What changed
RBI reminded co-operative banks that the PMLA 2002 provisions, effective from July 1, 2005, are now in effect. Banks must maintain specific transaction records as per Rule 3 and preserve customer identification documents for at least 10 years after business relationship ends.
What it means for you
Co-operative banks must upgrade their systems to capture and store detailed transaction data, including cash deals over ₹10 lakh and suspicious activities. This increases compliance costs but strengthens anti-money laundering defenses. Banks face accountability for lapses and must ensure senior management monitors implementation.
What you must do
- Implement systems to record all cash transactions above ₹10 lakh and connected series within a month exceeding ₹10 lakh.
- Maintain records of suspicious transactions and forged currency incidents as per Rule 3.
- Preserve transaction records for at least 10 years from cessation of transaction; preserve customer identification documents for at least 10 years after business relationship ends.
- Appoint a Principal Officer and establish internal reporting for suspicious transactions and cash transactions of ₹5 lakh and above (as per earlier KYC guidelines).
- Ensure senior management personally monitors compliance and fixes accountability for serious lapses.
- Report cash and suspicious transactions to FIU-IND as per prescribed formats.
Who it affects
State Co-operative Banks, District Central Co-operative Banks, Compliance officers and Principal Officers of co-operative banks, Senior management and board of co-operative banks
What is the threshold for reporting cash transactions under PMLA Rules?
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 must be recorded.
How long must banks preserve transaction records?
Banks must maintain transaction records for at least 10 years from the date of cessation of the transaction between the bank and the client. Customer identification records must be preserved for at least 10 years after the business relationship is ended.
What customer information must be preserved?
Banks must keep copies of documents like passports, identity cards, driving licenses, PAN, and utility bills obtained during account opening and business relationship.