Operation Red Spider is a code name of sting operation of an online magazine, Cobrapost in which it released video footage, recorded

largely by hidden cameras, showing high-ranking officials and some employees of top three Indian banks suggesting to an undercover reporter methods to launder money and offering safe deposit lockers to stash away the black money and offered to open accounts without adhering to Reserve Bank of India guidelines and use benami (false) accounts to facilitate the conversion of the black money and keep the identity of the depositor a secret. The editor of Cobrapost.com Mr. Aniruddha Bahal brought these video footage into the public domain on March 14, 2013.

How the Cobra Bit

Cobrapost Associate Editor Syed Masrur Hasan took an alias as Rajesh Sharma. Sharma aka Hasan told unsuspecting private banking officials that he was fronting a minister. He told them the ministers imaginary wives Nita and Vandana wanted to deposit black money. Several officials of all three banks in some 40 centres across the country readily bought the story. They readily offered solutions from opening of multiple bank accounts, investment plans, overseas remittance. They promised to create channels through which eventually, Sharma will get his money back in white. They also offered huge lockers, where Sharmaji can stash up to a few crores in cash.

What Cobra claims Money laundering sold as a product Bulk of insurance money in these banks is black money It has hundreds of hours of evidence Severe connivance of top management Clear violation of IPC and PMLA

A Cobrapost pan-India undercover investigation spanning several months, unearths a vast, nation-wide money laundering racket being run by HDFC Bank, ICICI Bank and Axis Bank. The brazen criminal activity by these banks is channelizing vast amounts of black money into the regular banking system as laundered white money. their investigation, conducted across dozens and dozens of branches of these banks and their insurance affiliates, across all five zones of the country, revealed these shocking facts: That these money laundering practices are part of a standard set of procedures within these banks; * These money laundering services are being openly offered to even walk-in customers who wish to launder their illicit money; * A variety of options for laundering ill-gotten cash are being offered brazenly; * These money laundering services are being offered practically as a standard product across the country. This huge money-laundering racket being run by these banks has been captured by Cobrapost, on video-tape, running into hundreds of hours. The evidence is graphic, crystal-clear and clinching. The investigation finds the banks and their managements systematically and deliberately violating several provisions of the Income Tax Act, FEMA, RBI regulations, KYC norms, the Banking Act and Prevention of Money laundering Act (PMLA) with utter disregard to consequences, driven by their desire to boost cheap deposits and thereby increasing their profits. It puts a big question mark on the legitimacy of these banks' deposits and therefore their profits. It also raises grave questions of the legitimacy and origins of funds being raised in their insurance and investment arms. It is also clear from our investigations that these banks have been indulging in these criminal practices for several years and have well-oiled processes for the same. Covered in this investigation, codenamed Operation Red Spider, are three leading private sector banks, namely, HDFC Bank, ICICI Bank and Axis Bank.

What were Cobrapost's methods to unearth this scam? It took just a cold call by the Cobrapost reporter to the branches of the banks, mentioned above, to put a grossly illegal proposition on the table: A politician wants to launder a huge sum of black money. The purpose: make it white. Would the bank officials help? And the lid came off the murky world of money laundering in the Indian banking sector, as the officials of these banks rolled out the red carpet for our Associate Editor Syed Masroor Hasan. Taking an alias of Rajeev Sharma, Masroor visited dozens and dozens of branches across the length and breadth of the country, including many major cities and state capitals, across all five zones. Nowhere was he disappointed. Nowhere was he turned away. Almost every banker that he came across was willing to help launder the black money of the fictitious politician Masroor was supposedly working for. The discussions on how to launder the money went up the management hierarchy. How these banks launder black money * The ways these major banks suggested to transform the black money into white were both imaginative in their range and brazen in their approach. This brought to the fore a modus operandi that is tailored to rake in vast amounts of black money in the form of illegal deposits, insurance and investment products, sold by these banks. All these creative means make the dirty money squeaky clean without the regulatory authorities ever getting a whiff of what they are doing. Here is a gist of what the various bankers suggested to help the politician launder his illegitimate money: * Accept huge amounts of cash and invest it in insurance products and gold. * Open an account to route the cash into various investment schemes of the bank. * Do it even without the mandatory PAN card or adhering to the KYC norms laid down by RBI. * Split the money into tranches to get it into the banking system without being detected. * Use benami accounts to facilitate the conversion of black money. * Use accounts of other customers to channelize the black money into the system for a fee. * Get demand drafts made for the client either from their own banks or from other banks to facilitate investment without it showing up in the clients account. * Keep the identity of the investor/depositor secret. * Open multiple accounts and close them at will to facilitate the investment of black money. * Invest black money in multiple instruments in the names of different individuals, not necessarily drawn from among the family.

* Allot lockers for the safekeeping of the illegitimate cash, including special large size lockers to accommodate crores of hard cash. * Personally come to the residence of the client to take the black money deal forward and collect the cash, even bring along counting machine. * Use provisions like Form 60 to deposit the illegitimate cash into the account to route it into investment. * Help the client to transfer black money abroad through NRE (Non-Resident External)/NRO (Non-Resident Ordinary) account; transfer the money telegraphically or through means other than regular banking procedures. Operation Red Spider exposes the alarmingly lax and ineffective regulation of our Banking and Insurance Industries Operation Red Spider makes it clear that the agencies entrusted under law to have an oversight over the banks, namely, the RBI, the Income Tax Department, Directorate of Revenue Intelligence, the Enforcement Directorate and various economic offences wings, have been grossly inefficient in unearthing misconduct on the part of the banks. It took a single reporter equipped with a low-end hidden camera, to unearth these endemic money laundering practices in HDFC Bank, ICICI Bank and Axis Bank: by merely posing as a walk-in customer wanting to launder huge sums of cash for a politician. The interactions between officials of the banks and the reporter clearly brings out the connivance of senior management of these banks in facilitating money laundering and other illegal transactions. Operation Red Spider clearly establishes that the senior management of these banks has compromised all standards of governance, and brazenly breaking the law by offering these money-laundering services practically as a nation-wide product. It becomes very clear through the Cobrapost investigation that all that matters to these banks' managements is to increase the banks access to cheap deposits, thereby boosting their profits vastly, even if the money thus accessed is criminal and shady. Cobrapost has hundreds of hours of raw video footage pertaining to the reporters interactions with personnel from the above-mentioned three banks. Cobrapost is willing to hand over the footage to any authorized law enforcement agency that wants to look into the matter. Cobrapost has undertaken dozens of investigations (including Operation Duryodhana: the cash for questions scam which led to the dismissal of 11 Members of Parliament) over the past 10 years and has been submitting unedited tapes to authorities whenever asked for. No agency has ever raised any questions as to the genuineness of evidence presented by Cobrapost.

When confronted with irrefutable evidence, the PR spin machines of the banks are likely to go into over drive and claim that these cases are aberrations and isolated, or that the tapes are doctored, or that we will look into the matter and take action. Let all parties be assured that nothing in Operation Red Spider is fabricated. The camera is a mechanical witness and it has captured the words and actions of the bankers with great clarity. These banks can be called criminal syndicates for what their managements are willing to do to improve the banks bottom line. The hundreds of hours of video footage clearly establish that these cases are not aberrations at all. In fact, to the contrary, they are the norm, across all five zones, major cities, spanning the length and breadth of a large country like India. Furthermore, these managements themselves are complicit in these criminal activities, and hence, to allow them to investigate this scam will only result in the destruction of evidence and a cover up of their tracks. No fair investigation can happen with the same people sitting at the helm of affairs. We further need to have the debate again whether private entities should be given banking licenses and whether those that have them deserve them or the country is better served with their licenses being cancelled. For, as things stand, as demonstrated by the conduct of HDFC Bank, ICICI Bank, and Axis Bank (the countrys leaders in banking), perhaps the country might be better served by private banks not being on the banking canvass. Finally, Mr. Chidambaram, our Finance Minister, has been speaking extensively about the cancer of money laundering and tax evasion in our system. The onus is now on the government to act swiftly, and get its investigative and enforcement agencies, including the CBI, to launch an investigation without even a days delay. Any delay will result in evidence like incriminating emails being destroyed (there are bank officials who have been caught on tape, saying that they routinely email seniors for approval/information on these illegal transactions), and cash being removed from lockers, customer identities being altered, etc. The whole country has been looking at the Swiss banks with suspicion as being the main repositories of black money belonging to Indian residents. As this path-breaking Cobrapost investigation starkly reveals, it is our very own, home-grown Indian banks that are the primary culprits in this giant racket.

ICICI bank http://www.cobrapost.com/index.php/news-detail?nid=102&cid=28

A countrywide undercover investigation by Cobrapost finds ICICI Bank committing gross violations of the Income Tax Act, FEMA, RBI regulations and the anti-Money Laundering Act. These activities render the vast assets it manages, the deposits it maintains, the profits it makes, and the spectacular growth it has registered, suspect. It was an innocuous visit by a journalist to the bank. The proposition was not innocuous: A politician wants to invest a huge amount of money to make it white. Would ICICI Bank officials help? A six-month long undercover investigation by Cobrapost, codenamed Operation Red Spider, found almost all officials of ICICI Bank bending over backwards to help sequester black money and make it white. Bankers in scores of ICICI branches, spread across the states of Rajasthan, Haryana, UT Chandigarh, Delhi, Uttar Pradesh, Andhra Pradesh, Tamil Nadu, Karnataka and Maharashtra were willing to help the Cobrapost reporter (posing as a relative of a fictitious politician) launder huge sums of ill-gotten money. Living up to its Khayaal Aapka (We care for you) motto, almost all the officials of ICICI Bank, caught on camera, welcomed Associate Editor Syed Masroor Hasan. They suggested innumerable ways to convert black money into white: invest the black money in insurance, split the money in smaller chunks to avoid attention, open multiple accounts to make multiple invstments in different names, withdraw money after maturity and close the accounts. All this would serve the purpose of making the money legitimate without the Income Tax Department knowing. The modus operandi the ICICI Bank officials suggested overall can be summarized as follows: * Open an account to route the cash into the Banks menu of insurance products.

* Do it even without the mandatory PAN card. * Split the money to invest in a diversified portfolio including gold. * Invest in multiple instruments in the names of different individuals, not necessarily from among the family, to facilitate the investment of black money. * Use dummy accounts to faceplate the conversion of black money. * Get demand drafts made for the client either from their own bank or from other banks to facilitate investment without it showing up in the clients account. * Allot lockers for the safekeeping of the illegitimate cash. * Personally come to the residence of the client to take the black money deal forward. * Make a suitable profile for the client, such as showing him as an agriculturist or engaged in some businesses, so as to make the investment unquestionable. * Help the client to transfer black money abroad either through NRE (Non-Resident External)/NRO (Non-Resident Ordinary) accounts or through means other than regular banking procedures. Helping such bankers and insurers are certain loopholes in the system, such as Section 10-10 (D) and the provision of scrutiny of investments up to a period of 7 years, which are being used to clean customers money. But the Anti-Money Laundering Act clearly stipulates that any dubious transactions should be reported to the regulatory authorities and their records preserved for a period of 10 years. Such was their eagerness to help that one ICICI Bank official who fell hook line and sinker for the fictitious story sold to him by the Cobrapost reporter, went about looking for Vandana, the invented wife of the invented politician and for the Peeli Kothi in Noida, their fictitious home. As one official claimed: Aisa hai Hindustan mein aisa nahin hai ki koi vyavastha na ho (In Hindustan, there is nothing which cannot be arranged). Said another official: Nahin toh kuch na kuch jugaad karte hain aapke liye (Otherwise, we will make some jugaad for you). When asked if he could do it using some dummy accounts, yet another official offered: Theek hai ghumate hain ghoomega idhar se hi ghoomega

(Alright, I will manipulate. It will be manipulated from here only). Since the start of its operations in 1994, ICICI Bank has emerged as the second largest bank in India, after SBI, with 2900 branches, a presence in 19 countries, and interests in life and general insurance, securities, and venture and asset management, among others. According to the information available on its websites, managing assets worth Rs. 4736.47 billion, the bank earned a profit of Rs. 64.65 billion in the fiscal year ending March 2012, a 20.3 per cent jump over the precious fiscal. What ICICI Bank has achieved in 19 years is phenomenal growth. However, the revelations made by bank officials during Operation Red Spider raise questions about the banks methods, the culpability of the top brass in money laundering, and the failure of the regulatory authorities to monitor their activities.

AXIS bank http://www.cobrapost.com/index.php/news-detail?nid=111&cid=29 A pan-India undercover investigation by Cobrapost finds Axis Bank is engaged in money laundering, flagrantly violating various RBI guidelines, the provisions of the Prevention of Money Laundering Act, the Income Tax Act, and KYC norms, making the vast assets it manages, the spectacular growth it has achieved and the profits it is raking in all look questionable It only needed a simple visit to the bank with as simple a proposition: A politician wants to invest his tainted crores. The purpose: Make the money clean. Would the bankers help? And the veneer came unstuck. Codenamed Operation Red Spider, a six-month long undercover investigation by Cobrapost found almost all Axis Bank officials going overboard in helping our reporter, posing as a relative of an imagined politician, invest black money in various products of the bank to make it white. In their zeal to net the customer with deep pockets, bankers in branches of Axis Banks spread across several states, including Rajasthan, Haryana, Delhi, Uttar Pradesh, Andhra Pradesh and West Bengal, suggested innumerable ways to convert black money into white: invest in insurance, invest in gold, deposit the cash in banks account, split the cash in smaller chunks to avoid detection, open multiple accounts, and the likes. All these ways serve the purpose of the client well, fully covering the tracks so much so that government regulatory authorities would never get a whiff of such dubious transactions. The modus operandi the bank officials revealed constitute the following: * Open an account to route the cash into the Banks spread of products including insurance; * Put the cash in accounts other than bona fide, like dummy accounts; * Use sundry accounts of the bank to deposit illegal cash and get the pay orders for investment; * Do it even without PAN card; * Use provisions like Form 60 to deposit the illegitimate cash into the account to route it into investment; * Get Demand Drafts made for the client even from other banks to facilitate investment; * Split the money to invest in diversified portfolio including gold; * Allot lockers for safe keeping the illegitimate cash; * Show the illegal cash as proceeds from some sham agreements of land sale; * Use duplicate PAN cards to route the cash transactions into investment;

* Send money abroad through NRE/NRO accounts; transfer cash using accounts of customers, for a fee; use some shell company to transfer money abroad showing it as expenses toward business-cum-leisure trip; transfer money using TCDC cards. The bankers would go out of their way to help you provided you have crores to show them, never mind if they have been earned by means other than legitimate, and they will help you make it legitimate, in a foolproof manner, taking advantages of certain loopholes of the system. For instance, they are using the provision of scrutiny of investments up to a period of 7 years to beat the system. Then there are provisions like Section 10-10(D) which come in handy to people invest black money and make it white.

All such acts of commissions, however, comprise an offence under various laws of the land, like the Income Tax Act, the Prevention of Money Laundering Act, punishable by imprisonment, and various RBI guidelines including KYC norms. Although KYC norms make it mandatory for bankers to report any dubious transactions to enforcement authorities in, the brazenness with which they are conducting their business bring a stark reality to the fore: The regulatory authorities have miserably failed to monitor their activities let alone bring them to book. Beginning its operations in 1994, Axis Bank, known as UTI Bank in its earlier avatar, has emerged as the third largest private bank, with 1987 domestic branches and a presence in seven countries, in barely two decades of its existence. It boasts of a network of 10,363 ATMs spread across the country. According to the information available on its websites, the banks had assets worth Rs. 285,627.79 crore in 2012, a 31.28 per cent increase since 2005. The bank has registered a similar spurt in its profits which grew by 45.12 per cent to a staggering figure of 4,242.21 crore in the same period. It is undoubtedly a phenomenal growth.

However, the revelations made by the Axis Bank officials, caught on camera by our Associate Editor Syed Masroor Hasan, during the course of Operation Red Spider make its deposits, its profits and its growth look dubious, so do the means employed to achieve them. It also brings forth the fact that the top brass of the bank is involved in money laundering.

Hdfc http://www.cobrapost.com/index.php/news-detail?nid=89&cid=27

A nationwide, undercover investigation across dozens of branches by Cobrapost reveals HDFC Bank is involved in extensive money laundering. The bank is blatantly violating various sections of the Income Tax Act, FEMA, RBI regulations and the Anti-Money Laundering Act, making the legitimacy of its deposits and its phenomenal profits and growth suspect. It was a simple visit by a journalist, posing as a frontman of a politician, to the bank. So was its stated purpose: A huge amount of black money of the politician was to be invested with the bank. Would the officials help make it white? The rider: Under no circumstances should the politician be identified. A six-month long undercover investigation by Cobrapost, codenamed Operation Red Spider, found dozens of officials of HDFC Bank, one of the oldest and most prestigious private banks in India, willing to help convert black money into white. Bankers across dozens of branches spread across the states of Rajasthan, Haryana, Delhi, Uttar Pradesh, West Bengal, Tamil Nadu and Karnataka, were willing to help our reporter (posing as a frontman for an imaginary politician) launder huge sums of illegitimate cash. At almost all branches, the Cobrapost journalist got a red carpet welcome, with officials going out of way to suggest myriad ways of converting the black money into white, with the Income Tax Department never coming to know about it: invest the black money in insurance and gold; split the money in smaller lots to avoid attention; open multiple accounts with the bank and withdraw the money after maturity. Almost all the officials claimed they were old hands in helping customers turn black money into white. Cumulatively, the modus operandi suggested by HDFC Bank officials to help launder a huge sum of the imaginary politicians black money (source obviously criminal) was * accept cash and invest it in the Banks menu of insurance products and gold; * do it even without PAN card; * keep the identity of the client secret; * help the client to transfer black money abroad through remittance using legal methods; * transfer the money telegraphically; * open multiple accounts and close them at will to facilitate the investment of black money and withdrawal; * get Demand Drafts made for the client from their own bank and other banks; * allot lockers to the client to ensure the safe keeping for their illegitimate, scam-tainted cash; personally collect the cash from the politicians house. All these acts constitute violations under various sections of the Income Tax Act, FEMA, RBI regulation and the Prevention of Money Laundering Act (PMLA) of 2002 which was promulgated to prevent the flow of money to groups or individuals who are a threat to the Indian state, its economy and social fabric. Coming in handy for such acts are certain provisions, such as Section 10-10(D), which bankers and insurers use to help their customers to launder money. HDFC officials were so confident that they threw discretion to the winds while talking business with potential customers. As one official claimed: HDFC baitha hi hua hai black money khane ke liye (HDFC has been set up to eat up all the black money).

HDFC Bank began operations in 1995. In the 17 years of its existence, the bank has emerged as one the leading financial institutions in the private sector with interests in securities, mutual funds, realty, life insurance and financial services. According to information available on its websites, its deposits totaled Rs. 246,706 crore as of March, 2012. The bank has registered a more than threefold increase in its net profits from Rs. 1590.12 crore in the fiscal ending March 2008 to Rs. 5164.96 crore in the fiscal ending March 2012. However, the information unearthed by Operation Red Spider throws doubt on the legitimacy of this growth story because it points to an illegitimacy of its deposits and therefore profits. In an ideal world where banks followed regulation and where regulators did their jobs, the story would have been different. True to its dictum, We Know Your World, nobody knows the world of black money better than HDFC. According to Mr Rajiv Takru, Secretary of Financial Services, Government of India, all Indian government agencies and regulators are working together to probe charges. On March 14, 2013 Reserve Bank of India conducted an inquiry into possible violation of its KYC (Know Your Customer) and AML (anti-money laundering) guidelines by ICICI Bank, HDFC Bank and Axis Bank. Following the enquiry, penalty of Rs 50 million on Axis Bank, Rs 45 million on HDFC Bank and Rs 10 million on ICICI Bank was imposed by RBI.

On March 15, 2013 ICICI Bank suspended 18 employees. On March 16, 2013 HDFC Bank appointed Deloitte Touche Tohmatsu to carry out an independent forensic inquiry of bank employees who are encouraging customers to evade income tax.