New Delhi: The Enforcement Directorate (ED) widened its investigation into the 6,173 crore Bank of Baroda money laundering case on Thursday after accused Sanjay Aggarwal, a trader who was arrested on Tuesday, revealed during interrogation that bank accounts of eight lenders were misused to launder 557 crore through foreign remittances.

The lenders are Oriental Bank of Commerce, ING Vysya Bank (acquired by Kotak Mahindra Bank Ltd in April), ICICI Bank Ltd, Kotak Mahindra Bank Ltd, IndusInd Bank Ltd, Dhanlaxmi Bank, Yes Bank and DCB Bank.

Bank records showed that 505 crore was deposited and remitted abroad through the Rajpur, Ghaziabad, branch of Oriental Bank of Commerce during 2006-2010 through 66 bank accounts.

Calls made to top officials of Oriental Bank of Commerce and IndusInd Bank remained unanswered till the time of writing the story. Emails and text messages sent to Kotak Mahindra Bank and Yes Bank did not elicit any response. ICICI Bank declined to comment.

Dhanlaxmi Bank said it has not been contacted by ED. However, a senior official at the bank said it “has no involvement in any irregular forex transactions".

Aggarwal, who has now emerged as one of the main operators in the illegal money laundering racket, revealed the involvement of several other people during interrogation.

“The accused persons, particularly Sanjay Aggarwal, disclosed as to how he along with some others were using a similar modus operandi with other banks also. We suspect that this case could have much larger ramifications with involvement of some more banks, which are currently under our scanner," said a senior ED official on condition of anonymity. “We also suspect that the accused persons along with others, which could include some banks officials as well, are involved in this racket for almost 10 years now and the amount involved could be much bigger than about 7,000 crore, which has come to light so far."

ED, in a statement on Tuesday, described the Bank of Baroda case as one of “trade-based money laundering" and said the traders were overvaluing export goods that attract duty drawback and under-invoicing imports to save on customs duty.

In the Bank of Baroda case, between 1 August 2014, when the irregular remittances to foreign accounts first surfaced, till 31 July this year, an amount of 6,172.92 crore was transferred, Mint reported on Monday.

Aggarwal, who was arrested along with five other people, including two Bank of Baroda officials, one HDFC Bank official and two other traders, by ED and the Central Bureau of Investigation (CBI), revealed that a group of individuals, including Rajiv Wadhwa and Manish Jain were involved in sending remittances for some of the export and import houses through banks.

Jain, ED claimed, has been involved in the illegal transfer of funds out of India in association with a number of people on the basis of forged import documents.

HDFC Bank on Wednesday suspended Kamal Kalra, an employee being investigated by ED in connection with irregularities in foreign exchange transactions at Bank of Baroda, pending inquiry.

Jain is accused of depositing unaccounted cash in banks in India, transferring cash to HSBC Bank (having the accounts of his firms) in Hong Kong and onward transmission of the same to China to settle unaccounted outstanding dues of various importers of India with Chinese suppliers, ED said in a release.

In its statement to the stock exchanges, Bank of Baroda had claimed that around 3,500 crore was remitted through 38 accounts to nearly 400 entities in Hong Kong and the United Arab Emirates. It admitted that the Ashok Vihar branch in New Delhi did not follow Foreign Exchange Management Act rules. However, it has maintained that it did not face any financial loss because of these dubious transactions.

Over the weekend, CBI raided 50 locations over allegations of illegal money transfer at the Ashok Vihar branch, according to an internal audit report of the bank, reviewed by Mint.

News agency Press Trust of India earlier on Thursday reported that the Serious Fraud Investigation Office, a multi-disciplinary organization under the ministry of corporate affairs to tackle white-collar crimes and fraud, has also initiated a probe into the money laundering case.

Close