The Hindu : New Delhi News : Banks' laxity under scanner

Online edition of India's National Newspaper
Tuesday, Mar 15, 2005

New Delhi

New Delhi

Banks' laxity under scanner

By Devesh K. Pandey

NEW DELHI, MARCH 14. The revelation that the alleged Lashkar-e-Taiba (LeT) militants gunned down by the Special Cell of the Delhi police in West Delhi recently were managing their funds through at least two accounts with multinational banks has raised serious questions over the procedure followed by such banks in allowing transactions. A few years ago, the Enforcement Directorate had unearthed a "hawala" racket though which over Rs. 700 crores was transferred to different banks.

While the police are trying to link the chain of money that reached the alleged Lashkar-e-Taiba militants, they have strong suspicion that the funds had originated from a Central Asian country and were diverted through Nepal. The reach of the network unearthed so far suggests that lakhs of rupees were pumped in to arrange the logistics to execute the plan to target the Indian Ministry Academy in Dehra Dun and the software companies on M.G. Road in Bangalore.

A considerable part of the money was deposited with the banks in the country. A senior official said the manner in which the terrorists were managing the funds suggests that they knew pretty well that they could open accounts in Indian banks without being detected. "This is mainly because several banks do not properly check the antecedents of the applicants. They seem more concerned about bringing in new customers to meet their monthly targets. The situation is such that certain banks even call up people on their mobile phones requesting them to open accounts with them. On several occasions it has been found that accounts were opened without the reference of the old account holders," said the official, maintaining that the problem of terrorist funding was very much linked to money laundering.

In 2000, the Enforcement Directorate had found that over Rs. 700 crores deposited in a dozen banks -- mostly located in Southern India -- was a part of "hawala" money originating from Dubai. While among those involved in the transactions were cooperative and multinational banks, a sizable chunk of the amount deposited there vanished within a year. Interestingly, the "hawala" money kept disappearing even as the probe was on. The case led the Government to set up a joint investigation team comprising senior police officers to unearth the entire racket, which has resulted in the arrest of several people so far.

Such a modus operandi of keeping "black money" in the safe custody of banks is also employed by the "underworld dons" operating from Central Asia and even from Malaysia, Hong Kong and certain African countries. In a bid to track down the route through which the alleged Lashkar militants had received the funds, the agencies are also probing the suspected role of certain banks in Nepal.

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