The Financial Intelligence Unit has slapped a fine of more than Rs 1.66 crore on Axis Bank for “failing” to put in place a mechanism to detect and report suspicious transactions carried out at one of its branches by creating a “fraud” account in the name of counter-terrorist commando force NSG.

The federal agency has issued an order on June 3 under Section 13 of the Prevention of Money Laundering Act (PMLA) that empowers its Director to impose a monetary penalty on a reporting entity (like Axis Bank) if the agency finds that its designated director on the board or any of its employees failed to comply with the obligations mandated under the said law. A query sent to Axis Bank did not elicit an immediate response.

According to the summary order accessed by PTI, the case pertains to an instance where “an employee of Axis Bank was alleged to have been complicit in a large-scale fraud and corruption scandal, in collusion with others.”

The Financial Intelligence Unit (FIU) order said this “alleged misconduct pertained to the creation of a fraudulent bank account in the name of the National Security Guard (NSG), a government agency.”

“Reports indicated that a manager at Axis Bank played a role in establishing this account, purportedly for the purpose of aggregating illicit funds,” the order said.

A total fine of Rs 1,66,25,000 was issued by the FIU against the bank on alleged charges of violation of the anti-money laundering law, the order said.

The FIU, under the Union Finance Ministry, is an agency entrusted with implementing certain sections of the anti-money laundering law like the Enforcement Directorate (ED). It (FIU) conducts examination of steps taken to check money laundering and other financial frauds, by banks and other financial institutions designated as ‘reporting entities’ under the PMLA, in the financial channels of the country.