• Corrupt bank officials knowingly bypass KYC rules to help criminals launder money.
• Fake or benami (proxy) accounts are created using fabricated documents.
• This technique is commonly used for tax evasion and black money conversion.

4. Operation Red Spider Sting Operation (2013)

Steps of the Fraud:

1. Undercover Investigation:
   • Journalists from Cobrapost posed as clients with unaccounted money, approaching bank officials to launder funds.
2. Complicity of Bank Officials:
   • Officials from major banks suggested methods to convert black money into white, including opening accounts without proper KYC adherence.
3. Offering Illicit Services:
   • They offered services like safe deposit lockers to stash cash, creation of fictitious accounts, and use of benami accounts to conceal identities.
4. Public Exposure:
   • The sting operation was made public, revealing the involvement of high-ranking bank officials in circumventing KYC norms.
5. Regulatory Response:
   • The Reserve Bank of India imposed penalties on the implicated banks for failing to adhere to KYC and anti-money laundering guidelines.