What changed
RBI reinforced PMLA compliance for RRBs, referencing the Government of India's July 1, 2005 notification that notified the Rules under PMLA, 2002, bringing PMLA provisions into effect from July 1, 2005. RRBs must now follow Section 12 obligations for record-keeping and reporting, including appointing a Principal Officer and internal reporting systems for suspicious and high-value cash transactions.
What it means for you
RRBs must treat PMLA compliance as a non-negotiable regulatory requirement, not just a guideline. Failure to maintain proper records or report suspicious transactions could lead to legal consequences. Banks need to ensure systems are robust enough to track and preserve transaction data for a decade, enabling quick retrieval for authorities.
What you must do
- Review and update internal policies to align with PMLA 2002 Rules, especially Section 12 obligations.
- Ensure systems capture and preserve records of all cash transactions over Rs 10 lakh, connected series within a month, counterfeit currency incidents, and suspicious transactions.
- Maintain customer identification documents (e.g., passport, PAN, utility bills) for at least 10 years after the business relationship ends.
- Appoint a Principal Officer and establish internal reporting mechanisms for suspicious and high-value cash transactions.
- Conduct staff training to ensure operational-level compliance and accountability for lapses.
Who it affects
Regional Rural Banks (RRBs), Compliance officers and Principal Officers at RRBs, Branch-level staff handling cash transactions and account opening
What transactions must RRBs record under PMLA Rules?
RRBs must record: all cash transactions over Rs 10 lakh (or equivalent foreign currency), series of connected cash transactions within a month aggregating over Rs 10 lakh, transactions involving forged or counterfeit currency, and all suspicious transactions (cash or non-cash).
How long must RRBs preserve transaction records?
Transaction records must be maintained 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 ends.
What is the role of a Principal Officer in RRBs?
The Principal Officer is responsible for internal reporting of suspicious transactions and cash transactions of Rs 10 lakh and above, as per earlier RBI guidelines. This role is critical for PMLA compliance.