What changed
Government notified PMLA Rules on July 1, 2005, bringing Section 12 obligations into effect. RBI circular (Feb 15, 2006) advises banks to comply with these statutory requirements, supplementing earlier KYC/AML guidelines.
What it means for you
Banks have statutory obligations under PMLA Section 12 for record-keeping and reporting. The ₹10 lakh cash transaction threshold and suspicious transaction reporting are legally enforceable. Banks must ensure systems for quick data retrieval and record preservation as specified.
What you must do
- Review and align your AML policy with PMLA 2002 Rules notified July 1, 2005.
- Implement systems to capture and report all cash transactions >₹10 lakh and connected series within a month.
- Preserve transaction records for at least 10 years from cessation of transaction and customer identification records for at least 10 years after business relationship ends.
- Ensure Principal Officer and internal reporting mechanism for suspicious transactions are operational (as per earlier circular).
- Train staff on PMLA obligations and fix accountability for lapses.
Who it affects
All Scheduled Commercial Banks (excluding RRBs), Compliance and AML teams (inferred), Branch operations handling cash transactions (inferred), Principal Officers for suspicious transaction reporting (inferred)
What is the cash transaction threshold for reporting under PMLA?
All cash transactions exceeding ₹10 lakh or equivalent in foreign currency must be recorded. Also, series of cash transactions within a month that aggregate over ₹10 lakh are covered.
How long must banks preserve transaction records?
Records must be maintained for at least ten years from the date of cessation of transaction between the bank and the client. Identification records must be preserved for at least ten years after the business relationship is ended.
Does this circular apply to Regional Rural Banks?
No, the circular explicitly excludes RRBs from its scope.