What changed
The Unlawful Activities (Prevention) Act, 1967 was amended in 2008, and the Government issued an Order on August 27, 2009 detailing procedures under Section 51A. This circular now explicitly requires Urban Co-operative Banks to follow that Order for freezing/unfreezing financial assets of designated individuals/entities from UN sanctions lists.
What it means for you
UCBs must now implement a strict 24-hour reporting timeline for any account matching designated terror lists. Banks need to maintain updated electronic lists and regularly scan all accounts, not just new ones. Non-compliance could lead to regulatory action, as the RBI is tightening the noose on terror financing through the cooperative banking sector.
What you must do
- Update your internal systems with the latest UN sanctions lists circulated by RBI and maintain them in electronic form.
- Run regular checks on all existing and new customer accounts against the designated list to identify matches.
- Report any matching account details to RBI and FIU-IND within 24 hours of detection.
- Ensure strict compliance with the procedure laid down in the UAPA Order dated August 27, 2009 for freezing/seizing assets.
- Train staff on the updated KYC/AML norms and the specific requirements of Section 51A of UAPA.
Who it affects
All Primary (Urban) Co-operative Banks, Compliance and AML/KYC teams at UCBs, Branch managers handling account opening and monitoring
What is the deadline for reporting a match with the designated list?
Banks must inform RBI and FIU-IND of full particulars of the funds or assets within 24 hours from the time of finding such a customer.
Does this apply only to new accounts or also existing ones?
It applies to both. Banks must scan all existing accounts to ensure no account is held by or linked to any listed individual or entity, and also check new accounts before opening.
What law empowers the government to freeze assets under this circular?
The Unlawful Activities (Prevention) Act, 1967, as amended in 2008, specifically Section 51A, empowers the Central Government to freeze, seize, or attach funds and financial assets of designated individuals or entities.