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KYC Norms/AML Standards/Combating Financing of
Terrorism/Obligation of banks under PMLA, 2002
RBI/2009-10/488
DBOD.AML.BC.No.108/14.01.001/2009-10
June 9, 2010
The Chairmen and Chief Executive Officers
All Scheduled Commercial Banks excluding RRBs/
All India Financial institutions/ Local Area Banks
Dear Sir,
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.
Please refer to the Master Circular
DBOD.AML.BC. No.2/14.01.001/ 2009-10 dated July 01, 2009 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.
Suspicion of money laundering/terrorist financing
2. With a view to preventing banks from being used, intentionally or
unintentionally, by criminal elements for money laundering or terrorist
financing, it is clarified that 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.
Filing of STR
3. Kind attention is invited to the instructions contained in Para 2.3(a)(iv)
and also Para 2.8 of the Master Circular dated July 1, 2009 referred to above,
in terms of which a bank should not open an account (or should consider closing
an existing account) when it is unable to apply appropriate CDD measures. It is
clarified that 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.
Politically Exposed Persons (PEPs)
4. In terms of instructions contained in Para 5 of circular dated September
11, 2009 on the subject, 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. It is clarified that the
instructions contained in paragraph 5 of the circular dated September 11, 2009,
are also applicable to accounts where a PEP is the ultimate beneficial owner.
Further, in regard to PEP accounts, it is reiterated that 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.
Principal Officer
5. With reference to Para 2.15 of the Master Circular dated July 1, 2009
referred to above, regarding appointment and responsibility of the Principal
Officer, it is clarified that 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.
6. These guidelines are issued under Section 35A of the Banking Regulation
Act, 1949. Any contravention thereof or non-compliance shall attract penalties
under Banking Regulation Act.
Yours faithfully,
(Vinay Baijal)
Chief General Manager
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