RBI/2010-11/292
A.P. (DIR Series) Circular No.20
A.P. (FL/RL Series) Circular No.03
November 30, 2010
To,
All Authorised Persons
Madam/ Sir,
Know Your Customer (KYC) norms/ Anti-Money Laundering (AML) standards/
Combating the Financing of Terrorism (CFT)/ Obligation of Authorised Persons
under Prevention of Money Laundering Act, (PMLA), 2002, as amended by Prevention
of Money Laundering (Amendment) Act, 2009- Money changing activities
Attention of the Authorized Persons is invited to the A.P. (DIR Series)
Circular No. 17 [A.P.(FL/ RL Series) Circular No. 04] dated November 27, 2009 on
Know Your Customer (KYC) norms/ Anti-Money Laundering (AML) standards/ Combating
the Financing of Terrorism (CFT)/ Obligation of Authorised Persons under
Prevention of Money Laundering Act, (PMLA), 2002, as amended by Prevention of
Money Laundering (Amendment) Act, 2009 in respect of money changing activities.
Countries which do not or insufficiently apply the FATF recommendations
- In F-Part-I, paragraph 4.10 (b) of the circular dated November 27,
2009 referred to above, Authorised Persons (APs) have been advised to take
into account the risks arising from the deficiencies in the AML/ CFT regime
of certain jurisdictions, as identified in the Financial Action Task Force
(FATF) Statement, issued from time to time, while dealing with the
individuals or businesses from these jurisdictions. It is advised that APs
should, in addition to the FATF Statements, issued from time to time, also
consider using publicly available information for identifying countries,
which do not or insufficiently apply the FATF Recommendations. Further, it
is clarified that APs should also give special attention to business
relationships and transactions with persons (including legal persons and
other financial institutions) from or in countries that do not or
insufficiently apply the FATF recommendations and jurisdictions included in
FATF Statements.
- In terms of F-Part-I, paragraph 4.6 of the circular dated November 27,
2009 referred to above, it is advised that ongoing monitoring is an
essential element of effective KYC procedures. In this regard, it is advised
that APs should examine the background and purpose of transactions with
persons (including legal persons and other financial institutions) from
jurisdictions included in FATF Statements and countries that do not or
insufficiently apply the FATF Recommendations. Further, if the transactions
have no apparent economic or visible lawful purpose, the background and
purpose of such transactions should, as far as possible, be examined and
written findings together with all the documents should be retained and made
available to the Reserve Bank/ other relevant authorities, on request.
- These guidelines would also be applicable mutatis mutandis to all agents/
franchisees of Authorised Persons and it will be the sole responsibility of
the Authorised Persons (franchisers) to ensure that their agents/
franchisees also adhere to these guidelines.
- Authorised Persons should bring the contents of this circular to the
notice of their constituents concerned.
- The directions contained in this Circular are issued under Section 10(4)
and Section 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999)
and also under the Prevention of Money Laundering Act, (PMLA), 2002, as
amended by Prevention of Money Laundering (Amendment) Act, 2009 and
Prevention of Money-Laundering (Maintenance of Records of the Nature and
Value of Transactions, the Procedure and Manner of Maintaining and Time for
Furnishing Information and Verification and Maintenance of Records of the
Identity of the Clients of the Banking Companies, Financial Institutions and
Intermediaries) Rules, 2005, as amended from time to time. Non-compliance
with the guidelines would attract penal provisions of the Acts concerned or
Rules made there under.
Yours faithfully,
(Salim Gangadharan)
Chief General Manager-in-Charge