16 Mar 2013

How bankers and Big Brother make great bedfellows

A few weeks ago, my bank sent me the following by email.

Apparently, the Government of India has "declared" that henceforth citizen services like subsidies, welfare payments, pensions, etc. will be routed through aadhaar-enabled bank accounts.

I am certain that the official reasoning is to help the Indian banking and "national security" apparatus keep an eye on transactions by the "bad guys". Of course the corollary is that all customers / citizens are guilty until proven otherwise by a government database.

But the government babus and the banks are innocent angels -- except when they are caught with their pants around their ankles!

For example... In October 2012, ICICI Bank (a foreign-owned "Indian" bank) was fined Rs5,500,000 by the RBI for unspecified money-laundering activities. What is interesting about the paltry amount is that the MAXIMUM penalty for violation of guidelines is only Rs 500,000. But the RBI can chose to REPEAT the fine for REPEATED violations. Thus, ICICI was fined 500,000 ...11 times!

Surely, ICICI has learnt a bitter lesson.

This week - just 5 months later - ICICI has merrily presented India's ever-diligent banking regulator with yet another opportunity fine them in multiples of Rs500,000!

Cobrapost.com, a small investigative team, did a undercover journalistic "sting" which show bankers eager to help them evade regulatory guidelines - ON VIDEO!

Of course, Nanadan Nilekeni would gallantly tell us that none of this would have happened if the bank accounts were in aadhaar's biometrically-sealed database. And Captain Raghu Raman would volunteer that India's other Orwellian project, NATGRID which links 11 government agencies and 21 databases, would certainly have prevented such situations.

Of course, both of them would be lying through their teeth.

Because, as Aniruddha Bahal, Editor-in-Chief of Cobrapost says, KYC guidelines, IDs (biometric or otherwise) and banking laws amount to squat if bankers KNOWINGLY wish to circumvent them... Especially, if they are certain that laundering millions or billions would land at best a feeble wrist-slap and chump-change in fines.

The Indians are just learning the ropes from the master at the game:
- In December 2012, HSBC pays a world-record $1.9 billion fine after being caught money-laundering for drug cartels... with ZERO legal implications.
- In February 2013, it is revealed that HSBC's CEO is awarded more than $3 million as bonus for his "strong leadership" in 2012.

The Indians still have a long way to go... but with the government and regulator's help, they'll get there eventually.

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