In the alleged Rs 400-crore fraud by a senior employee at a Gurgaon branch of Citibank, RBI is probing whether there have been any violations of norms related to customer verification and monitoring of accounts. The initial probe by the banking regulator has indicated transactions totalling hundreds of crores of rupees in about a dozen Citibank accounts, presumably operated by Shivraj Puri , the main accused of the case, sources said.

Some of these accounts belonged to those Citibank clients who have fallen victim to the fraud, while others could have been opened by Puri himself in the names of his relatives or fictitious people.

RBI is probing whether Citibank allowed these accounts to be opened after following the mandatory KYC (Know Your Customer) norms, which make it mandatory for verification of customer details such as valid identity and residence proof with documents like PAN card, Passport and utility bills.

The norms also require the bank to physically verify the identity and address of the customers.

Besides, RBI is also probing whether Citibank followed the STR (Suspicious Transaction Reporting) norms, which requires a bank to immediately inform the regulatory and enforcement agencies about high-value and unusual transactions in any of its accounts, sources said.

Banks are required to observe a much stricter vigil about compliance to KYC and STR norms in case of customers being high-networth individuals (HNIs). In this case, it is mostly HNIs who have been allegedly defrauded by Puri.

Citibank has maintained that it has followed all the norms, including the KYC regulations, it immediately informed RBI and other agencies after it suspected irregularities on part of Puri.

However, sources said that Citibank communicated to RBI after receiving complaints from some clients against Puri and the apex bank is conducting scrutiny of all transactions in the accounts of the bank’s Gurgaon branch since 2009 to ascertain whether any of them warranted STR filing.

RBI introduced KYC norms in 2001 and incidentally the first bank to be penalised for non-compliance was reportedly Citibank in 2004.

As per the reports, RBI slapped a fine of Rs 5 lakh against Citibank for non-compliance of KYC norms in allowing Abdul Karim Telgi, the main accused in the fake stamp paper scam at that time, to open accounts with the bank.

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