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The Reserve Bank of India has slapped a penalty of Rs 25 lakh on Citibank for violation of Know Your Customer (KYC) and Anti-Money Laundering (AML) norms while opening accounts, which led to perpetration of fraud at its Gurgaon branch.
The RBI action follows several high net-worth individuals and corporate entities such as the Hero Group getting duped to the tune of Rs 300 crore by the foreign bank's Relationship Manager Shivraj Puri. The bank is believed to have refunded the money to those who had invested in the schemes, even as the RBI began investigating the case.
Following its investigation, the RBI issued a show-cause notice to Citibank on April 21, in response to which the bank submitted a written reply on May 6.
After considering the facts of the case and the bank's reply and oral submissions during the personal hearings held on June 7, the RBI concluded that violations were substantiated and warranted imposition of penalty, said a press release issued today.
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