UBS AG refuses to provide information to Indian authorities on illegal money transfers across Switzerland, BVI, and other locations
The Swiss bank UBS AG refused to co-operate with Indian authorities, to unravel a multinational trail of money transfers across Switzerland, New York, the British Virgin Islands and Pune, between Indian stud farm owner Hasan Ali Khan and a fugitive Saudi arms dealer. That not only cost the Swiss bank its deal to buy the Indian mutual fund business of Standard Chartered Bank for $118.2 million, but also the presence in the booming Indian banking market.
It was reported last December that the Reserve Bank of India (RBI) decided to turn down the UBS proposal to acquire Standard Chartered Asset Management Co Pvt Ltd over possible money laundering through UBS by Khan. Standard Chartered, the parent company of Standard Chartered Bank in India, sent a notice to stock exchanges in London and Hong Kong in the end of December, saying it will not proceed with the proposed sale.
The Reserve Bank of India (RBI) put on hold a banking licence to UBS, issued just a year ago and allowing it to open its first branch in Mumbai. Now, by information from unofficial sources, RBI will not release the licence until it gets certain clarifications from UBS. Meanwhile, with this branch licence UBS was ready to commence its banking operations in India. At the moment, the Swiss bank is present in India through its broking and investment banking arm UBS Securities India Pvt Ltd.
From the same sources, it became known that RBI and the Indian government acted in close co-ordination in seeking the UBS plan to buy the mutual fund business of Standard Chartered Bank. The finance ministry had reservations about clearing the mutual fund deal, and it had communicated the same to RBI. The home ministry approval is mandatory for any bank licence, and after the banking regulator approves the entry of a foreign bank in India, it is checked by the ministry for security reasons.