RBI/ 2009-10/227
A.P. (DIR Series) Circular No.15
A.P. (FL/RL Series) Circular No.02
November 19, 2009
To,
All Authorized Persons
Madam/ Sir,
Know Your Customer (KYC) norms/ Anti-Money Laundering (AML) standards/ Combating
of Financing of Terrorism (CFT)/ Obligation of Authorised Persons under
Prevention of Money-Laundering Act, (PMLA), 2002, as amended by Prevention of
Money Laundering (Amendment) Act, 2009- Money changing activities–Suspicious
Transaction Reporting Format
Attention of Authorized persons is invited to the Anti-Money Laundering
Guidelines for Authorised Money Changers (AMCs) governing money changing
transactions, issued vide
A.P. (DIR Series) Circular No. 18 [A.P. (FL Series)
Circular No. 01] dated December 02, 2005.
- Government of India vide the Prevention of Money Laundering (Amendment) Act,
2009 (21 of 2009) has amended the PMLA and the amendment has come into force
with effect from June 1, 2009. The amendment, inter alia, has brought authorized
persons within the definition of "Financial Institutions" under Section 2(l) of
the Act. Accordingly, in terms of Section 12 of the Act and the rules made there
under, authorized persons are required to furnish information to Financial
Intelligence Unit-India (FIU-IND) in the prescribed format. Government of India
vide its Notification No.13/2009/F.No.6/8/2009-ES dated November 12, 2009, has
also amended 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 copy of the amendment Notification is annexed
(Annex-I).
- Accordingly, all authorized persons are advised to furnish Suspicious
Transaction Report (STR) to FIU-IND in respect of their money changing
activities within 7 days of arriving at a conclusion that a transaction,
including attempted transaction, whether or not made in cash, or a series of
transaction integrally connected are of suspicious nature. The formats of STR,
both manual and electronic, have been made available by FIU-IND in their website
http://fiuindia.gov.in.
- The STR formats prescribed would also be applicable to all franchisees of authorised persons and it will be the sole responsibility of the franchisers to
ensure that their franchisees also adhere to the said reporting requirements.
- The directions contained in this circular have been issued under Section
10(4) and Section 11(1) of the Foreign Exchange Management Act, 1999 (42 of
1999), Prevention of Money-Laundering Act, (PMLA), 2002 (as amended form time to
time), and Prevention of Money-laundering (Maintenance of Records of the Nature
and Value of Transactions, the Procedure and Manner of Maintaining and Time for
Furnishing Information and Verification and Maintenance of Records of the
Identity of the Clients of the Banking Companies, Financial Institutions and
Intermediaries) Rules, 2005, as amended from time to time. Non-compliance with
the guidelines would attract penal provisions of the Acts concerned.
Yours faithfully,
(Salim Gangadharan)
Chief General Manager-in-Charge
Annex - I
Government of India
Ministry of Finance
(Department of Revenue)
NOTIFICATION
New Delhi, the 12th November, 2009
G.S.R. 816(E) - In exercise of the powers conferred by clauses (a), (b) and (c)
of sub-section (1) of section 12 and section 15 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, in consultation with the Reserve
Bank of India, hereby makes the following rules further to amend 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) 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) Amendment Rules, 2009.
(2) They shall come into force on the date of their publication in the Official
Gazette.
- 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 (hereinafter referred to as the principal rules),-
In rule 2, in sub-rule(1), -
(a) after clause (c), the following clause shall be inserted, namely:-
‘(ca) “non profit organisation” means any entity or organisation that is
registered as a trust or a society under the Societies Registration Act, 1860
(21 of 1860) or any similar State legislation or a company registered under
section 25 of the Companies Act, 1956 (1 of 1956);’;
(b) after clause (f), the following clause shall be inserted, namely:-
‘(fa) “Regulator” means a person or an authority or a Government which is vested
with the power to license, authorise, register, regulate or supervise the
activity of banking companies, financial institutions or intermediaries, as the
case may be;’;
(c) for clause (g), the following clause shall be substituted, namely:-
‘(g) “Suspicious transaction" means a transaction referred to in clause (h),
including an attempted transaction, whether or not made in cash, which to a
person acting in good faith -
(a) gives rise to a reasonable ground of suspicion that it may involve proceeds
of an offence specified in the Schedule to the Act, regardless of the value
involved; or
(b) appears to be made in circumstances of unusual or unjustified complexity; or
(c) appears to have no economic rationale or bonafide purpose; or
(d) gives rise to a reasonable ground of suspicion that it may involve financing
of the activities relating to terrorism;’.
- In the principal rules, in rule 3, in sub-rule (1), after clause (B), the
following clause shall be inserted, namely:-
“(BA) all transactions involving receipts by non-profit organisations of value
more than rupees ten lakh, or its equivalent in foreign currency;”.
- In the principal rules, in rule 5, for the words “the Reserve Bank of India
or the Securities and Exchange Board of India, or the Insurance Regulatory
Development Authority, as the case may be,”, where ever they occur, the words,
“its Regulator,”, shall be substituted.
- In the principal rules, for rule 6, the following rule shall be substituted,
namely:-
“6. Retention of records of transactions– The records referred to in rule 3
shall be maintained for a period of ten years from the date of transactions
between the client and the banking company, financial institution or
intermediary, as the case may be.”.
- In the principal rules, in rule 7, for the words “the Reserve Bank of India
or the Securities and Exchange Board of India, or the Insurance Regulatory
Development Authority, as the case may be,” where ever they occur, the words,
“its Regulator,”, shall be substituted;
- In the principal rules, in rule 8,-
(a) in sub-rule (1), for the word, brackets and letters, “clauses (A) and (B)”,
the word, brackets and letters “clauses (A), (B) and (BA)” shall be substituted;
(b) after sub-rule (3), the following proviso shall be inserted at the end,
namely:-
“Provided that a banking company, financial institution or intermediary, as the
case may be, and its employees shall keep the fact of furnishing information in
respect of transactions referred to in clause (D) of sub-rule (1) of rule 3
strictly confidential.”.
- In the principal rules, in rule 9,-
(a) for sub-rules (1) and (2), the following sub-rules shall be substituted,
namely:-
“(1) Every banking company, financial institution and intermediary, as the case
may be, shall -
(a) at the time of commencement of an account-based relationship, identify its
clients, verify their identity and obtain information on the purpose and
intended nature of the business relationship, and
(b) in all other cases, verify identity while carrying out:
(i) transaction of an amount equal to or exceeding rupees fifty thousand,
whether conducted as a single transaction or several transactions that appear to
be connected, or
(ii) any international money transfer operations.
(1 A) Every banking company, financial institution and intermediary, as the case
may be, shall identify the beneficial owner and take all reasonable steps to
verify his identity.
(1 B) Every banking company, financial institution and intermediary, as the case
may be, shall 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 customer, his
business and risk profile.
(1 C) No banking company, financial institution or intermediary, as the case may
be, shall keep any anonymous account or account in fictitious names.
(2) Where the client is an individual, he shall for the purpose of sub-rule (1),
submit to the banking company, financial institution and intermediary, as the
case may be, one certified copy of an ‘officially valid document’ containing
details of his identity and address, one recent photograph and such other
documents including in respect of the nature of business and financial status of
the client as may be required by the banking company or the financial
institution or the intermediary, as the case may be:
Provided that photograph need not be submitted by a client falling under clause
(b) of sub-rule (1).”;
(b) after sub-rule (6), the following sub-rule shall be inserted, namely:-
“(6 A) Where the client is a juridical person, the banking company, financial
institution and intermediary, as the case may be, shall verify that any person
purporting to act on behalf of such client is so authorised and verify the
identity of that person.”;
(c) for sub-rule (7), the following sub-rule shall be substituted, namely:-
"(7) (i)The regulator shall issue guidelines incorporating the requirements of
sub-rules (1) to (6A) above and may prescribe enhanced measures to verify the
client’s identity taking into consideration type of client, business
relationship or nature and value of transactions.
(ii) Every banking company, financial institution and intermediary as the case
may be, shall formulate and implement a Client Identification Programme to
determine the true identity of its clients, incorporating requirements of
sub-rules (1) to (6A) and guidelines issued under clause (i) above.
- In the principal rules, in rule 10, for the words “the Reserve Bank of India
or the Securities and Exchange Board of India, or the Insurance Regulatory
Development Authority, as the case may be,”, wherever they occur, the words,
“its regulator;”, shall be substituted;
[Notification No.13/2009/F.No. 6/8/2009- ES]
S.G.P. VERGHESE.Under Secy.
Note: The principal rules were published in Part II, Section 3, Sub-section (i)
of the Gazette of India, Extraordinary vide number G.S.R. No. 444(E), dated 1st
July, 2005 and subsequently amended vide number G.S.R. No. 717(E), dated 13th
December, 2005 and G.S.R. No. 389(E), dated 24th May, 2007.
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