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Alarmed over ten-fold rise in ‘suspect transactions’, banks alert tax authorities

India TV Business Desk New Delhi 04 Jan 2017, 9:35:34 IST
India TV Business Desk

With the Income Tax Department and Enforcement Directorate stepping up the ante against black money and financial corruption, banks are not taking any chances in reporting “suspicious” transactions with some of the private banks reporting an increase of up to 10 times. 

Times of India, in its report, cited sources saying that a private bank, which used to report around 275-300 transactions a month, saw the number for Suspicious Transaction Reports (STR) filings with the Financial Intelligence Unit (FIU) rise to almost 3,000 during December. 

Meanwhile, another bank said that it had seen a seven to eight-fold rise in STRs which were typically made for cash deposits of over Rs 1 crore. 

The report further quoted an executive at one of the largest banks saying that the number of filings had increased as there were several more alerts in the wake of increased surveillance from tax authorities. 

“We are being extra cautious. The number of cases that we used to report in a month, we are now doing in a week,” Times of India quoted the bank official as saying. 

Ever since the government announced the demonetisation of Rs 500 and Rs 1,000 notes, the ED and I-T department have been keeping a strict vigil on the deposit of scrapped notes – especially in private banks – and have also arrested several executives on allegations of illegally helping people convert black money. 

According to the report, the tax authorities have identified as many as 547 branches for heightened scrutiny as they saw abnormal activity compared to the average daily business. 

The increased pressure and repeated queries and surveys from the agencies prompted the banks to increase the “alerts”. 

“If there was a dormant account or one where the volume was very low and suddenly it saw a spurt in the form of large deposits, we decided to play it safe and report it to FIU. We are not taking any chances,” said a bank executive. 

“Basically, any transaction which we think is suspicious is being reported. We do not want to face the blame,” he added.