in money laundering, which was used for terror financing in the region.
The Suspicious Activity report stated that entities and individuals were involved in money laundering of approx US$1.53 billion through 3,201 illegal transactions with a total of 44 Indian finance organizations being used for the illegal acts. According to a set of records of parties with Indian addresses, Indian banks figure in SARs were linked to over 2,000 transactions valued at over $1 billion between 2011 and 2017. Significantly, there are thousands of transactions linked to Indian entities and businessmen where the Indian senders or beneficiaries have addresses in foreign jurisdictions. There are cases where ‘suspicious transactions’ have been carried out through the international payment gateway of foreign banks. In others, foreign branches of Indian banks such as a State Bank of India account in Canada and an account of Union Bank of India in the UK have been used by clients for carrying out part of the transactions in question. The report now raises questions about India’s participation in the sponsorship of terrorist activities in the shadowy world of international banking system.
Earlier, a report by UN had disclosed presence of terrorist groups in Kerala, Karnataka and Asaam. The Indian Premier League (cricket tournament) has also been pointed out for money laundering practices by the Indian judiciary.
The problems for Indian banks are continuing. Besides terror financing, according to S&P Global Market Intelligence, 10 out of the 15 worst-performing banks between July and September were Indian banks. The YES Bank was at the bottom of the list, with the total returns plummeting nearly 50pc. Other Indian banks with the worst returns include Punjab & Sind Bank, Indian Overseas Bank, Union Bank of India, IDBI Bank, and Punjab National Bank.
All of them logged in double-digit total negative returns between July and September. The report said smaller banks from Bangladesh, Pakistan, and China were among the best-performing stocks for the three months ending on September 30.
After the FinCEN report, Indian claims regarding Pakistan’s involvement in terror financing have been neutralized while Pakistan’s grievances on similar charges against India stand vindicated.
It is known that India used terror financing to conduct terrorism in Pakistan. A retired Indian Major, Gaurav Arya, has already confessed to these activities on live TV. Serving Indian Navy Commander Khulbhusah Jadhav who was arrested by Pakistan, has already confessed to terror financing in Pakistan.
Now India, which has been eager to see Pakistan blacklisted in FATF, is in deep trouble as its own credentials have hit a new low. Pakistan has been on FATF’s grey list since 2018 after failing to comply with regulations pertaining to money laundering and terrorism. But on July 30, 2020 the Pakistani Senate unanimously approved two bills: the United Nations Security Council Amendment Bill and the Anti-Terrorism Act Amendment.
These new blunt FinCEN revelations, which show dozens of Indian banks involved in suspicious activities, suggest FATF must review India’s role in money laundering. The international community must also open its eyes to Indian role in destablising Pakistan. The 10-yearly review of India was due in 2020 but was pushed to early 2021 due to the pandemic. The world can now see that India is definitely involved in sponsoring terrorist activities to achieve its geopolitical aims.
