What changed
The Prevention of Money Laundering (Amendment) Act, 2009, effective June 1, 2009, changed record retention periods. Transaction records must now be kept for 10 years from the transaction date, and customer identification records for 10 years after the business relationship ends. Additionally, if an existing customer becomes a Politically Exposed Person (PEP), banks must obtain senior management approval to continue the relationship and apply enhanced CDD measures.
What it means for you
Urban co-operative banks must update their record-keeping systems to comply with the new 10-year retention periods, which are longer than previous requirements. Banks also need to implement processes to identify when existing customers become PEPs and escalate such cases for senior management approval. This increases compliance burden but strengthens anti-money laundering efforts.
What you must do
- Update record retention policies to keep transaction records for at least 10 years from transaction date and customer ID records for 10 years after account closure.
- Implement monitoring to detect when existing customers or beneficial owners become PEPs and require senior management approval to continue the relationship.
- Ensure Principal Officer and staff have timely access to customer identification data, transaction records, and other CDD information.
- Review and align internal procedures with the amended PMLA 2009 requirements, including enhanced monitoring for PEP accounts.
Who it affects
Primary (Urban) Co-operative Banks, Compliance officers and Principal Officers at UCBs, Senior management at UCBs handling PEP relationships
What is the new record retention period for transaction records under PMLA 2009?
Transaction records must be maintained for at least 10 years from the date of the transaction between the bank and the client.
How should banks handle an existing customer who becomes a Politically Exposed Person (PEP)?
Banks must obtain senior management approval to continue the business relationship and subject the account to enhanced CDD measures and ongoing monitoring.
What access should the Principal Officer have to comply with these rules?
The Principal Officer and appropriate staff must have timely access to customer identification data, CDD information, transaction records, and other relevant information to discharge their responsibilities.