In the country where it can take 30 years to have a telephone line installed, the financial intelligence unit has finally bestirred itself and fined two banks lightly for having no money-laundering controls between 2005 and 2014.

The banks in question are not private banks but co-operative banks, namely Mahila Vikas Co-operative Bank Ltd of Ahmedabad and Mahamedha Urban Co-operative Bank of Ghaziabad. Nonetheless, the fines represent a snapshot of the punishments that private banks might expect for AML failures this year. Both banks are obliged to report suspicious and currency/cash transactions to the FIU in accordance with the Prevention of Money-Laundering Act 2002. The FIU has only imposed one other fine this year, in January.

FIU staff visited Mahila Vikas Bank on one day in May 2013 and, in keeping with the exceedingly slow pace of Indian bureaucracy, issued it in September 2014 with a proposal (a 'show-cause notice') to take penal action against it for breaking s12 PMLA (read with rule 3(A, B, BA, C and D), rule 5(2), rule 7(3) and rule 8(1, 2 and 3) of the Prevention of Money-Laundering (Maintenance of Records) Rules 2005 or 'PML rules' for short) for failing to send off any CTRs between 2006 and 2008, a failure that the bank was never able to explain; sending them off late between 2008 and 2010; not reporting 229 transactions in 22 accounts in 2011-12; not reporting 87 transactions in 19 accounts in 2012-13; failing to establish any mechanism to detect suspicious transactions, thus breaking rules 3(D), 5(2), 7(3) and 8(3); failure to do the same for counterfeit currency transactions, thus breaking rules 3(C), 5(2), 7(3) and 8(2); and failing to do the same for "non-profit organisaation transactions," thereby breaking rules 3(BA), 5(2), 7(3) and 8(1).

The rules require every bank to send the FIU's director a monthly report of all cash transactions of more than 1 million rupees (£10,354). This the bank failed to do on many occasions.

When faced with the 'show-cause notice,' the top man at the bank excused himself by saying that he had only joined in April 2008 and had "taken the initiative" of sending off the CTRs after the FIU inspectors had pointed out their absence. The bank disputed the FIU's findings about its failure to report 229 and 87 transactions and made other assertions about its diligence in reporting, but provided no documentary evidence to back its contentions up. It also admitted that at one stage that it came upon some counterfeit notes but sent no report to the FIU. The FIU, for its part, said that it wanted to be "lenient" and fined the bank 4.2 million rupees (£43,484).

Mahamdeha Bank, in the meantime, failed to send off any CTRs for 40 months over the period 2006-13. Other reports that it did send were late. It failed to establish any mechanism to detect and report cash transactions. It did not have any internal mechanism for generating alerts and examining them with a view to sending off suspicious transaction reports or STRs. All this contravened s12(1)(b) PMLA, read together with rules 3(A, B and D), 5(2), 7(3) and 8(1 and 2). The inspection happened in October 2013; finally, in March last year, the FIU proposed a punishment. The bank, once again, cried foul, blaming its delays in sending off CTRs on changes it was making to its software. As the period in question stretches from 2006 to 2013, this must have been a gargantuan IT project. The bank asked for "one more chance."

This, however, was not the end of the story. Mr Edward Samson Luke, the bank's CEO, met some staff at the FIU and promised to file an affidavit within one month that would contain a list of cash transactions that were reportable, but were not reported along with proof and a list of principal officers, the period under discission beginning on 1 July 2005 and ending on the date of the affidavit. The deadline for that affidavit was 18 October 2015, but that date came and went. The FIU then gave the bank until 6 November to produce it, but this deadline passed with no affidavit also. The head of the FIU therefore imposed a penalty of 9.7 million rupees (£100,422) on the bank.

The pay grade of a deputy director at the FIU appears to be 57,869 rupees (£600) per annum. Luke was personally fined 600,000 rupees (£6,227) for his failure to furnish information in the six months between October 2015 and March this year, calculated at 100,000 rupees for each month's delay.