RBI/2013-14/94
DBOD.AML.BC.No.24/14.01.001/2013-14
July 1, 2013
Ashadha 10, 1935 (saka)
The Chairmen/Chief Executive Officers
All Scheduled Commercial Banks (excluding RRBs)/
All India Financial Institutions/ Local Area Banks
Dear Sir,
Master Circular – Know Your Customer (KYC) norms
/ Anti-Money Laundering (AML) standards/Combating of Financing of Terrorism
(CFT)/Obligation of banks under PMLA, 2002
Please refer to our Master Circular DBOD.AML.BC.No.11/14.01.001/2012-13 dated
July 02, 2012 consolidating instructions/guidelines issued to banks till June
30, 2012 on Know Your Customer (KYC) norms /Anti-Money Laundering (AML)
standards/Combating of Financing of Terrorism (CFT)/Obligation of banks under
PMLA, 2002. This Master Circular is a consolidation of the instructions on Know
Your Customer (KYC) norms /Anti-Money Laundering (AML) standards/Combating of
Financing of Terrorism (CFT)/Obligation of banks under PMLA, 2002 issued up to
June 30, 2013.
2. The Master Circular has been placed on the RBI website:
(http://www.rbi.org.in )
Yours faithfully,
(Prakash Chandra Sahoo)
Chief General Manager
Master Circular on Know Your Customer (KYC) norms/Anti-Money Laundering (AML)
standards/Combating of Financing of Terrorism (CFT)/Obligation of banks under
Prevention of Money Laundering Act, (PMLA), 2002
Purpose
Banks were advised to follow certain customer identification procedure for
opening of accounts and monitoring transactions of a suspicious nature for the
purpose of reporting it to appropriate authority. These ‘Know Your Customer’
guidelines have been revisited in the context of the Recommendations made by the
Financial Action Task Force (FATF) on Anti Money Laundering (AML) standards and
on Combating Financing of Terrorism (CFT). Detailed guidelines based on the
Recommendations of the Financial Action Task Force and the paper issued on
Customer Due Diligence (CDD) for banks by the Basel Committee on Banking
Supervision, with indicative suggestions wherever considered necessary, have
been issued. Banks have been advised to ensure that a proper policy framework on
‘Know Your Customer’ and Anti-Money Laundering measures is formulated with the
approval of their Board and put in place.
2. This Master Circular aims at consolidating all the instructions/guidelines
issued by RBI on Know Your Customer (KYC) norms/Anti-Money Laundering (AML)
standards/Combating Financing of Terrorism (CFT)/Obligations of banks under
PMLA, 2002. The Master Circular has been placed on the RBI website
(http://www.rbi.org.in).
Previous instructions
A list of circulars issued in this regard is given in Annex – V
Application
- The instructions, contained in the master circular, are applicable to All India
Financial Institutions, all scheduled commercial banks (excluding RRBs) and
Local Area Banks.
- These guidelines are issued under Section 35A of the Banking Regulation Act,
1949 and Rule 7 of Prevention of Money-Laundering (Maintenance of Records)
Rules, 2005. Any contravention thereof or non-compliance shall attract penalties
under Banking Regulation Act.
- This Master Circular consolidates all the circulars issued on the subject up to
June 30, 2013.
1 Introduction
1.1 Know Your Customer (KYC) Norms/Anti-Money Laundering (AML)
Measures/Combating of Financing of Terrorism (CFT)/Obligations of banks under
PMLA, 2002
The objective of KYC/AML/CFT guidelines is to prevent banks from being used,
intentionally or unintentionally, by criminal elements for money laundering or
terrorist financing activities. KYC procedures also enable banks to
know/understand their customers and their financial dealings better which in
turn help them manage their risks prudently.
1. 2 Definition of Customer
For the purpose of KYC policy, a ‘Customer’ is defined as:
- a person or entity that maintains an account and/or has a business relationship
with the bank;
- one on whose behalf the account is maintained (i.e. the beneficial owner). [Ref:
Government of India Notification dated February 12, 2010 - Rule 9, sub-rule (1A)
of PMLA Rules - ' Beneficial Owner' means the natural person who ultimately owns
or controls a client and or the person on whose behalf a transaction is being
conducted, and includes a person who exercise ultimate effective control over a
juridical person]
- beneficiaries of transactions conducted by professional intermediaries, such as
Stock Brokers, Chartered Accountants, Solicitors etc. as permitted under the
law, and
- any person or entity connected with a financial transaction which can pose
significant reputational or other risks to the bank, say, a wire transfer or
issue of a high value demand draft as a single transaction.
2. Guidelines
2.1 General
- Banks should keep in mind that the information collected from the customer for
the purpose of opening of account is to be treated as confidential and details
thereof are not to be divulged for cross selling or any other like purposes.
Banks should, therefore, ensure that information sought from the customer is
relevant to the perceived risk, is not intrusive, and is in conformity with the
guidelines issued in this regard. Any other information from the customer should
be sought separately with his/her consent and after opening the account
- Banks should ensure that any remittance of funds by way of demand draft,
mail/telegraphic transfer or any other mode and issue of travellers’ cheques for
value of Rupees fifty thousand and above is effected by debit to the customer’s
account or against cheques and not against cash payment
- with effect from April 1, 2012, banks should not make payment of
cheques/drafts/pay orders/banker’s cheques bearing that date or any subsequent
date, if they are presented beyond the period of three months from the date of
such instrument.
- Banks should ensure that the provisions of Foreign Contribution (Regulation)
Act, 2010, wherever applicable, are strictly adhered to.
2.2 KYC Policy
Banks should frame their KYC policies incorporating the following four key
elements:
- Customer Acceptance Policy;
- Customer Identification Procedures;
- Monitoring of Transactions; and
- Risk Management.
2.3 Customer Acceptance Policy (CAP)
a) Every bank should develop a clear Customer Acceptance Policy laying down
explicit criteria for acceptance of customers. The Customer Acceptance Policy
must ensure that explicit guidelines are in place on the following aspects of
customer relationship in the bank.
(i) No account is opened in anonymous or fictitious/benami name.
[Ref: Government of India Notification dated June 16, 2010 Rule 9, sub-rule (1C)
- Banks should not allow the opening of or keep any anonymous account or
accounts in fictitious name or account on behalf of other persons whose identity
has not been disclosed or cannot be verified].
(ii) Parameters of risk perception are clearly defined in terms of the nature of
business activity, location of customer and his clients, mode of payments,
volume of turnover, social and financial status etc. to enable categorisation of
customers into low, medium and high risk (banks may choose any suitable
nomenclature viz. level I, level II and level III). Customers requiring very
high level of monitoring, e.g. Politically Exposed Persons (PEPs) may, if
considered necessary, be categorised even higher;
(iii) Documentation requirements and other information to be collected in
respect of different categories of customers depending on perceived risk and
keeping in mind the requirements of PML Act, 2002 and instructions/guidelines
issued by Reserve Bank from time to time;
(iv) Not to open an account or close an existing account where the bank is
unable to apply appropriate customer due diligence measures, i.e., bank is
unable to verify the identity and /or obtain documents required as per the risk
categorisation due to non cooperation of the customer or non reliability of the
data/information furnished to the bank. It is, however, necessary to have
suitable built in safeguards to avoid harassment of the customer. For example,
decision by a bank to close an account should be taken at a reasonably high
level after giving due notice to the customer explaining the reasons for such a
decision.
(v) Circumstances, in which a customer is permitted to act on behalf of another
person/entity, should be clearly spelt out in conformity with the established
law and practice of banking as there could be occasions when an account is
operated by a mandate holder or where an account is opened by an intermediary in
fiduciary capacity and
(vi) Necessary checks before opening a new account so as to ensure that the
identity of the customer does not match with any person with known criminal
background or with banned entities such as individual terrorists or terrorist
organisations etc.
b) Banks should prepare a profile for each new customer based on risk
categorisation. The customer profile may contain information relating to
customer’s identity, social/financial status, nature of business activity,
information about his clients’ business and their location etc. The nature and
extent of due diligence will depend on the risk perceived by the bank. However,
while preparing customer profile banks should take care to seek only such
information from the customer, which is relevant to the risk category and is not
intrusive. The customer profile is a confidential document and details contained
therein should not be divulged for cross selling or any other purposes.
c) For the purpose of risk categorisation, individuals (other than High Net
Worth) and entities whose identities and sources of wealth can be easily
identified and transactions in whose accounts by and large conform to the known
profile, may be categorised as low risk. Illustrative examples of low risk
customers could be salaried employees whose salary structures are well defined,
people belonging to lower economic strata of the society whose accounts show
small balances and low turnover, Government Departments and Government owned
companies, regulators and statutory bodies etc. In such cases, the policy may
require that only the basic requirements of verifying the identity and location
of the customer are to be met. Customers that are likely to pose a higher than
average risk to the bank should be categorised as medium or high risk depending
on customer's background, nature and location of activity, country of origin,
sources of funds and his client profile, etc. Banks should apply enhanced due
diligence measures based on the risk assessment, thereby requiring intensive
‘due diligence’ for higher risk customers, especially those for whom the sources
of funds are not clear. In view of the risks involved in cash intensive
businesses, accounts of bullion dealers (including sub-dealers) & jewelers
should also be categorized by banks as 'high risk' requiring enhanced due
diligence. Other examples of customers requiring higher due diligence include
(a) nonresident customers; (b) high net worth individuals; (c) trusts,
charities, NGOs and organizations receiving donations; (d) companies having
close family shareholding or beneficial ownership; (e) firms with 'sleeping
partners'; (f) politically exposed persons (PEPs) of foreign origin, customers
who are close relatives of PEPs and accounts of which a PEP is the ultimate
beneficial owner; (g) non-face to face customers and (h) those with dubious
reputation as per public information available etc. Howeveronly NPOs/NGOs
promoted by United Nations or its agencies may be classified as low risk
customers.
d) In addition to what has been indicated above, banks/FIs should take steps to
identify and assess their ML/TF risk for customers, countries and geographical
areas as also for products/ services/ transactions/delivery channels, Banks/FIs
should have policies, controls and procedures, duly approved by their boards, in
place to effectively manage and mitigate their risk adopting a risk-based
approach. As a corollary, banks would be required to adopt enhanced measures for
products, services and customers with a medium or high risk rating. In this
regard, banks may use for guidance in their own risk assessment, a Report on
Parameters for Risk-Based Transaction Monitoring (RBTM) dated March 30, 2011
issued by Indian Banks' Association on May 18, 2011 as a supplement to their
guidance note on Know Your Customer (KYC) norms / Anti-Money Laundering (AML)
standards issued in July 2009. The IBA guidance also provides an indicative list
of high risk customers, products, services and geographies.
e) It is important to bear in mind that the adoption of customer acceptance
policy and its implementation should not become too restrictive and must not
result in denial of banking services to general public, especially to those, who
are financially or socially disadvantaged.
2.4 Customer Identification Procedure (CIP)
a) The policy approved by the Board of banks should clearly spell out the
Customer Identification Procedure to be carried out at different stages, i.e.,
while establishing a banking relationship; carrying out a financial transaction
or when the bank has a doubt about the authenticity/veracity or the adequacy of
the previously obtained customer identification data. Customer identification
means identifying the customer and verifying his/her identity by using reliable,
independent source documents, data or information. Banks need to obtain
sufficient information necessary to establish, to their satisfaction, the
identity of each new customer, whether regular or occasional, and the purpose of
the intended nature of banking relationship. Being satisfied means that the bank
must be able to satisfy the competent authorities that due diligence was
observed based on the risk profile of the customer in compliance with the extant
guidelines in place. Such risk-based approach is considered necessary to avoid
disproportionate cost to banks and a burdensome regime for the customers.
Besides risk perception, the nature of information/documents required would also
depend on the type of customer (individual, corporate etc.). For customers that
are natural persons, the banks should obtain sufficient identification data to
verify the identity of the customer, his address/location, and also his recent
photograph. For customers that are legal persons or entities, the bank should
(i) verify the legal status of the legal person/entity through proper and
relevant documents; (ii) verify that any person purporting to act on behalf of
the legal person/entity is so authorised and identify and verify the identity of
that person; (iii) understand the ownership and control structure of the
customer and determine who are the natural persons who ultimately control the
legal person
b) Customer identification requirements in respect of a few typical cases,
especially, legal persons requiring an extra element of caution are given in
paragraph 2.5 below for guidance of banks. Banks may, however, frame their own
internal guidelines based on their experience of dealing with such
persons/entities, normal bankers’ prudence and the legal requirements as per
established practices. If the bank decides to accept such accounts in terms of
the Customer Acceptance Policy, the bank should take reasonable measures to
identify the beneficial owner(s) and verify his/her/their identity in a manner
so that it is satisfied that it knows who the beneficial owner(s) is/are [Ref:
Government of India Notification dated June 16, 2010 - Rule 9 sub-rule (1A) of
PML Rules].
c) In this connection, a reference may be made to the circular DBOD.AML.BC. No.
71/14.01.001/2012-13 dated January 18, 2013 wherein the procedure for
determination of Beneficial Ownership, as advised by Government of India has
been specified,
d) The increasing complexity and volume of financial transactions necessitate
that customers do not have multiple identities within a bank, across the banking
system and across the financial system. This can be achieved by introducing a
unique identification code for each customer. The Unique Customer Identification
Code (UCIC) will help banks to identify customers, track the facilities availed,
monitor financial transactions in a holistic manner and enable banks to have a
better approach to risk profiling of customers. It would also smoothen banking
operations for the customers. While some banks already use UCIC for their
customers by providing them a relationship number, etc., other banks have not
adopted this practice. Banks were therefore, advised to initiate steps for
allotting UCIC to all their customers while entering into any new relationships
for individual customers to begin with. Existing individual customers were
required to be allotted UCIC by end-May 2013. However, in view of difficulties
expressed by some banks in implementing UCIC for their customers, for various
reasons, and keeping in view the constraints, the time for completing the
process of allotting UCIC to existing customers is extended up to March 31,
2014. We, however, reiterate that UCIC should be allotted to all customers while
entering into new relationships.
e) Whenever there is suspicion of money laundering or terrorist financing or
when other factors give rise to a belief that the customer does not, in fact,
pose a low risk, banks should carry out full scale customer due diligence (CDD)
before opening an account
f) When there are suspicions of money laundering or financing of the activities
relating to terrorism or where there are doubts about the adequacy or veracity
of previously obtained customer identification data, banks should review the due
diligence measures including verifying again the identity of the client and
obtaining information on the purpose and intended nature of the business
relationship. [Ref: Government of India Notification dated June 16, 2010- Rule 9
sub-rule (1D) of PML Rules].
g) It has been observed that some close relatives, e.g. wife, son, daughter and
parents, etc. who live with their husband, father/mother and son, as the case
may be, are finding it difficult to open account in some banks as the utility
bills required for address verification are not in their name. It is clarified,
that in such cases, banks can obtain an identity document and a utility bill of
the relative with whom the prospective customer is living along with a
declaration from the relative that the said person (prospective customer)
wanting to open an account is a relative and is staying with him/her. Banks can
use any supplementary evidence such as a letter received through post for
further verification of the address. While issuing operational instructions to
the branches on the subject, banks should keep in mind the spirit of
instructions issued by the Reserve Bank and avoid undue hardships to individuals
who are, otherwise, classified as low risk customers.
h) Some banks insist on opening of fresh accounts by customers when customers
approach them for transferring their account from one branch of the bank to
another branch of the same bank. Banks are advised that KYC once done by one
branch of the bank should be valid for transfer of the account within the bank
as long as full KYC has been done for the concerned account. The customer should
be allowed to transfer his account from one branch to another branch without
restrictions. In order to comply with KYC requirements of correct address of the
person, fresh address proof may be obtained from him/her upon such transfer by
the transferee branch.
j) Banks may transfer existing accounts at the transferor branch to the
transferee branch without insisting on fresh proof of address and on the basis
of a self-declaration from the account holder about his/her current address,
subject to submitting proof of address within a period of six months.
i) Banks should intimate their customers that in the event of change in address
due to relocation or any other reason, they should intimate the new address to
the bank within two weeks of such a change. While opening new accounts and while
periodically updating KYC data as required in terms of para 2.4 (g) of the
Master Circular, an undertaking to this effect should be obtained.
k) Banks should introduce a system of periodical updation of customer
identification data (including photograph/s) after the account is opened. The
periodicity of such updation should not be less than once in five years in case
of low risk category customers and not less than once in two years in case of
high and medium risk categories. Such verification should be done irrespective
of whether the account has been transferred from one branch to another and banks
are required to also maintain records of transactions as prescribed.
l) An indicative list of the nature and type of documents/information that may
be may be relied upon for customer identification is given in Annex-I to this
Master Circular. It is clarified that permanent correct address, as referred to
in Annex-I, means the address at which a person usually resides and can be taken
as the address as mentioned in a utility bill or any other document accepted by
the bank for verification of the address of the customer.
m) If the address on the document submitted for identity proof by the
prospective customer is same as that declared by him/her in the account opening
form, the document may be accepted as a valid proof of both identity and
address. If the address indicated on the document submitted for identity proof
differs from the current address mentioned in the account opening form, a
separate proof of address should be obtained.
n) A rent agreement indicating the address of the customer duly registered with
State Government or similar registration authority may also be accepted as a
proof of address.
o) It has been brought to our notice that the said indicative list furnished in
Annex - I, is being treated by some banks as an exhaustive list as a result of
which a section of public is being denied access to banking services. Banks are,
therefore, advised to take a review of their extant internal instructions in
this regard.
2.5 Customer Identification Requirements – Indicative Guidelines
i) Walk-in Customers
In case of transactions carried out by a non-account based customer, that is a
walk-in customer, where the amount of transaction is equal to or exceeds rupees
fifty thousand, whether conducted as a single transaction or several
transactions that appear to be connected, the customer's identity and address
should be verified. if a bank has reason to believe that a customer is
intentionally structuring a transaction into a series of transactions below the
threshold of Rs.50,000/- the bank should verify the identity and address of the
customer and also consider filing a suspicious transaction report (STR) to
FIU-IND.
NOTE: In terms of Clause (b) (ii) of sub-Rule (1) of Rule 9 of the PML Rules,
2005 banks and financial institutions are required to verify the identity of the
customers for all international money transfer operations
ii. Salaried Employees
In case of salaried employees, it is clarified that with a view to containing
the risk of fraud, banks should rely on certificate/letter of identity and/or
address issued only from corporate and other entities of repute and should be
aware of the competent authority designated by the concerned employer to issue
such certificate/letter. Further, in addition to the certificate/letter issued
by the employer, banks should insist on at least one of the officially valid
documents as provided in the Prevention of Money Laundering Rules (viz.
passport, driving licence, PAN Card, Voter’s Identity card, etc.) or utility
bills for KYC purposes for opening bank accounts of salaried employees of
corporate and other entities
iii. Trust/Nominee or Fiduciary Accounts
There exists the possibility that trust/nominee or fiduciary accounts can be
used to circumvent the customer identification procedures. Banks should
determine whether the customer is acting on behalf of another person as
trustee/nominee or any other intermediary. If so, banks should insist on receipt
of satisfactory evidence of the identity of the intermediaries and of the
persons on whose behalf they are acting, as also obtain details of the nature of
the trust or other arrangements in place. While opening an account for a trust,
banks should take reasonable precautions to verify the identity of the trustees
and the settlors of trust (including any person settling assets into the trust),
grantors, protectors, beneficiaries and signatories. Beneficiaries should be
identified when they are defined. In the case of a 'foundation', steps should be
taken to verify the founder managers/ directors and the beneficiaries, if
defined.
iv. Accounts of companies and firms
Banks need to be vigilant against business entities being used by individuals as
a ‘front’ for maintaining accounts with banks. Banks should examine the control
structure of the entity, determine the source of funds and identify the natural
persons who have a controlling interest and who comprise the management. These
requirements may be moderated according to the risk perception e.g. in the case
of a public company it will not be necessary to identify all the shareholders.
v. Client accounts opened by professional intermediaries
a. When the bank has knowledge or reason to believe that the client account
opened by a professional intermediary is on behalf of a single client, that
client must be identified. Banks may hold 'pooled' accounts managed by
professional intermediaries on behalf of entities like mutual funds, pension
funds or other types of funds. Banks also maintain 'pooled' accounts managed by
lawyers/chartered accountants or stockbrokers for funds held 'on deposit' or 'in
escrow' for a range of clients. Where funds held by the intermediaries are not
co-mingled at the bank and there are 'sub-accounts', each of them attributable
to a beneficial owner, all the beneficial owners must be identified. Where such
funds are co-mingled at the bank, the bank should still look through to the
beneficial owners. Where the banks rely on the 'customer due diligence' (CDD)
done by an intermediary, they should satisfy themselves that the intermediary is
regulated and supervised and has adequate systems in place to comply with the
KYC requirements. It should be understood that the ultimate responsibility for
knowing the customer lies with the bank.
b. Under the extant AML/CFT framework, therefore, it is not possible for
professional intermediaries like Lawyers and Chartered Accountants, etc. who are
bound by any client confidentiality that prohibits disclosure of the client
details, to hold an account on behalf of their clients. It is reiterated that
banks should not allow opening and/or holding of an account on behalf of a
client/s by professional intermediaries, like Lawyers and Chartered Accountants,
etc., who are unable to disclose true identity of the owner of the account/funds
due to any professional obligation of customer confidentiality. Further, any
professional intermediary who is under any obligation that inhibits bank's
ability to know and verify the true identity of the client on whose behalf the
account is held or beneficial ownership of the account or understand true nature
and purpose of transaction/s, should not be allowed to open an account on behalf
of a client.
vi. Accounts of Politically Exposed Persons (PEPs) resident outside India
a. Politically exposed persons are individuals who are or have been entrusted
with prominent public functions in a foreign country, e.g., Heads of States or
of Governments, senior politicians, senior government/judicial/military
officers, senior executives of state-owned corporations, important political
party officials, etc. Banks should gather sufficient information on any
person/customer of this category intending to establish a relationship and check
all the information available on the person in the public domain. Banks should
verify the identity of the person and seek information about the sources of
funds before accepting the PEP as a customer. The decision to open an account
for a PEP should be taken at a senior level which should be clearly spelt out in
Customer Acceptance Policy. Banks should also subject such accounts to enhanced
monitoring on an ongoing basis. The above norms may also be applied to the
accounts of the family members or close relatives of PEPs.
b. In the event of an existing customer or the beneficial owner of an existing
account, subsequently becoming a PEP, banks should obtain senior management
approval to continue the business relationship and subject the account to the
CDD measures as applicable to the customers of PEP category including enhanced
monitoring on an ongoing basis. These instructions are also applicable to
accounts where a PEP is the ultimate beneficial owner.
c. Further, banks should have appropriate ongoing risk management procedures for
identifying and applying enhanced CDD to PEPs, customers who are close relatives
of PEPs, and accounts of which a PEP is the ultimate beneficial owner.
vii. Accounts of non-face-to-face customers
With the introduction of telephone and electronic banking, increasingly accounts
are being opened by banks for customers without the need for the customer to
visit the bank branch. In the case of non-face-to-face customers, apart from
applying the usual customer identification procedures, there must be specific
and adequate procedures to mitigate the higher risk involved. Certification of
all the documents presented should be insisted upon and, if necessary,
additional documents may be called for. In such cases, banks may also require
the first payment to be effected through the customer's account with another
bank which, in turn, adheres to similar KYC standards. In the case of
cross-border customers, there is the additional difficulty of matching the
customer with the documentation and the bank may have to rely on third party
certification/introduction. In such cases, it must be ensured that the third
party is a regulated and supervised entity and has adequate KYC systems in
place.
viii. Accounts of proprietary concerns
Apart from following the extant guidelines on customer identification procedure
as applicable to the proprietor, banks should call for and verify the following
documents before opening of accounts in the name of a proprietary concern:
Proof of the name, address and activity of the concern, like registration
certificate (in the case of a registered concern), certificate/licence issued by
the Municipal authorities under Shop & Establishment Act, sales and income tax
returns, CST/VAT certificate, certificate/registration document issued by Sales
Tax/Service Tax/Professional Tax authorities, Licence issued by the Registering
authority like Certificate of Practice issued by Institute of Chartered
Accountants of India, Institute of Cost Accountants of India, Institute of
Company Secretaries of India, Indian Medical Council, Food and Drug Control
Authorities, registration/licensing document issued in the name of the
proprietary concern by the Central Government or State Government
Authority/Department. Banks may also accept IEC (Importer Exporter Code) issued
to the proprietary concern by the office of DGFT, the complete Income Tax Return
(not just the acknowledgement) in the name of the sole proprietor where the
firm's income is reflected, duly authenticated/acknowledged by the Income Tax
authorities and utility bills such as electricity, water, and landline telephone
bills in the name of the proprietary concern as required documents for opening
of bank accounts of proprietary concerns.
Any two of the above documents would suffice. These documents should be in the
name of the proprietary concern.
2.6 Small Accounts
In terms of Government of India, Notification No. 14/2010/F.No.6/2/2007-E.S
dated December 16, 2010, the 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 has been amended. The notification
is reproduced at Annexe - IV of this circular.
A. Small Accounts
a. In terms of Rule 2 clause (fb) of the Notification 'small account' means a
savings account in a banking company where-
- the aggregate of all credits in a financial year does not exceed rupees one
lakh;
- the aggregate of all withdrawals and transfers in a month does not exceed rupees
ten thousand; and
- the balance at any point of time does not exceed rupees fifty thousand .
b. Rule (2A) of the Notification lays down the detailed procedure for opening
'small accounts'. Banks are advised to ensure adherence to the procedure
provided in the Rules for opening of small accounts.
B. Officially Valid Documents
- The Notification has also expanded the definition of 'officially valid document'
as contained in clause (d) of Rule 2(1)of the PML Rules to include job card
issued by NREGA duly signed by an officer of the State Government and the
letters issued by the Unique Identification Authority of India containing
details of name, address and Aadhaar number.
- All accounts opened in terms of procedure prescribed in Rule 2A of the
Notification dated December 16, 2010 referred to above should be treated as
"small accounts" and be subject to the conditions stipulated in clause (i) to
(v) of the sub-rule (2A) of Rule 9.
- Banks may accept NREGA Job Card as an ‘officially valid document’ for opening of
bank accounts without the limitations applicable to ‘Small Accounts’.
- While opening accounts based on Aadhaar also, if the address provided by the
account holder is the same as that on Aadhaar letter, it may be accepted as a
proof of both identity and address.
2.7 Operation of Bank Accounts & Money Mules
- It has been brought to our notice that “Money Mules” can be used to launder the
proceeds of fraud schemes (e.g., phishing and identity theft) by criminals who
gain illegal access to deposit accounts by recruiting third parties to act as
“money mules.” In some cases these third parties may be innocent while in others
they may be having complicity with the criminals.
- In a money mule transaction, an individual with a bank account is recruited to
receive cheque deposits or wire transfers and then transfer these funds to
accounts held on behalf of another person or to other individuals, minus a
certain commission payment. Money mules may be recruited by a variety of
methods, including spam e-mails, advertisements on genuine recruitment web
sites, social networking sites, instant messaging and advertisements in
newspapers. When caught, these money mules often have their bank accounts
suspended, causing inconvenience and potential financial loss, apart from facing
likely legal action for being part of a fraud. Many a times the address and
contact details of such mules are found to be fake or not up to date, making it
difficult for enforcement agencies to locate the account holder.
- The operations of such mule accounts can be minimised if banks follow the
guidelines on opening of accounts and monitoring of transactions contained in
this Master Circular. Banks are, therefore, advised to strictly adhere to the
guidelines on KYC/AML/CFT issued from time to time and to those relating to
periodical updation of customer identification data after the account is opened
and also to monitoring of transactions in order to protect themselves and their
customers from misuse by such fraudsters.
2.8 Bank No Longer Knows the True Identity
In the circumstances when a bank believes that it would no longer be satisfied
that it knows the true identity of the account holder, the bank should also file
an STR with FIU-IND.
2.9 Monitoring of Transactions
- Ongoing monitoring is an essential element of effective KYC procedures. Banks
can effectively control and reduce their risk only if they have an understanding
of the normal and reasonable activity of the customer so that they have the
means of identifying transactions that fall outside the regular pattern of
activity. However, the extent of monitoring will depend on the risk sensitivity
of the account. Banks should pay special attention to all complex, unusually
large transactions and all unusual patterns which have no apparent economic or
visible lawful purpose. Banks may prescribe threshold limits for a particular
category of accounts and pay particular attention to the transactions which
exceed these limits. Transactions that involve large amounts of cash
inconsistent with the normal and expected activity of the customer should
particularly attract the attention of the bank. Very high account turnover
inconsistent with the size of the balance maintained may indicate that funds are
being 'washed' through the account. High-risk accounts have to be subjected to
intensified monitoring. Every bank should set key indicators for such accounts,
taking note of the background of the customer, such as the country of origin,
sources of funds, the type of transactions involved and other risk factors. High
risk associated with accounts of bullion dealers (including sub-dealers) &
jewelers should be taken into account by banks to identify suspicious
transactions for filing Suspicious Transaction Reports (STRs) to Financial
Intelligence Unit- India (FIU-IND) Banks should put in place a system of
periodical review of risk categorization of accounts and the need for applying
enhanced due diligence measures. Such review of risk categorisation of customers
should be carried out at a periodicity of not less than once in six months.
- It has come to our notice that accounts of Multi-level Marketing (MLM) Companies
were misused for defrauding public by luring them into depositing their money
with the MLM company by promising a high return. Such depositors are assured of
high returns and issued post-dated cheques for interest and repayment of
principal. So long as money keeps coming into the MLM company’s account from new
depositors, the cheques are honoured but once the chain breaks, all such
post-dated instruments are dishonoured. This results in fraud on the public and
is a reputational risk for banks concerned. Further, banks should closely
monitor the transactions in accounts of marketing firms. In cases where a large
number of cheque books are sought by the company, there are multiple small
deposits (generally in cash) across the country in one bank account and where a
large number of cheques are issued bearing similar amounts/dates, the bank
should carefully analyse such data and in case they find such unusual operations
in accounts, the matter should be immediately reported to Reserve Bank and other
appropriate authorities such as Financial Intelligence Unit India (FIU-Ind)
under Department of Revenue, Ministry of Finance.
- Banks should exercise ongoing due diligence with respect to the business
relationship with every client and closely examine the transactions in order to
ensure that they are consistent with their knowledge of the client, his business
and risk profile and where necessary, the source of funds [Ref: Government of
India Notification dated June 16, 2010 -Rule 9, sub-rule (1B)]
- The risk categorization of customers as also compilation and periodic updation
of customer profiles and monitoring and closure of alerts in accounts by banks
are extremely important for effective implementation of KYC/AML/CFT measures. It
is, however, observed that there are laxities in effective implementation of the
Reserve Bank’s guidelines in this area, leaving banks vulnerable to operational
risk. Banks should, therefore, ensure compliance with the regulatory guidelines
on KYC/AML/CFT both in letter and spirit. Accordingly, banks are advised to
complete the process of risk categorization and compiling/updating profiles of
all of their existing customers in a time-bound manner, and in any case not
later than end-March 2013.
2.10 Closure of accounts
Where the bank is unable to apply appropriate KYC measures due to non-furnishing
of information and /or non-cooperation by the customer, the bank should consider
closing the account or terminating the banking/business relationship after
issuing due notice to the customer explaining the reasons for taking such a
decision. Such decisions need to be taken at a reasonably senior level.
2.11 Risk Management
a) The Board of Directors of the bank should ensure that an effective KYC
programme is put in place by establishing appropriate procedures and ensuring
their effective implementation. It should cover proper management oversight,
systems and controls, segregation of duties, training and other related matters.
Responsibility should be explicitly allocated within the bank for ensuring that
the bank’s policies and procedures are implemented effectively. Banks should, in
consultation with their boards, devise procedures for creating risk profiles of
their existing and new customers, assess risk in dealing with various countries,
geographical areas and also the risk of various products, services,
transactions, delivery channels, etc. Banks’ policies should address effectively
managing and mitigating these risks adopting a risk-based approach as discussed
in Para 2.3 (d) above.
b) Banks’ internal audit and compliance functions have an important role in
evaluating and ensuring adherence to the KYC policies and procedures. As a
general rule, the compliance function should provide an independent evaluation
of the bank’s own policies and procedures, including legal and regulatory
requirements. Banks should ensure that their audit machinery is staffed
adequately with individuals who are well-versed in such policies and procedures.
Concurrent/ Internal Auditors should specifically check and verify the
application of KYC procedures at the branches and comment on the lapses observed
in this regard. The compliance in this regard should be put up before the Audit
Committee of the Board on quarterly intervals.
2.12 Introduction of New Technologies – Credit Cards/Debit Cards/ Smart
Cards/Gift Cards
Banks should pay special attention to any money laundering threats that may
arise from new or developing technologies including internet banking that might
favour anonymity, and take measures, if needed, to prevent their use in money
laundering schemes. Many banks are engaged in the business of issuing a variety
of Electronic Cards that are used by customers for buying goods and services,
drawing cash from ATMs, and can be used for electronic transfer of funds. Banks
are required to ensure full compliance with all KYC/AML/CFT guidelines issued
from time to time, in respect of add-on/ supplementary cardholders also.
Further, marketing of credit cards is generally done through the services of
agents. Banks should ensure that appropriate KYC procedures are duly applied
before issuing the cards to the customers. It is also desirable that agents are
also subjected to KYC measures.
2.13 Combating Financing of Terrorism
a) In terms of PMLA Rules, suspicious transaction should include, inter alia,
b) transactions, which give rise to a reasonable ground of suspicion that these
may involve financing of the activities relating to terrorism. Banks are,
therefore, advised to develop suitable mechanism through appropriate policy
framework for enhanced monitoring of accounts suspected of having terrorist
links and swift identification of the transactions and making suitable reports
to FIU-Ind on priority.
c) As and when list of individuals and entities, approved by Security Council
Committee established pursuant to various United Nations' Security Council
Resolutions (UNSCRs), are received from Government of India, Reserve Bank
circulates these to all banks and financial institutions. Banks/Financial
Institutions should ensure to update the lists of individuals and entities as
circulated by Reserve Bank. The UN Security Council has adopted Resolutions 1988
(2011) and 1989 (2011) which have resulted in splitting of the 1267 Committee's
Consolidated List into two separate lists, namely:
- “Al-Qaida Sanctions List”, which is maintained by the 1267 / 1989 Committee.
This list shall include only the names of those individuals, groups,
undertakings and entities associated with Al-Qaida. The Updated Al-Qaida
Sanctions List is available at
http://www.un.org/sc/committees/1267/aq_sanctions_list.shtml
- “1988 Sanctions List”, which is maintained by the 1988 Committee. This list
consists of names previously included in Sections A (“Individuals associated
with the Taliban”) and B (“Entities and other groups and undertakings associated
with the Taliban”) of the Consolidated List. The Updated 1988 Sanctions list is
available at http://www.un.org/sc/committees/ 1988/list.shtml
It may be noted that both “Al-Qaida Sanctions List” and “1988 Sanctions List”
are to be taken into account for the purpose of implementation of Section 51A of
the Unlawful Activities (Prevention) Act, 1967.
Banks are advised that before opening any new account it should be ensured that
the name/s of the proposed customer does not appear in the lists. Further, banks
should scan all existing accounts to ensure that no account is held by or linked
to any of the entities or individuals included in the list. Full details of
accounts bearing resemblance with any of the individuals/entities in the list
should immediately be intimated to RBI and FIU-IND.
2.14 Freezing of Assets under Section 51A of Unlawful Activities (Prevention)
Act, 1967
i) The Unlawful Activities (Prevention) Act, 1967 (UAPA) has been amended by the
Unlawful Activities (Prevention) Amendment Act, 2008. Government has issued an
Order dated August 27, 2009 detailing the procedure for implementation of
Section 51A of the Unlawful Activities (Prevention) Act, 1967 relating to the
purposes of prevention of, and for coping with terrorist activities. In terms of
Section 51A, the Central Government is empowered to freeze, seize or attach
funds and other financial assets or economic resources held by, on behalf of or
at the direction of the individuals or entities Listed in the Schedule to the
Order, or any other person engaged in or suspected to be engaged in terrorism
and prohibit any individual or entity from making any funds, financial assets or
economic resources or related services available for the benefit of the
individuals or entities Listed in the Schedule to the Order or any other person
engaged in or suspected to be engaged in terrorism.
ii) Banks are required to strictly follow the procedure laid down in the UAPA
Order dated August 27, 2009 (Annex III) and ensure meticulous compliance to the
Order issued by the Government.
iii) On receipt of the list of individuals and entities subject to UN sanctions
(referred to as designated lists) from RBI, banks should ensure expeditious and
effective implementation of the procedure prescribed under Section 51A of UAPA
in regard to freezing/unfreezing of financial assets of the designated
individuals/entities enlisted in the UNSCRs and especially, in regard to funds,
financial assets or economic resources or related services held in the form of
bank accounts.
iv) In terms of Para 4 of the Order, in regard to funds, financial assets or
economic resources or related services held in the form of bank accounts, the
RBI would forward the designated lists to the banks requiring them to:
- Maintain updated designated lists in electronic form and run a check on the
given parameters on a regular basis to verify whether individuals or entities
listed in the schedule to the Order (referred to as designated
individuals/entities) are holding any funds, financial assets or economic
resources or related services held in the form of bank accounts with them.
- In case, the particulars of any of their customers match with the particulars of
designated individuals/entities, the banks shall immediately, not later than 24
hours from the time of finding out such customer, inform full particulars of the
funds, financial assets or economic resources or related services held in the
form of bank accounts, held by such customer on their books to the Joint
Secretary (IS.I), Ministry of Home Affairs, at Fax No.011-23092569 and also
convey over telephone on 011-23092736. The particulars apart from being sent by
post should necessarily be conveyed on e-mail.
- Banks shall also send by post a copy of the communication mentioned in (b) above
to the UAPA nodal officer of RBI, Chief General Manager, Department of Banking
Operations and Development, Central Office, Reserve Bank of India, Anti Money
Laundering Division, Central Office Building, 13th Floor, Shahid Bhagat Singh
Marg, Fort, Mumbai - 400 001 and also by fax at No.022-22701239. The particulars
apart from being sent by post/fax should necessarily be conveyed on e-mail .
- Banks shall also send a copy of the communication mentioned in (b) above to the
UAPA nodal officer of the state/UT where the account is held as the case may be
and to FIU-India.
- In case, the match of any of the customers with the particulars of designated
individuals/entities is beyond doubt, the banks would prevent designated persons
from conducting financial transactions, under intimation to Joint Secretary
(IS.I), Ministry of Home Affairs, at Fax No. 011-23092569 and also convey over
telephone on 011-23092736. The particulars apart from being sent by post should
necessarily be conveyed on e-mail.
- Banks shall also file a Suspicious Transaction Report (STR) with FIU-IND
covering all transactions in the accounts covered by paragraph (b) above,
carried through or attempted, as per the prescribed format.
v) Freezing of financial assets
- On receipt of the particulars as mentioned in paragraph iv(b) above, IS-I
Division of MHA would cause a verification to be conducted by the State Police
and /or the Central Agencies so as to ensure that the individuals/ entities
identified by the banks are the ones listed as designated individuals/entities
and the funds, financial assets or economic resources or related services ,
reported by banks are held by the designated individuals/entities. This
verification would be completed within a period not exceeding 5 working days
from the date of receipt of such particulars.
- In case, the results of the verification indicate that the properties are owned
by or held for the benefit of the designated individuals/entities, an order to
freeze these assets under section 51A of the UAPA would be issued within 24
hours of such verification and conveyed electronically to the concerned bank
branch under intimation to Reserve Bank of India and FIU-IND.
- The order shall take place without prior notice to the designated
individuals/entities.
vi) Implementation of requests received from foreign countries under U.N.
Security Council Resolution 1373 of 2001.
- U.N. Security Council Resolution 1373 obligates countries to freeze without
delay the funds or other assets of persons who commit, or attempt to commit,
terrorist acts or participate in or facilitate the commission of terrorist acts;
of entities or controlled directly or indirectly by such persons; and of persons
and entities acting on behalf of, or at the direction of such persons and
entities, including funds or other assets derived or generated from property
owned or controlled, directly or indirectly, by such persons and associated
persons and entities.
- To give effect to the requests of foreign countries under U.N. Security Council
Resolution 1373, the Ministry of External Affairs shall examine the requests
made by the foreign countries and forward it electronically, with their
comments, to the UAPA nodal officer for IS-I Division for freezing of funds or
other assets.
- The UAPA nodal officer of IS-I Division of MHA, shall cause the request to be
examined, within five working days so as to satisfy itself that on the basis of
applicable legal principles, the requested designation is supported by
reasonable grounds, or a reasonable basis, to suspect or believe that the
proposed designee is a terrorist, one who finances terrorism or a terrorist
organization, and upon his satisfaction, request would be electronically
forwarded to the nodal officers in RBI. The proposed designee, as mentioned
above would be treated as designated individuals/entities.
- Upon receipt of the requests from the UAPA nodal officer of IS-I Division, the
list would be forwarded to banks and the procedure as enumerated at paragraphs
2.13[(iii), (iv) and (v)] shall be followed.
- The freezing orders shall take place without prior notice to the designated
persons involved.
vii) Procedure for unfreezing of funds, financial assets or economic resources
or related services of individuals/entities inadvertently affected by the
freezing mechanism upon verification that the person or entity is not a
designated person
Any individual or entity, if it has evidence to prove that the freezing of
funds, financial assets or economic resources or related services, owned/held by
them has been inadvertently frozen, they shall move an application giving the
requisite evidence, in writing, to the concerned bank. The banks shall inform
and forward a copy of the application together with full details of the asset
frozen given by any individual or entity informing of the funds, financial
assets or economic resources or related services have been frozen inadvertently,
to the nodal officer of IS-I Division of MHA as per the contact details given in
paragraph (iv)(b) above within two working days. The Joint Secretary (IS-I),
MHA, being the nodal officer for (IS-I) Division of MHA, shall cause such
verification as may be required on the basis of the evidence furnished by the
individual/entity and if he is satisfied, he shall pass an order, within fifteen
working days, unfreezing the funds, financial assets or economic resources or
related services, owned/held by such applicant under intimation to the concerned
bank. However, if it is not possible for any reason to pass an order unfreezing
the assets within fifteen working days, the nodal officer of IS-I Division shall
inform the applicant.
viii) Communication of Orders under section 51A of Unlawful Activities
(Prevention) Act.
All Orders under section 51A of Unlawful Activities (Prevention) Act, relating
to funds, financial assets or economic resources or related services, would be
communicated to all banks through RBI.
2.15 Jurisdictions that do not or insufficiently apply the FATF Recommendations
- Banks are required to take into account risks arising from the deficiencies in
AML/CFT regime of the jurisdictions included in the FATF Statement. In addition
to FATF Statements circulated by Reserve Bank of India from time to time,
(latest as on July 1, 2012, being our circular DBOD. AML.No.13738
/14.01.001/2011-12 dated March 14, 2012) banks should also consider publicly
available information for identifying countries, which do not or insufficiently
apply the FATF Recommendations. It is clarified that banks 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.
- Banks 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
documents should be retained and made available to Reserve Bank/other relevant
authorities, on request.
2.16 Correspondent Banking
Correspondent banking is the provision of banking services by one bank (the
“correspondent bank”) to another bank (the “respondent bank”). These services
may include cash/funds management, international wire transfers, drawing
arrangements for demand drafts and mail transfers, payable-through-accounts,
cheques clearing etc. Banks should gather sufficient information to understand
fully the nature of the business of the correspondent/respondent bank.
Information on the other bank’s management, major business activities, level of
AML/CFT compliance, purpose of opening the account, identity of any third party
entities that will use the correspondent banking services, and
regulatory/supervisory framework in the correspondent's/respondent’s country may
be of special relevance. Similarly, banks should try to ascertain from publicly
available information whether the other bank has been subject to any money
laundering or terrorist financing investigation or regulatory action. While it
is desirable that such relationships should be established only with the
approval of the Board, in case the Boards of some banks wish to delegate the
power to an administrative authority, they may delegate the power to a committee
headed by the Chairman/CEO of the bank while laying down clear parameters for
approving such relationships. Proposals approved by the Committee should
invariably be put up to the Board at its next meeting for post facto approval.
The responsibilities of each bank with whom correspondent banking relationship
is established should be clearly documented. In the case of
payable-through-accounts, the correspondent bank should be satisfied that the
respondent bank has verified the identity of the customers having direct access
to the accounts and is undertaking ongoing 'due diligence' on them. The
correspondent bank should also ensure that the respondent bank is able to
provide the relevant customer identification data immediately on request.
b) Correspondent relationship with a “Shell Bank”
Banks should refuse to enter into a correspondent relationship with a “shell
bank” (i.e. a bank which is incorporated in a country where it has no physical
presence and is unaffiliated to any regulated financial group). Shell banks are
not permitted to operate in India. Banks should not enter into relationship with
shell banks and before establishing correspondent relationship with any foreign
institution, banks should take appropriate measures to satisfy themselves that
the foreign respondent institution does not permit its accounts to be used by
shell banks. Banks should be extremely cautious while continuing relationships
with correspondent banks located in countries with poor KYC standards and
countries identified as 'non-cooperative' in the fight against money laundering
and terrorist financing. Banks should ensure that their respondent banks have
anti money laundering policies and procedures in place and apply enhanced 'due
diligence' procedures for transactions carried out through the correspondent
accounts.
2.17 Applicability to branches and subsidiaries outside India
The guidelines contained in this master circular shall apply to the branches and
majority owned subsidiaries located abroad, especially, in countries which do
not or insufficiently apply the FATF Recommendations, to the extent local laws
permit. When local applicable laws and regulations prohibit implementation of
these guidelines, the same should be brought to the notice of Reserve Bank. In
case there is a variance in KYC/AML standards prescribed by the Reserve Bank and
the host country regulators, branches/overseas subsidiaries of banks are
required to adopt the more stringent regulation of the two.
2.18 Wire Transfer
Banks use wire transfers as an expeditious method for transferring funds between
bank accounts. Wire transfers include transactions occurring within the national
boundaries of a country or from one country to another. As wire transfers do not
involve actual movement of currency, they are considered as a rapid and secure
method for transferring value from one location to another.
i) The salient features of a wire transfer transaction are as under:
- Wire transfer is a transaction carried out on behalf of an originator person
(both natural and legal) through a bank by electronic means with a view to
making an amount of money available to a beneficiary person at a bank. The
originator and the beneficiary may be the same person.
- Cross-border transfer means any wire transfer where the originator and the
beneficiary bank or financial institutions are located in different countries.
It may include any chain of wire transfers that has at least one cross-border
element.
- Domestic wire transfer means any wire transfer where the originator and receiver
are located in the same country. It may also include a chain of wire transfers
that takes place entirely within the borders of a single country even though the
system used to effect the wire transfer may be located in another country.
- The originator is the account holder, or where there is no account, the person
(natural or legal) that places the order with the bank to perform the wire
transfer.
ii) Wire transfer is an instantaneous and most preferred route for transfer of
funds across the globe and hence, there is a need for preventing terrorists and
other criminals from having unfettered access to wire transfers for moving their
funds and for detecting any misuse when it occurs. This can be achieved if basic
information on the originator of wire transfers is immediately available to
appropriate law enforcement and/or prosecutorial authorities in order to assist
them in detecting, investigating, prosecuting terrorists or other criminals and
tracing their assets. The information can be used by Financial Intelligence Unit
- India (FIU-IND) for analysing suspicious or unusual activity and disseminating
it as necessary. The originator information can also be put to use by the
beneficiary bank to facilitate identification and reporting of suspicious
transactions to FIU-IND. Owing to the potential terrorist financing threat
posed by small wire transfers, the objective is to be in a position to trace all
wire transfers with minimum threshold limits. Accordingly, banks must ensure
that all wire transfers are accompanied by the following information:
A. Cross-border wire transfers
i) All cross-border wire transfers must be accompanied by accurate and
meaningful originator information.
ii) Information accompanying cross-border wire transfers must contain the name
and address of the originator and where an account exists, the number of that
account. In the absence of an account, a unique reference number, as prevalent
in the country concerned, must be included.
iii) Where several individual transfers from a single originator are bundled in
a batch file for transmission to beneficiaries in another country, they may be
exempted from including full originator information, provided they include the
originator’s account number or unique reference number as at (ii) above.
B. Domestic wire transfers
- Information accompanying all domestic wire transfers of Rs.50000/- (Rupees Fifty
Thousand) and above must include complete originator information i.e. name,
address and account number etc., unless full originator information can be made
available to the beneficiary bank by other means.
- If a bank has reason to believe that a customer is intentionally structuring
wire transfer to below Rs. 50000/- (Rupees Fifty Thousand) to several
beneficiaries in order to avoid reporting or monitoring, the bank must insist on
complete customer identification before effecting the transfer. In case of
non-cooperation from the customer, efforts should be made to establish his
identity and Suspicious Transaction Report (STR) should be made to FIU-IND.
- When a credit or debit card is used to effect money transfer, necessary
information as (i) above should be included in the message.
iii) Exemptions
Interbank transfers and settlements where both the originator and beneficiary
are banks or financial institutions would be exempted from the above
requirements.
iv) Role of Ordering, Intermediary and Beneficiary banks
a) Ordering Bank
An ordering bank is the one that originates a wire transfer as per the order
placed by its customer. The ordering bank must ensure that qualifying wire
transfers contain complete originator information. The bank must also verify and
preserve the information at least for a period of five years.
b) Intermediary bank
For both cross-border and domestic wire transfers, a bank processing an
intermediary element of a chain of wire transfers must ensure that all
originator information accompanying a wire transfer is retained with the
transfer. Where technical limitations prevent full originator information
accompanying a cross-border wire transfer from remaining with a related domestic
wire transfer, a record must be kept at least for five years (as required under
Prevention of Money Laundering Act, 2002) by the receiving intermediary bank of
all the information received from the ordering bank.
c) Beneficiary bank
A beneficiary bank should have effective risk-based procedures in place to
identify wire transfers lacking complete originator information. The lack of
complete originator information may be considered as a factor in assessing
whether a wire transfer or related transactions are suspicious and whether they
should be reported to the Financial Intelligence Unit-India. The beneficiary
bank should also take up the matter with the ordering bank if a transaction is
not accompanied by detailed information of the fund remitter. If the ordering
bank fails to furnish information on the remitter, the beneficiary bank should
consider restricting or even terminating its business relationship with the
ordering bank.
2.19 Principal Officer
- Banks should appoint a senior management officer to be designated as Principal
Officer. Banks should ensure that the Principal Officer is able to act
independently and report directly to the senior management or to the Board of
Directors. Principal Officer shall be located at the head/corporate office of
the bank and shall be responsible for monitoring and reporting of all
transactions and sharing of information as required under the law. He will
maintain close liaison with enforcement agencies, banks and any other
institution which are involved in the fight against money laundering and
combating financing of terrorism
- Further, the role and responsibilities of the Principal Officer should include
overseeing and ensuring overall compliance with regulatory guidelines on
KYC/AML/CFT issued from time to time and obligations under the Prevention of
Money Laundering Act, 2002, rules and regulations made thereunder, as amended
form time to time. The Principal Officer will also be responsible for timely
submission of CTR, STR and reporting of counterfeit notes and all transactions
involving receipts by non-profit organisations of value more than Rupees Ten
Lakh or its equivalent in foreign currency to FIU-IND.
- With a view to enabling the Principal Officer to discharge his responsibilities
effectively, the Principal Officer and other appropriate staff should have
timely access to customer identification data and other CDD information,
transaction records and other relevant information.
2.20 Maintenance of records of transactions/Information to be
preserved/Maintenance and preservation of records/Cash and Suspicious
transactions reporting to Financial Intelligence Unit- India (FIU-IND)
Government of India, Ministry of Finance, Department of Revenue, vide its
notification dated July 1, 2005 in the Gazette of India, has notified the Rules
under the Prevention of Money Laundering Act (PMLA), 2002. In terms of the said
Rules, the provisions of PMLA, 2002 came into effect from July 1, 2005. Section
12 of the PMLA, 2002 casts certain obligations on the banking companies in
regard to preservation and reporting of customer account information. Banks are,
therefore, advised to go through the provisions of PMLA, 2002 and the Rules
notified there under and take all steps considered necessary to ensure
compliance with the requirements of Section 12 of the Act ibid.
i) Maintenance of records of transactions
Banks should introduce a system of maintaining proper record of transactions
prescribed under Rule 3 of PML Rules, 2005, as mentioned below:
- all cash transactions of the value of more than Rupees Ten Lakh or its
equivalent in foreign currency;
- all series of cash transactions integrally connected to each other which have
been valued below Rupees Ten Lakh or its equivalent in foreign currency where
such series of transactions have taken place within a month and the aggregate
value of such transactions exceeds Rupees Ten Lakh;
- all transactions involving receipts by non-profit organisations of value more
than rupees ten lakh or its equivalent in foreign currency [Ref: Government of
India Notification dated November 12, 2009- Rule 3,sub-rule (1) clause (BA) of
PML Rules]
- all cash transactions where forged or counterfeit currency notes or bank notes
have been used as genuine and where any forgery of a valuable security or a
document has taken place facilitating the transaction and
- All suspicious transactions whether or not made in cash and by way of as
mentioned in the Rules.
Explanation - Integrally connected cash transactions referred to at (b) above
The following transactions have taken place in a branch during the month of
April 2008:
| Date |
Mode |
Dr (in Rs.) |
Cr (in Rs.) |
Balance (in Rs.) BF - 8,00,000.00 |
| 02/04/2008 |
Cash |
5,00,000.00 |
3,00,000.00 |
6,00,000.00 |
| 07/04/2008 |
Cash |
40,000.00 |
2,00,000.00 |
7,60,000.00 |
| 08/04/2008 |
Cash |
4,70,000.00 |
1,00,000.00 |
3,90,000.00 |
| Monthly summation |
|
10,10,000.00 |
6,00,000.00 |
|
- As per above clarification, the debit transactions in the above example are
integrally connected cash transactions because total cash debits during the
calendar month exceeds Rs. 10 lakhs. However, the bank should report only the
debit transaction taken place on 02/04 & 08/04/2008. The debit transaction dated
07/04/2008 should not be separately reported by the bank, which is less than
Rs.50,000/-.
- All the credit transactions in the above example would not be treated as
integrally connected, as the sum total of the credit transactions during the
month does not exceed Rs.10 lakh and hence credit transaction dated 02, 07 &
08/04/2008 should not be reported by banks.
ii) Information to be preserved
Banks are required to maintain all necessary information in respect of
transactions referred to in Rule 3 to permit reconstruction of individual
transaction, including the following information:
- the nature of the transactions;
- the amount of the transaction and the currency in which it was denominated;
- the date on which the transaction was conducted; and
- the parties to the transaction
iii) Maintenance and Preservation of Records
a) Banks are required to maintain the records containing information of all
transactions including the records of transactions detailed in Rule 3 above.
Banks should take appropriate steps to evolve a system for proper maintenance
and preservation of account information in a manner that allows data to be
retrieved easily and quickly whenever required or when requested by the
competent authorities. Further, in terms of PML Amemdment Act 2012 notified on
February 15, 2013, banks should maintain for at least five years from the date
of transaction between the bank and the client, all necessary records of
transactions, both domestic or international, which will permit reconstruction
of individual transactions (including the amounts and types of currency involved
if any) so as to provide, if necessary, evidence for prosecution of persons
involved in criminal activity.
b) Banks should ensure that records pertaining to the identification of the
customer and his address (e.g. copies of documents like passports, identity
cards, driving licenses, PAN card, utility bills etc.) obtained while opening
the account and during the course of business relationship, are properly
preserved for at least five years after the business relationship is ended as
required under Rule 10 of the Rules ibid. The identification records and
transaction data should be made available to the competent authorities upon
request.
c) In paragraph 2.10 of this Master Circular, banks have been advised to pay
special attention to all complex, unusual large transactions and all unusual
patterns of transactions, which have no apparent economic or visible lawful
purpose. It is further clarified that the background including all
documents/office records/memorandums pertaining to such transactions and purpose
thereof should, as far as possible, be examined and the findings at branch as
well as Principal Officer level should be properly recorded. Such records and
related documents should be made available to help auditors in their day-to-day
work relating to scrutiny of transactions and also to Reserve Bank/other
relevant authorities. These records are required to be preserved for five years
as is required under PMLA, 2002.
iv) Reporting to Financial Intelligence Unit - India
a) In terms of the PMLA Rules, banks are required to report information relating
to cash and suspicious transactions and all transactions involving receipts by
non-profit organisations of value more than rupees ten lakh or its equivalent in
foreign currency to the Director, Financial Intelligence Unit-India (FIU-IND) in
respect of transactions referred to in Rule 3 at the following address:
Director, FIU-IND,
Financial Intelligence Unit-India,
6th Floor, Hotel Samrat,
Chanakyapuri,
New Delhi -110021
Website - http://fiuindia.gov.in/
Explanation: Government of India Notification dated November 12, 2009- Rule 2
sub-rule (1) clause (ca) defines Non-Profit Organization (NPO). NPO means any
entity or organisation that is registered as a trust or a society under the
Societies Registration Act, 1860 or any similar State legislation or a company
registered under section 25 of the Companies Act, 1956.
b) Banks should carefully go through all the reporting formats. There are
altogether eight reporting formats, as detailed in Annex II, viz. i) Cash
Transactions Report (CTR); ii) Summary of CTR iii) Electronic File
Structure-CTR; iv) Suspicious Transactions Report (STR); v) Electronic File
Structure-STR; vi) Counterfeit Currency Report (CCR); vii) Summary of CCR and
viii) Electronic File Structure-CCR. The reporting formats contain detailed
guidelines on the compilation and manner/procedure of submission of the reports
to FIU-IND. It would be necessary for banks to initiate urgent steps to ensure
electronic filing of all types of reports to FIU-IND. The related hardware and
technical requirement for preparing reports in an electronic format, the related
data files and data structures thereof are furnished in the instructions part of
the concerned formats.
c) FIU-IND have placed on their website editable electronic utilities to enable
banks to file electronic CTR/STR who are yet to install/adopt suitable
technological tools for extracting CTR/STR from their live transaction data
base. It is, therefore, advised that in cases of banks, where all the branches
are not fully computerized, the Principal Officer of the bank should cull out
the transaction details from branches which are not yet computerized and
suitably arrange to feed the data into an electronic file with the help of the
editable electronic utilities of CTR/STR as have been made available by FIU-IND
in their website http://fiuindia.gov.in.
In terms of instructions contained in paragraph 2.3(b) of this Master Circular,
banks are required to prepare a profile for each customer based on risk
categorisation. Further, vide paragraph 2.10(d), the need for periodical review
of risk categorisation has been emphasized. It is, therefore, reiterated that
banks, as a part of transaction monitoring mechanism, are required to put in
place an appropriate software application to throw alerts when the transactions
are inconsistent with risk categorization and updated profile of customers. It
is needless to add that a robust software throwing alerts is essential for
effective identification and reporting of suspicious transaction.
2.21 Cash and Suspicious Transaction Reports
A. Cash Transaction Report (CTR)
While detailed instructions for filing all types of reports are given in the
instructions part of the related formats, banks should scrupulously adhere to
the following:
- The Cash Transaction Report (CTR) for each month should be submitted to FIU‑IND
by 15th of the succeeding month. Cash transaction reporting by branches to their
controlling offices should, therefore, invariably be submitted on monthly basis
(not on fortnightly basis) and banks should ensure to submit CTR for every month
to FIU-IND within the prescribed time schedule.
- All cash transactions, where forged or counterfeit Indian currency notes have
been used as genuine should be reported by the Principal Officer to FIU-IND in
the specified format not later than seven working days from the date of
occurrence of such transactions (Counterfeit Currency Report – CCR). These cash
transactions should also include transactions where forgery of valuable security
or documents has taken place and may be reported to FIU-IND in plain text form.
- While filing CTR, details of individual transactions below Rupees Fifty thousand
need not be furnished.
- CTR should contain only the transactions carried out by the bank on behalf of
their clients/customers excluding transactions between the internal accounts of
the bank.
- A summary of cash transaction report for the bank as a whole should be compiled
by the Principal Officer of the bank every month in physical form as per the
format specified. The summary should be signed by the Principal Officer and
submitted to FIU-India.
- In case of Cash Transaction Reports (CTR) compiled centrally by banks for the
branches having Core Banking Solution (CBS) at their central data centre level,
banks may generate centralised Cash Transaction Reports (CTR) in respect of
branches under core banking solution at one point for onward transmission to
FIU-IND, provided:
- The CTR is generated in the format prescribed by Reserve Bank in Para
2.21(iv)(b) of this Master Circular;
- A copy of the monthly CTR submitted on its behalf to FIU-India is available at
the concerned branch for production to auditors/inspectors, when asked for; and
- The instruction on ‘Maintenance of records of transactions’; ‘Information to be
preserved’ and ‘Maintenance and Preservation of records’ as contained above in
this Master Circular at Para 2.21 (i), (ii) and (iii) respectively are
scrupulously followed by the branch.
However, in respect of branches not under CBS, the monthly CTR should continue
to be compiled and forwarded by the branch to the Principal Officer for onward
transmission to FIU-IND.
B. Suspicious Transaction Reports (STR)
i) While determining suspicious transactions, banks should be guided by
definition of suspicious transaction contained in PMLA Rules as amended from
time to time.
ii) It is likely that in some cases transactions are abandoned/aborted by
customers on being asked to give some details or to provide documents. It is
clarified that banks should report all such attempted transactions in STRs, even
if not completed by customers, irrespective of the amount of the transaction.
iii) Banks should make STRs if they have reasonable ground to believe that the
transaction involve proceeds of crime generally irrespective of the amount of
transaction and/or the threshold limit envisaged for predicate offences in part
B of Schedule of PMLA, 2002.
iv) The Suspicious Transaction Report (STR) should be furnished within 7 days of
arriving at a conclusion that any transaction, whether cash or non-cash, or a
series of transactions integrally connected are of suspicious nature. The
Principal Officer should record his reasons for treating any transaction or a
series of transactions as suspicious. It should be ensured that there is no
undue delay in arriving at such a conclusion once a suspicious transaction
report is received from a branch or any other office. Such report should be made
available to the competent authorities on request.
v) In the context of creating KYC/AML awareness among the staff and for
generating alerts for suspicious transactions, banks may consider the indicative
list of suspicious activities contained in Annex-E of the 'IBA's Guidance Note
for Banks, January 2012’.
vi) Banks should not put any restrictions on operations in the accounts where an
STR has been made. Banks and their employees should keep the fact of furnishing
of STR strictly confidential, as required under PML Rules. It should be ensured
that there is no tipping off to the customer at any level.
C. Non-Profit Organisation
The report of all transactions involving receipts by non- profit organizations
of value more than rupees ten lakh or its equivalent in foreign currency should
be submitted every month to the Director, FIU‑IND by 15th of the succeeding
month in the prescribed format.
2.22 Customer Education/Employee's Training/Employee's Hiring
a) Customer Education
Implementation of KYC procedures requires banks to demand certain information
from customers which may be of personal nature or which has hitherto never been
called for. This can sometimes lead to a lot of questioning by the customer as
to the motive and purpose of collecting such information. There is, therefore, a
need for banks to prepare specific literature/ pamphlets etc. so as to educate
the customer of the objectives of the KYC programme. The front desk staff needs
to be specially trained to handle such situations while dealing with customers.
b) Employees’ Training
Banks must have an ongoing employee training programme so that the members of
the staff are adequately trained in KYC procedures. Training requirements should
have different focuses for frontline staff, compliance staff and staff dealing
with new customers. It is crucial that all those concerned fully understand the
rationale behind the KYC policies and implement them consistently.
c) Hiring of Employees
It may be appreciated that KYC norms/AML standards/CFT measures have been
prescribed to ensure that criminals are not allowed to misuse the banking
channels. It would, therefore, be necessary that adequate screening mechanism is
put in place by banks as an integral part of their recruitment/hiring process of
personnel.
Annex- I
Customer Identification Procedure
Features to be verified and documents that may be obtained from customers
| Features |
Documents |
Accounts of individuals
- Legal name and any other names used
- Correct permanent address
|
(i) Passport (ii) PAN card (iii) Voter’s Identity Card (iv) Driving
License (v) Job Card issued by NREGA duly signed by an officer of the
State Govt (vi) The letter issued by the Unique Identification Authority
of India ( UIDAI) containing details of name, address and Aadhaar number
(vii) Identity card (subject to the bank’s satisfaction) (viii) Letter
from a recognized public authority or public servant verifying the
identity and residence of the customer to the satisfaction of bank
(i) Telephone bill (ii) Bank account statement (iii) Letter from any
recognized public authority (iv) Electricity bill (v) Ration card (vi)
Letter from employer (subject to satisfaction of the bank) (vii) A rent
agreement indicating the address of the customer duly registered with
State Government or similar registration authority. (any one document
which provides customer information to the satisfaction of the bank will
suffice ) |
Accounts of companies
- Name of the company
- Principal place of business
- Mailing address of the company
- Telephone/Fax Number
|
(i) Certificate of incorporation and Memorandum & Articles of
Association (ii) Resolution of the Board of Directors to open an account
and identification of those who have authority to operate the account
(iii) Power of Attorney granted to its managers, officers or employees
to transact business on its behalf (iv) Copy of PAN allotment letter (v)
Copy of the telephone bill |
Accounts of partnership firms
- Legal name
- Address
- Names of all partners and their addresses
- Telephone numbers of the firm and partners
|
(i) Registration certificate, if registered (ii) Partnership deed
(iii) Power of Attorney granted to a partner or an employee of the firm
to transact business on its behalf (iv) Any officially valid document
identifying the partners and the persons holding the Power of Attorney
and their addresses (v) Telephone bill in the name of firm/partners |
Accounts of trusts & foundations
- Names of trustees, settlors, beneficiaries and signatories
- Names and addresses of the founder, the managers/directors and the
beneficiaries
- Telephone/fax numbers
|
(i) Certificate of registration, if registered (ii) Power of
Attorney granted to transact business on its behalf (iii) Any officially
valid document to identify the trustees, settlors, beneficiaries and
those holding Power of Attorney, founders/managers/ directors and their
addresses (iv) Resolution of the managing body of the foundation/
association (v) Telephone bill |
Accounts of Proprietorship Concerns
Proof of the name, address and activity of the concern
|
- Registration certificate (in the case of a registered concern)
- Certificate/licence issued by the Municipal authorities under Shop &
Establishment Act,
- Sales and income tax returnss
- CST/VAT certificatee
- Certificate/registration document issued by Sales Tax/Service
Tax/Professional Tax authorities
- Licence issued by the Registering authority like Certificate of
Practice issued by Institute of Chartered Accountants of India,
Institute of Cost Accountants of India, Institute of Company Secretaries
of India, Indian Medical Council, Food and Drug Control Authorities,
registration/licensing document issued in the name of the proprietary
concern by the Central Government or State Government Authority/
Department, etc. Banks may also accept IEC (Importer Exporter Code)
issued to the proprietary concern by the office of DGFT as an identity
document for opening of the bank account etc.
- The complete Income Tax return (not just the acknowledgement) in the
name of the sole proprietor where the firm's income is reflected, duly
authenticated/ acknowledged by the Income Tax Authorities.
- Utility bills such as electricity, water, and landline telephone
bills in the name of the proprietary concern.
Any two of the above documents would suffice. These documents should
be in the name of the proprietary concern. |
Annex – II
(List of various reports and their formats)
- Cash Transaction Report (CTR)
- Summary of CTR
- Electronic File Structure - CTR
- Suspicious Transaction Report (STR)
- Electronic File Structure - STR
- Counterfeit Currency Report (CCR)
- Summary of CCR
- Electronic File Structure - CCR
Annex -III
File No.17015/10/2002-IS-VI
Government of India
Ministry of Home Affairs
Internal Security-I Division
New Delhi, dated 27th August, 2009
ORDER
Subject : Procedure for implementation of Section 51A of the Unlawful Activities
(Prevention)Act, 1967
The Unlawful Activities (Prevention) Act, 1967 (UAPA) has been amended and
notified on 31.12.2008, which, inter-alia, inserted Section 51A to the Act.
Section 51A reads as under:-
"51A. For the prevention of, and for coping with terrorist activities, the
Central Government shall have power to –
- freeze, seize or attach funds and other financial assets or economic resources
held by, on behalf of or at the direction of the individuals or entities Listed
in the Schedule to the Order, or any other person engaged in or suspected to be
engaged in terrorism;
- prohibit any individual or entity from making any funds, financial assets or
economic resources or related services available for the benefit of the
individuals or entities Listed in the Schedule to the Order or any other person
engaged in or suspected to be engaged in terrorism;
- prevent the entry into or the transit through India of individuals Listed in the
Schedule to the Order or any other person engaged in or suspected to be engaged
in terrorism",
The Unlawful Activities (Prevention) Act define "Order" as under:-
"Order" means the Prevention and Suppression of Terrorism (Implementation of
Security Council Resolutions) Order, 2007, as may be amended from time to time.
In order to expeditiously and effectively implement the provisions of Section
51A, the following procedures shall be followed:-
Appointment and Communication of details of UAPA nodal officers
2. As regards appointment and communication of details of UAPA nodal officers -
- The UAPA nodal officer for IS-I division would be the Joint Secretary (IS.I),
Ministry of Home Affairs. His contact details are 011-23092736(Tel),
011-23092569(Fax) and e-mail.
- The Ministry of External Affairs, Department of Economic Affairs, Foreigners
Division of MHA, FIU-IND; and RBI, SEBI, IRDA (hereinafter referred to as
Regulators) shall appoint a UAPA nodal officer and communicate the name and
contact details to the IS-I Division in MHA.
- The States and UTs should appoint a UAPA nodal officer preferably of the rank of
the Principal Secretary/Secretary, Home Department and communicate the name and
contact details to the IS-I Division in MHA.
- The IS-I Division in MHA would maintain the consolidated list of all UAPA nodal
officers and forward the list to all other UAPA nodal officers.
- The RBI, SEBI, IRDA should forward the consolidated list of UAPA nodal officers
to the banks, stock exchanges/depositories, intermediaries regulated by SEBI and
insurance companies respectively.
- The consolidated list of the UAPA nodal officers should be circulated to the
nodal officer of IS-I Division of MHA in July every year and on every change.
Joint Secretary(IS-I), being the nodal officer of IS-I Division of MHA, shall
cause the amended list of UAPA nodal officers to be circulated to the nodal
officers of Ministry of External Affairs, Department of Economic Affairs,
Foreigners Division of MHA, RBI, SEBI, IRDA and FIU-IND.
Communication of the list of designated individuals/entities
3. As regards communication of the list of designated individuals/entities-
- The Ministry of External Affairs shall update the list of individuals and
entities subject to UN sanction measures on a regular basis. On any revision,
the Ministry of External Affairs would electronically forward this list to the
Nodal Officers in Regulators, FIU-IND, IS-I Division and Foreigners' Division in
MHA.
- The Regulators would forward the list mentioned in (i) above (referred to as
designated lists) to the banks, stock exchanges/depositories, intermediaries
regulated by SEBI and insurance companies respectively.
- The IS-I Division of MHA would forward the designated lists to the UAPA nodal
officer of all States and UTs.
- The Foreigners Division of MHA would forward the designated lists to the
immigration authorities and security agencies.
Regarding funds, financial assets or economic resources or related services held
in the form of bank accounts, stocks or insurance policies etc.
4. As regards funds, financial assets or economic resources or related services
held in the form of bank accounts, stocks or insurance policies etc., the
Regulators would forward the designated lists to the banks, stock
exchanges/depositories, intermediaries regulated by SEBI and insurance companies
respectively. The RBI, SEBI and IRDA would issue necessary guidelines to banks,
stock exchanges/depositories, intermediaries regulated by SEBI and insurance
companies requiring them to -
(i) Maintain updated designated lists in electronic form and run a check on the
given parameters on a regular basis to verify whether individuals or entities
listed in the schedule to the Order (referred to as designated
individuals/entities) are holding any funds, financial assets or economic
resources or related services held in the form of bank accounts, stocks or
insurance policies etc. with them.
(ii) In case, the particulars of any of their customers match with the
particulars of designated individuals/entities, the banks, stock exchanges/
depositories, intermediaries regulated by SEBI and insurance companies shall
immediately, not later than 24 hours from the time of finding out such customer,
inform full particulars of the funds, financial assets or economic resources or
related services held in the form of bank accounts, stocks or insurance policies
etc. held by such customer on their books to the Joint Secretary (IS.I),
Ministry of Home Affairs, at Fax No.011-23092569 and also convey over telephone
on 011-23092736. The particulars apart from being sent by post should
necessarily be conveyed on e-mail.
(iii) The banks, stock exchanges/ depositories, intermediaries regulated by SEBI
and insurance companies shall also send by post a copy of the communication
mentioned in (ii) above to the UAPA nodal officer of the state/ UT where the
account is held and Regulators and FIU-IND, as the case may be.
(iv) In case, the match of any of the customers with the particulars of
designated individuals/entities is beyond doubt, the banks stock exchanges /
depositories, intermediaries regulated by SEBI and insurance companies would
prevent designated persons from conducting financial transactions, under
intimation to Joint Secretary (IS.I), Ministry of Home Affairs, at Fax No.
011-23092569 and also convey over telephone on 011-23092736. The particulars
apart from being sent by post should necessarily be conveyed on e-mail.
(v) The banks, stock exchanges/depositories, intermediaries regulated by SEBI
and insurance companies shall file a Suspicious Transaction Report (STR) with
FIU-IND covering all transactions in the accounts covered by paragraph (ii)
above , carried through or attempted, as per the prescribed format.
5. On receipt of the particulars referred to in paragraph 3(ii) above, IS-I
Division of MHA would cause a verification to be conducted by the State Police
and/or the Central Agencies so as to ensure that the individuals/entities
identified by the banks, stock exchanges/depositories, intermediaries regulated
by SEBI and Insurance Companies are the ones listed as designated
individuals/entities and the funds, financial assets or economic resources or
related services, reported by banks, stock exchanges/depositories,
intermediaries regulated by SEBI and insurance companies are held by the
designated individuals/entities. This verification would be completed within a
period not exceeding 5 working days from the date of receipt of such
particulars.
6. In case, the results of the verification indicate that the properties are
owned by or held for the benefit of the designated individuals/entities, an
order to freeze these assets under section 51A of the UAPA would be issued
within 24 hours of such verification and conveyed electronically to the
concerned bank branch, depository, branch of insurance company branch under
intimation to respective Regulators and FIU-IND. The UAPA nodal officer of IS-I
Division of MHA shall also forward a copy thereof to all the Principal
Secretary/Secretary, Home Department of the States or UTs, so that any
individual or entity may be prohibited from making any funds, financial assets
or economic assets or economic resources or related services available for the
benefit of the designated individuals/entities or any other person engaged in or
suspected to be engaged in terrorism. The UAPA nodal officer of IS-I Division of
MHA shall also forward a copy of the order under Section 51A, to all Directors
General of Police/Commissioners of Police of all states/UTs for initiating
action under the provisions of Unlawful Activities (Prevention) Act.
The order shall take place without prior notice to the designated
individuals/entities.
Regarding financial assets or economic resources of the nature of immovable
properties.
7. IS-I Division of MHA would electronically forward the designated lists to the
UAPA nodal officer of all States and UTs with the request to have the names of
the designated individuals/entities, on the given parameters, verified from the
records of the office of the Registrar performing the work of registration of
immovable properties in their respective jurisdiction.
8. In case, the designated individuals/entities are holding financial assets or
economic resources of the nature of immovable property and if any match with the
designated individuals/entities is found, the UAPA nodal officer of the State/UT
would cause communication of the complete particulars of such individual/entity
along with complete details of the financial assets or economic resources of the
nature of immovable property to the Joint Secretary (IS.I), Ministry of Home
Affairs, immediately within 24 hours at Fax No.011-23092569 and also convey over
telephone on 011-23092736. The particulars apart from being sent by post should
necessarily be conveyed on e-mail.
9. The UAPA nodal officer of the State/UT may cause such inquiry to be conducted
by the State Police so as to ensure that the particulars sent by the Registrar
performing the work of registering immovable properties are indeed of these
designated individuals/entities. This verification would be completed within a
maximum of 5 working days and should be conveyed within 24 hours of the
verification, if it matches with the particulars of the designated
individual/entity to Joint Secretary(IS-I), Ministry of Home Affairs at the Fax
telephone numbers and also on the e-mail id given below.
10. A copy of this reference should be sent to the Joint Secretary (IS.I),
Ministry of Home Affairs, at Fax No.011-23092569 and also convey over telephone
on 011-23092736. The particulars apart from being sent by post would necessarily
be conveyed on e-mail. MHA may have the verification also conducted by the
Central Agencies. This verification would be completed within a maximum of 5
working days.
11. In case, the results of the verification indicate that the particulars match
with those of designated individuals/entities, an order under Section 51A of the
UAPA would be issued within 24 hours, by the nodal officer of IS-I Division of
MHA and conveyed to the concerned Registrar performing the work of registering
immovable properties and to FIU-IND under intimation to the concerned UAPA nodal
officer of the State/UT.
The order shall take place without prior notice, to the designated
individuals/entities.
12. Further, the UAPA nodal officer of the State/UT shall cause to monitor the
transactions/accounts of the designated individual/entity so as to prohibit any
individual or entity from making any funds, financial assets or economic
resources or related services available for the benefit of the individuals or
entities listed in the schedule to the order or any other person engaged in or
suspected to be engaged in terrorism. The UAPA nodal officer of the State/UT
shall upon coming to his notice, transactions and attempts by third party
immediately bring to the notice of the DGP/Commissioner of Police of the
State/UT for also initiating action under the provisions of Unlawful Activities
(Prevention) Act.
Implementation of requests received from foreign countries under U.N. Security
Council Resolution 1373 of 2001.
13. U.N. Security Council Resolution 1373 obligates countries to freeze without
delay the funds or other assets of persons who commit, or attempt to commit,
terrorist acts or participate in or facilitate the commission of terrorist acts;
of entities owned or controlled directly or indirectly by such persons; and of
persons and entities acting on behalf of, or at the direction of such persons
and entities, including funds or other assets derived or generated from property
owned or controlled, directly or indirectly, by such persons and associated
persons and entities. Each individual country has the authority to designate the
persons and entities that should have their funds or other assets frozen.
Additionally, to ensure that effective cooperation is developed among countries,
countries should examine and give effect to, if appropriate, the actions
initiated under the freezing mechanisms of other countries.
14. To give effect to the requests of foreign countries under U.N. Security
Council Resolution 1373, the Ministry of External Affairs shall examine the
requests made by the foreign countries and forward it electronically, with their
comments, to the UAPA nodal officer for IS-I Division for freezing of funds or
other assets.
15. The UAPA nodal officer of IS-I Division of MHA, shall cause the request to
be examined, within 5 working days so as to satisfy itself that on the basis of
applicable legal principles, the requested designation is supported by
reasonable grounds, or a reasonable basis, to suspect or believe that the
proposed designee is a terrorist, one who finances terrorism or a terrorist
organization, and upon his satisfaction, request would be electronically
forwarded to the nodal officers in Regulators. FIU-IND and to the nodal officers
of the States/UTs. The proposed designee, as mentioned above would be treated as
designated individuals/entities.
16. Upon receipt of the requests by these nodal officers from the UAPA nodal
officer of IS-I Division, the procedure as enumerated at paragraphs 4 to 12
above shall be followed.
The freezing orders shall take place without prior notice to the designated
persons involved.
Procedure for unfreezing of funds, financial assets or economic resources or
related services of individuals/entities inadvertently affected by the freezing
mechanism upon verification that the person or entity is not a designated person
17. Any individual or entity, if it has evidence to prove that the freezing of
funds, financial assets or economic resources or related services, owned/held by
them has been inadvertently frozen, they shall move an application giving the
requisite evidence, in writing, to the concerned bank, stock
exchanges/depositories, intermediaries regulated by SEBI, insurance companies,
Registrar of Immovable Properties and the State/UT nodal officers.
18. The banks stock exchanges/depositories, intermediaries regulated by SEBI,
insurance companies, Registrar of Immovable Properties and the State/UT nodal
officers shall inform and forward a copy of the application together with full
details of the asset frozen given by any individual or entity informing of the
funds, financial assets or economic resources or related services have been
frozen inadvertently, to the nodal officer of IS-I Division of MHA as per the
contact details given in paragraph 4(ii) above within two working days.
19. The Joint Secretary (IS-I), MHA, being the nodal officer for (IS-I) Division
of MHA, shall cause such verification as may be required on the basis of the
evidence furnished by the individual/entity and if he is satisfied, he shall
pass an order, within 15 working days, unfreezing the funds, financial assets or
economic resources or related services, owned/held by such applicant under
intimation to the concerned bank, stock exchanges/depositories, intermediaries
regulated by SEBI, insurance company and the nodal officers of States/UTs.
However, if it is not possible for any reason to pass an order unfreezing the
assets within fifteen working days, the nodal officer of IS-I Division shall
inform the applicant.
Communication of Orders under section 51A of Unlawful Activities (Prevention)
Act.
20. All Orders under section 51A of Unlawful Activities (Prevention) Act,
relating to funds, financial assets or economic resources or related services,
would be communicated to all banks, depositories/stock exchanges, intermediaries
regulated by SEBI, insurance companies through respective Regulators, and to all
the Registrars performing the work of registering immovable properties, through
the State/UT nodal officer by IS-I Division of MHA.
Regarding prevention of entry into or transit through India
21. As regards prevention of entry into or transit through India of the
designated individuals, the Foreigners Division of MHA, shall forward the
designated lists to the immigration authorities and security agencies with a
request to prevent the entry into or the transit through India. The order shall
take place without prior notice to the designated individuals/entities.
22. The immigration authorities shall ensure strict compliance of the Orders and
also communicate the details of entry or transit through India of the designated
individuals as prevented by them to the Foreigners' Division of MHA.
Procedure for communication of compliance of action taken under Section 51A.
23. The nodal officers of IS-I Division and Foreigners Division of MHA shall
furnish the details of funds, financial assets or economic resources or related
services of designated individuals/entities frozen by an order, and details of
the individuals whose entry into India or transit through India was prevented,
respectively, to the Ministry of External Affairs for onward communication to
the United Nations.
24. All concerned are requested to ensure strict compliance of this order.
(D .Diptivilasa)
Joint Secretary to Government of India
Annex - IV
Government of India
Ministry of Finance
(Department of Revenue)
Notification
New Delhi, the 16th December 2010
GSR ------ (E) – In exercise of the powers conferred by sub-section (1) read
with clauses (h) (i), (j) and (k) of sub-section (2) of Section 73 of the
Prevention of Money-laundering Act, 2002 (15 of 2003), the Central Government
hereby makes the following amendments to the 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, namely::-
1. (1) These rules may be called the 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) Third Amendment Rules, 2010.
(2) They shall come into force on the date of their publication in the Official
Gazette.
2. In the 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, -
(a) in rule 2,-
(i) after clause (b), the following clause shall be inserted, namely:-
“(bb) “Designated Officer” means any officer or a class of officers authorized
by a banking company, either by name or by designation, for the purpose of
opening small accounts”.
(ii) in clause (d), for the words “the Election Commission of India or any other
document as may be required by the banking company or financial institution or
intermediary”, the words “Election Commission of India, job card issued by NREGA
duly signed by an officer of the State Government, the letter issued by the
Unique Identification Authority of India containing details of name, address and
Aadhaar number or any other document as notified by the Central Government in
consultation with the Reserve Bank of India or any other document as may be
required by the banking companies, or financial institution or intermediary”
shall be substituted;
(iii) after clause (fa), the following clause shall be inserted, namely:-
“(fb) “small account” means a savings account in a banking company where-
- the aggregate of all credits in a financial year does not exceed rupees one
lakh,
- the aggregate of all withdrawals and transfers in a month does not exceed rupees
ten thousand, and;
- the balance at any point of time does not exceed rupees fifty thousand”.
(b) In rule 9, after sub-rule (2), the following sub-rule shall be inserted,
namely:-
“(2A) Notwithstanding anything contained in sub-rule (2), an individual who
desires to open a small account in a banking company may be allowed to open such
an account on production of a self-attested photograph and affixation of
signature or thumb print, as the case may be, on the form for opening the
account.
Provided that –
- the designated officer of the banking company, while opening the small account,
certifies under his signature that the person opening the account has affixed
his signature or thumb print, as the case may be, in his presence;
- a small account shall be opened only at Core Banking Solution linked banking
company branches or in a branch where it is possible to manually monitor and
ensure that foreign remittances are not credited to a small account and that the
stipulated limits on monthly and annual aggregate of transactions and balance in
such accounts are not breached, before a transaction is allowed to take place;
- a small account shall remain operational initially for a period of twelve
months, and thereafter for a further period of twelve months if the holder of
such an account provides evidence before the banking company of having applied
for any of the officially valid documents within twelve months of the opening of
the said account, with the entire relaxation provisions to be reviewed in
respect of the said account after twenty four months.
- a small account shall be monitored and when there is suspicion of money
laundering or financing of terrorism or other high risk scenarios, the identity
of client shall be established through the production of officially valid
documents, as referred to in sub rule ( 2) of rule 9"; and
- foreign remittance shall not be allowed to be credited into a small account
unless the identity of the client is fully established through the production of
officially valid documents, as referred to in sub-rule (2) of rule 9.”
(Notification No.14/2010/F.No.6/2/2007-ES)
(S.R. Meena)
Under Secretary
Note: The principal rules were published in Gazette of India, Extraordinary,
Part-II, Section 3, Sib-Section (i) vide number G.S.R.444 (E), dated the 1st
July, 2005 and subsequently amended by number G.S.R.717 (E), dated the 13th
December, 2005, number G.S.R. 389(E), dated the 24th May, 2007, number G.S.R.
816(E), dated the 12th November, 2009, number G.S.R.76 (E), dated the 12th
February, 2010 and number G.S.R. 508(E), dated the 16th June, 2010.
ANNEX –-V
(List of Circulars on ‘Know Your Customer’ and monitoring of transactions
consolidated in the Master Circular)
| Sr. No. |
Circular No. and date |
Subject |
Gist of instructions |
| 1 |
DBOD.BP.BC.92/C.469-76 dated 12th August, 1976 |
Issue of DDs/TTs in excess of Rs.5000/- |
Applicants (whether customer or not) for DD/MT/TT/Travellers cheques for amount
exceeding Rs.10,000/- should affix Permanent Income Tax Number on the
application. |
| 2 |
DBOD.GC.BC.62/c.408(A)/87 dated 11th November, 1987 |
Frauds in banks-opening of new accounts. |
Payment for imports should be made by debit to the accounts maintained with the
same bank or any other bank and under no circumstances cash should be accepted
for retirement of import bills. There should be reasonable gap of say, 6 months
between the time an introducer opens his account and introduces another
prospective account holder to the bank. Introduction of an account should enable
proper identification of the person opening an account so that the person can be
traced if the account is misused. |
| 3 |
DBOD.BP.BC.114/C.469 (81)-91 dated 19th April, 1991 |
Misuse of banking channels for violation of fiscal laws and evasion of taxes –
Issue and payment of demand drafts for Rs.50,000 and above. |
Banks to issue travellers cheques, demand drafts, mail transfers, telegraphic
transfers for Rs. 50,000/- and above by debit to customers accounts or against
cheques only and not against cash. |
| 4 |
DBOD.BC.20/17.04.001/92 dated 25th August, 1992 |
Committee to enquire into various aspects relating to frauds and malpractices in
banks. |
Banks advised to adhere to the prescribed norms and safeguards while opening
accounts etc. |
| 5 |
DBOD.BP.BC.60/21.01.023/92 dated 21st December,1992 |
Diversion of working capital funds. |
Banks to ensure that withdrawals from cash credit/overdraft accounts are
strictly for the purpose for which the credit limits were sanctioned by them.
There should be no diversion of working capital finance for acquisition of fixed
assets, investments in associate companies/ subsidiaries and acquisition of
shares, debentures, units of UTI and other mutual funds and other investments in
the capital market. |
| 6 |
DBOD.FMC.No.153/27.01.003/93-94 dated
1st September,
1993 |
Monitoring of flow of funds. |
Banks to be vigilant and ensure proper end use of bank funds/monitoring flow of
funds. Banks to keep vigil over heavy cash withdrawals by account holders which
may be disproportionate to their normal trade/business requirements and cases of
unusual trends. Doubtful cases to be reported to DBOD, Regional office. |
| 7 |
DBOD.GC.BC.193/17.04.001/93 dated 18th November, 1993
|
Frauds in banks – Encashment of Interest/Dividend Warrants, Refund Orders etc.
|
Banks to be vigilant in opening new accounts without proper introduction, new
accounts with fictitious names and addresses. Banks instructed to strictly
adhere to the instructions issued on opening and operating of bank accounts. |
| 8 |
DBOD.GC.BC.202/17.04.001/93 dated 6th December, 1993
|
The Committee to enquire into various aspects relating to frauds and
malpractices in banks. |
Customer identification while opening accounts including obtaining of
photographs of customers while opening accounts. |
| 9 |
DBOD.No.GC.BC.46/17.04.001 dated 22nd April, 1994 |
The Committee to enquire into various aspects relating to frauds and
malpractices in banks. |
Clarifications given to banks regarding obtaining photographs of the
depositors/account holder authorised to operate new accounts with effect from
1.1.1994. Obtaining of photographs would apply to residents and non-residents
and all categories of deposits including fixed/recurring/cumulative deposit
accounts and also to those persons authorised to operate the accounts. |
| 10 |
DBOD.BP.BC.106/21.01.001/94 dated 23rd September,1994
|
Fraudulent operations in deposit accounts-opening and collection of cheques/pay
orders etc. |
Banks to examine every request for opening joint accounts very carefully, look
into the purpose, other relevant aspects relating to business, the financial
position of the account holders and whether number of account holders are large.
‘Generally crossed’ cheques and payable to ‘order’ should be collected only on
proper endorsement by the payee. Banks to exercise care in collection of cheques
of large amounts and ensure that joint accounts are not used for benami
transactions. |
| 11 |
DBOD.BP.BC.57/21.01.001/95 dated 4th May, 1995 |
Frauds in banks – Monitoring of deposit accounts. |
Banks to introduce system of close watch of new deposit accounts and monitoring
of cash withdrawals and deposits for Rs.10 lakh and above in deposit, cash
credit and overdraft accounts. Banks to keep record of details of these large
cash transactions in a separate register. |
| 12 |
DBOD.BP.BC.102/21.01.001/95 dated 20th September, 1995
|
Monitoring of Deposit Accounts. |
Reporting of all cash deposits and withdrawals of Rs.10 lakhs and above with
full details in fortnightly statements by bank branches to their controlling
offices. Transactions of suspicious nature to be apprised to Head Office. RBI to
look into these statements at the time of inspections |
| 13 |
DBOD.BP.BC.42/21.01.001/96 dated 6th April, 1996 |
Monitoring cash deposits and withdrawals of Rs.10 lakh and above in
deposit/other accounts. |
Banks asked to submit feedback on implementation of the system of close
monitoring of large cash deposits and withdrawals of Rs.10 lakh and above. |
| 14 |
DBOD.No.BP.BC.12/21.01.023/98 dated 11th February 1998
|
Furnishing of data-violation of secrecy obligations.
|
Banks should satisfy themselves that information sought will not violate the
laws relating to secrecy in banking transactions except under compulsion of law,
duty to the public to disclose, where interest of bank requires disclosure and
where disclosure is made with the express or implied consent of the customer. |
| 15 |
DBS.FGV.BC.56.23.04.001/98-99 dated 21st June, 1999 |
Report of the Study Group on Large Value Bank Frauds.
|
Banks advised to implement the main recommendations of the Study Group on Large
Value Bank Frauds. |
| 16 |
DBOD.COMP.BC.No.130/07.03.23/2000-01 dated 14th June, 2001
|
Internet Banking in India-Guidelines. |
Banking facilities on Internet will be subject to the existing regulatory
framework. Banks having physical presence in India only will be allowed to offer
banking services over Internet to residents in India and any cross border
transactions will be subject to existing exchange control regulations. Banks to
establish identity and also make enquiries about integrity and reputation of the
prospective customer. Internet accounts should be opened only after proper
introduction and physical verification of the identity of the customer. |
| 17 |
DBOD.BP.52/21.01.001/2001-02 dated 5th December, 2001
|
Prevention of Terrorism Ordinance,2001-Implementation thereof.
|
Banks should keep a watchful eye on the transactions of the 23 terrorist
organisations listed in the Schedule to the Ordinance. Violations of the extant
Acts or normal banking operations must be reported to the appropriate
authorities under the Ordinance under advice to RBI. Banks to undertake ‘due
diligence’ in respect of the ‘KYC’ principle. |
| 18 |
DBOD.AML.BC.89/14.01.001/2001-02 dated 15th April, 2002
|
Freezing of funds pursuant to United Nations Security Council Resolution, 1390.
|
Accounts of individuals and entities listed should be immediately frozen as
informed by the Security Council Sanctions Committee of the UN. If any
transaction is detected involving any of these entities, banks to report to RBI
promptly for necessary action. |
| 19 |
DBOD.AML.BC.No.102/14.01.001/2001-02 dated 10th May,2002
|
Monitoring of accounts - compliance with instructions.
|
Banks should ensure that no new accounts are opened by banned organisations.
Banks to strictly adhere to the extant guidelines regarding opening and
monitoring of accounts. Banks to confirm having issued instructions for
immediate compliance by the branches and controlling offices. |
| 20 |
DBOD.AML.BC.18/14.01.001/2002-03 dated August 16, 2002
|
Guidelines on "Know Your Customer" norms and
“Cash transactions” |
First circular on KYC. The customer identification should entail verification
through an introductory reference from an existing account holder/a person known
to the bank or on the basis of documents provided by the customer. The Board of
Directors of the banks should have in place adequate policies that establish
procedures to verify the bonafide identification of individual/ corporates
opening an account. Branches of banks are required to report all cash deposits
and withdrawals of Rs.10 lakhs and above as well as transactions of suspicious
nature with full details in fortnightly statements to their controlling offices. |
| 21 |
DBOD.NO.AML.BC.58/14.01.001/2004-05 dated November 29, 2004
|
'Know Your Customer' (KYC) Guidelines – Anti Money Laundering Standards |
Our guidelines were revisited to make those compliant with FATF recommendations
and Basel Committee Report on CDD. Four pronged approach was prescribed to banks
based on Customer Acceptance Policy, Customer Identification Procedure,
Monitoring of Transaction and Risk Management. |
| 22 |
DBOD.NO.AML.BC.28 /14.01.001/2005-06 dated August 23, 2005
|
Know Your Customer Guidelines- Anti-Money Laundering Standards
|
KYC guidelines on document requirement were relaxed for people belonging to
financially disadvantageous sections in the society, who could open account with
introductory reference. |
| 23 |
DBOD.NO.AML.BC.63/14.01.001/2005-06 dated February 15, 2006
|
Prevention of Money Laundering Act, 2002 – Obligation of banks in terms of Rules
notified thereunder |
Reporting mechanism and formats were prescribed to banks to report cash and
suspicious transactions to Financial Intelligence Unit- India (FIU-IND). |
| 24 |
DBOD.AML.BC. No.77/ 14.01.001 / 2006-07 April 13, 2007
|
Wire transfers |
Banks were advised to ensure that all wire transfers involving domestic and
cross border fund transfers are accompanied by full originator information. |
| 25 |
DBOD.AML.BC.No. 63/ 14.01.001/2007-08 dated February 18, 2008
|
Know Your Customer (KYC) Norms/Anti Money Laundering (AML) Standards/Combating
of Financing of Terrorism (CFT) |
Revised guidelines on KYC/AML issued on review of risk categorization of
customers; periodical updation of customer identification data and screening
mechanism for recruitment /hiring process of personnel. |
| 26 |
DBOD.AML.BC.No. 85/ 14.01.001/ 2007 -08 dated May 22, 2008
|
Prevention of Money Laundering Act, 2002 – Obligation of banks in terms of Rules
notified thereunder. |
Revised guidelines issued on CTR and STR by banks to FIU-IND. |
| 27 |
DBOD.AML.BC.No.12/14.01.001/2008-09 dated July 1, 2008
|
Master Circular –KYC norms/AML Standards/CFT/ Obligation of Banks under PMLA,
2002 |
The Master Circular consolidates all the guidelines issued by Reserve Bank of
India on KYC/AML/CFT norms up to June 30, 2008 |
| 28 |
DBOD.AML.BC.No.2/14.01.001/2009-10 dated July 1, 2009
|
Master Circular –KYC norms/AML Standards/CFT/ Obligation of Banks under PMLA,
2002 |
The Master Circular consolidates all the guidelines issued by Reserve Bank of
India on KYC/AML/CFT norms up to June 30, 2009 |
| 29 |
DBS.CO.FrMC. No. 2605/23.04.001/ 2009-10 dated August 18, 2009
|
Adherence to KYC/AML Guidelines while opening & conducting accounts of MLM
Companies |
Banks were advised to exercise caution when opening accounts of marketing and
trading firms and to monitor cases when large number of cheque books were issued
to such companies and small deposits in cash were being made in a/cs. |
| 30 |
DBOD.AML.BC.No.43/14.01.001/2009-10 dated September 11, 2009
|
KYC norms/AML standards/CFT/ Obligation of banks under PMLA, 2002
|
The Government amended the Prevention of Money Laundering Act, 2005 and it came
into force with effect from June 01, 2009 as notified by the Government. |
| 31 |
DBOD.AML.BC.No.44/14.01.001/2009-10 dated September 17, 2009
|
Combating Financing of Terrorism-Unlawful Activities (Prevention) Act,(UAPA)
1967- Obligation of banks |
Government of India, Ministry of Home Affairs issued an 'Order' dated August 27,
2009 detailing the procedure for implementation of Section 51A of UAPA |
| 32 |
DBOD.AML.BC.No.68/14.01.001/2009-10 dated January 12, 2009
|
Prevention of Money laundering (Amendment) Rules 2009- Obligation of banks
/Financial Institutions |
Government of India Notification dated November 12, 2009 amended the Prevention
of Money Laundering ( Maintenance of records of the Intermediaries) Rules 2005 |
| 33 |
DBOD.AML.BC.No.80/14.01.001/2009-10 dated March 26, 2010
|
Know Your Customer (KYC) guidelines- accounts of proprietary concerns
|
Customer identification procedure issued for account opening by proprietary
concerns. |
| 34 |
DBOD.AML.BC.No.95/14.01.001/2009-10 dated April 23, 2010
|
Prevention of Money Laundering (Maintenance of records of the …Intermediaries)
Amendment Rules, 2010 - Obligation of banks |
Government of India Notification dated February 12, 2010 amended the Prevention
of Money Laundering (Maintenance of records of the Intermediaries) Rules 2005 |
| 35 |
DBOD.AML.BC.No.108/14.01.001/2009-10 dated June 9, 2010
|
KYC norms/AML standards/CFT/Obligation of banks under PMLA, 2002 |
Further clarifications issued to banks in regard to: suspicion of money
laundering or terrorist financing; filing of STRs; PEPs and Principal Officer. |
| 36 |
DBOD.AML.BC.No.109/14.01.001/2009-10 dated June 10, 2010
|
KYC norms/AML standards/CFT/Obligation of banks under PMLA, 2002 |
Guidelines reiterated for Client accounts opened by professional intermediaries |
| 37 |
DBOD.AML.BC.No.111/14.01.001/2009-10 dated June 15, 2010
|
KYC norms/AML standards/CFT/Obligation of banks under PMLA, 2002 |
Banks advised to take into account risks arising from deficiencies in AML/CFT
regime of the Jurisdictions included in FATF Statement and also publicly
available information of countries which do not or insufficiently apply the FATF
recommendations and banks should not enter into relationship with shell banks. |
| 38 |
DBOD.AML.BC.No.113/14.01.001/2009-10 dated June 29, 2010
|
Prevention of Money Laundering (Maintenance of records of the …Intermediaries)
Second Amendment Rules 2010 |
Government of India Notification dated June 16, 2010 amended the Prevention of
Money Laundering (Maintenance of records of the Intermediaries) Rules 2005 |
| 39 |
DBOD.AML.BC.No.38/14.01.001/2010-11 dated August 31, 2010
|
Accounts of proprietary concerns |
An addition is made to the list of documents that may be accepted for opening a
bank account in the name of a proprietary concern |
| 40 |
DBOD.AML.BC.No.50/14.01.001/2010-11 dated October 26, 2010
|
Opening of bank accounts -salaried employees |
Banks need to rely on certification only from corporates and other entities of
repute and should be aware of the competent authority designated by the
concerned employer to issue such certificate/letter. In addition to the
certificate from employer, banks should insist on at least one of the officially
valid documents as provided in the PML Rules. |
| 41 |
DBOD.AML.BC.No.65/14.01.001/2010-11 dated December 7, 2010
|
Operation of bank accounts & money mules |
Banks advised that operations of money mules can be minimized if banks follow
the guidelines contained in the Master Circular on KYC/AML/CFT/obligations of
banks under PMLA, 2002 |
| 42 |
DBOD.AML.BC.No.70/14.01.001/2010-11 dated December 30, 2010
|
Accounts of bullion dealers (including sub-dealers) & jewelers should be
categorized by banks as ' high risk'. |
Accounts of bullion dealers (including sub-dealers) & jewelers should be
categorized by banks as ' high risk'. requiring enhanced due diligence and
intensified transaction monitoring. High risk associated with such accounts
should also be taken into account to identify suspicious transactions for filing
suspicious transaction reports (STRs) to FIU-IND. |
| 43 |
DBOD.AML.BC.No.77/14.01.001/2010-11 dated January 27, 2011
|
Opening of "Small Account" |
Government of India Notification dated December 16, 2011 amended the Prevention
of Money Laundering (Maintenance of records of the Intermediaries) Rules 2005 to
include definition of 'Small Account' and the detailed procedure for opening
'small accounts'. |
| 44 |
DBOD.AML.BC. No.36/14.01.001/2011-12 dated September 28, 2011.
|
Know Your Customer Norms – Letter issued by Unique Identification Authority of
India (UIDAI) containing details of name, address and Aadhaar number
|
Letter issued by the UIDAI is accepted as an officially valid document for
opening all types of bank accounts |
| 45 |
DBOD.AML BC.No.47/14.01.001/2011-12 dated November 04, 2011
|
Payment of Cheques/Drafts/ Pay Orders/ Banker’s Cheques
|
With effect from April 1, 2012, cheques / Drafts/ Pay Orders/ Banker's cheques
issued on or after April 1, 2012 are valid for three months from the date of
issue. |
| 46 |
DBOD. AML.BC. No.65 /14.01.001/2011-12 dated December 19, 2011
|
Know Your Customer (KYC) norms/Anti-Money Laundering (AML) standards/Combating
of Financing of Terrorism (CFT)/Obligation of banks under Prevention of Money
Laundering Act (PMLA), 2002- Assessment and Monitoring of Risk |
Banks may take steps to identify and assess their ML/TF risk for customers,
countries and geographical areas as also for products/ services/ transactions/
delivery channels. Banks should also have policies, controls and procedures,
duly approved by their boards, in place to effectively manage and mitigate their
risk adopting a risk-based approach and adopt enhanced measures for products,
services and customers with a medium or high risk rating. |
| 47 |
DBOD AML BC No. 70 /14.01.001/2011-12 dated December 30, 2011
|
splitting of UNSC 1267 Committee's list of individuals and entities linked to
Al-Qaida and Taliban |
Banks may take into account both “Al-Qaida Sanctions List” and “1988 Sanctions
List” for the purpose of implementation of Section 51A of the Unlawful
Activities (Prevention) Act, 1967. |
| 48 |
DBOD. AML.BC. No 93 /14.01.001/2011-12 dated April 17, 2012
|
Know your Customer (KYC) guidelines - accounts of proprietary concerns
|
An addition is made to the list of documents that may be accepted for opening a
bank account in the name of a sole proprietary concern |
| 49 |
DBOD. AML.BC. No 109 /14.01.001/2011-12 dated June 08, 2012
|
Know your Customer (KYC) guidelines- Unique Customer Identification Code for
bank customers in India |
Banks to introduce Unique Customer Identification system to track all facilities
availed, monitor transactions in a holistic manner and to have better
risk-profiling of customers. System should be in place by May 2013. |
| 50. |
DBOD. AML.BC. No 110 /14.01.001/2011-12 dated June 08, 2012
|
Know your Customer (KYC) guidelines - Risk Categorization and updation of
Customer Profile |
Banks advised to complete the work of risk categorization and updation of risk
profile of all customers by March 2013. |
| 51 |
DBOD.AML.BC. No. 65/14.01.001/2012-13 dated December 10, 2012
|
Know Your Customer (KYC) norms /Anti-Money Laundering (AML) Standards/Combating
of Financing of Terrorism (CFT)/Obligation of banks under Prevention of Money
Laundering Act (PMLA), 2002 |
KYC norms were further simplified by issuing following instructions : (i) to
have only one document for both identity and address if the address on the
document submitted for identity proof is same as that declared in the account
opening form, (ii) introduction from an existing customer of the bank not
mandatory when documents of identity and address are provided, (iii) If the
address provided by the account holder is the same as that on Aadhaar letter, it
may be accepted as a proof of both identity and address, (iv) NREGA Job Card to
be accepted as an ‘officially valid document’ for opening of bank accounts
without the limitations applicable to ‘Small Accounts’ |
| 52 |
DBOD.AML.BC. No.71/14.01.001/2012-13 dated January 18, 2013
|
Know Your Customer (KYC) Norms /Anti-Money Laundering (AML) Standards/Combating
of Financing of Terrorism (CFT)/Obligation of banks under Prevention of Money
Laundering Act (PMLA), 2002 |
Procedure to identify beneficial owner as advised by Government has been
specified. |
| 53 |
DBOD.AML.BC. No. 78 /14.01.001/2012-13 dated January 29, 2013
|
Know Your Customer (KYC) Norms /Anti-Money Laundering (AML) Standards/Combating
of Financing of Terrorism (CFT)/Obligation of banks under Prevention of Money
Laundering Act (PMLA), 2002 |
To help a large number of customers with transferable jobs or those who migrate
for jobs are unable to produce a utility bill or other documents in their name
as address proof immediately after relocating, banks were advised to transfer
existing accounts at the transferor branch to the transferee branch without
insisting on fresh proof of address and on the basis of a self- declaration from
the account holder about his/her current address, subject to submitting proof of
address within a period of six months. Further, banks were also advised to
accept rent agreement duly registered with State Government or similar
registration authority indicating the address of the customer, in addition to
other documents listed as proof of address in Annex I of our Master Circular on
KYC/AML/CFT dated July 2, 2012. |
| 54 |
RBI/2012-13/459
DBOD.AML.BC. No.87/14.01.001/2012-13 dated March 28, 2013 |
Simplifying norms for Self Help Groups |
KYC verification of all the members of SHG need not be done while opening the
savings bank account of the SHG and KYC verification of all the office bearers
would suffice. As regards KYC verification at the time of credit linking of
SHGs, no separate KYC verification of the members or office bearers is necessary |
| 55 |
DBOD. AML.BC. No.101 /14.01.001/2011-12 dated May 31, 2013
|
Extending time period for allotting Unique Customer
Identification Code (UCIC) for banks’ customers in India |
Considering the difficulties experienced in implementation the time for
completing the process of allotting UCIC to existing customers was extended up
to March 31, 2014. |