HSBC’s admission to money laundering for criminal syndicates compels regulators from both countries to exchange more information.
The UK’s Financial Services Authority and the Reserve Bank of India have entered into a new Memorandum of Understanding for mutual assistance and information exchange in supervision of banks operating in both countries.
This comes after the money laundering scandal involving HSBC’s staff in India. A U.S. government inquiry found that HSBC had exposed countries to numerous risks emanating from drug cartels, terrorist financing and money laundering activities.
The MoU will help India seek material information and help from the UK in cases like HSBC, and also on other issues relating to British banks operating in India.
The agreement is also aimed at helping RBI and FSA ensure that operations of cross-border banking establishments in both countries are prudently conducted and the head offices and parent entities of these banks exercise adequate and effective control over the operations of their cross-border branches and subsidiaries.
It will also allow the two regulators to share relevant information with the each other regarding any material developments or supervisory concerns about operations of a banking entity present in both the countries.
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