Home › Circulars › RBI/2009-10/269

KYC/AML/CFT Obligations for Payment System Operators

No longer current — withdrawn, no replacement on file yet

Source: Reserve Bank of India · RBI/2009-10/269 · issued 22 Dec 2009 · ~2 min read

Quick answerRBI mandates all PSS Act-authorized payment system operators to implement Board-approved KYC/AML/CFT policies under PMLA 2002, covering cross-border remittances and agent compliance, effective December 22, 2009.

What changed

Payment system operators were brought under the Prevention of Money Laundering Act, 2002 via the 2009 amendment, requiring them to adopt KYC/AML/CFT guidelines. RBI issued detailed instructions in Annex-I and Annex-II for cross-border inward remittances, aligned with FATF recommendations. Operators must ensure their agents and sub-agents also comply with these norms.

What it means for you

Banks and payment firms must formalize KYC/AML/CFT frameworks with board approval, increasing compliance costs but strengthening anti-money laundering defenses. Non-compliance risks penal action under the PSS Act. The circular extends liability to agents, requiring robust oversight of third-party networks.

Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.

What banks were required to do at the time

Review and update your KYC/AML/CFT policy with board approval to align with PMLA 2002 and FATF standards.
Ensure cross-border inward remittance processes comply with the detailed guidelines in Annex-I and Annex-II.
Verify that all agents and sub-agents adhere to these KYC/AML/CFT norms and document their compliance.
Communicate the circular's contents to all relevant constituents and maintain audit trails.
Prepare for potential penal provisions under the PSS Act for any guideline violations.

Who it affects

All payment system operators authorized under the Payment and Settlement Systems Act, 2007, Agents and sub-agents of payment system operators in India, Banks involved in cross-border inward remittance activities

❓ Common questions

Regulatory timeline

Stated effective date effective December 22, 2009
Decoded by BankPulse 2026-06-19 07:52 IST
Status change: withdrawn 03 Aug 2026, 04:00 IST

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

What is the legal basis for these KYC/AML/CFT guidelines?

The guidelines are issued under Section 18 of the Payment and Settlement Systems Act, 2007, and are mandated by the Prevention of Money Laundering Act, 2002 as amended in 2009.

Do these guidelines apply to agents of payment system operators?

Yes, the guidelines apply mutatis mutandis to all agents and sub-agents, and the operator is solely responsible for ensuring their compliance.

What happens if a payment system operator does not comply?

Non-compliance attracts penal provisions under the PSS Act or the rules made thereunder, as stated in the circular.

📜 Read the original circular — full text as issued by RBI

RBI/2009-10/269 
 DPSS.CO.AD.No./1320/02.27.005/2009-10 
 December 22, 2009 
 To 
 All the Payment System Operators authorized under the Payment and Settlement Systems Act, 2007 
 Madam/Dear Sir, 
 Know Your Customer (KYC) norms/Anti-Money Laundering (AML) standards/ Combating the Financing of Terrorism (CFT) obligation of Payment System Operators under Prevention of Money Laundering Act, (PMLA), 2002, as amended by Prevention of Money Laundering (Amendment) Act, 2009 
 Attention of all the Payment System Operators authorized under the Payment and Settlement Systems Act, 2007 (PSS Act) is invited to the terms and conditions subject to which the Certificates of Authorisation were issued specifying inter-alia to adhere to the provisions of the Prevention of Money Laundering (Amendment) Act and the rules framed thereunder.
 2.    In terms of Prevention of Money Laundering Act, (PMLA), 2002, as amended by Prevention of Money Laundering (Amendment) Act, 2009, all the Payment System Operators have been brought under the purview of PMLA, 2002. Therefore, detailed instructions on Know Your Customer (KYC) norms/Anti-Money Laundering (AML) standards/Combating the Financing of Terrorism (CFT) in respect of cross-border inward remittance activities, in the context of the Financial Action Task Force (FATF) Recommendations on Anti Money Laundering (AML) standards and on Combating the Financing of Terrorism (CFT) have been prescribed.
 3.    Accordingly, guidelines on obligation of Payment System Operators under PMLA, 2002 as amended by Prevention of Money Laundering (Amendment) Act, 2009 are given in Annex-I and Annex-II . All Payment System Operators should have in place a proper policy framework on ‘Know Your Customer’, ‘Anti-Money Laundering’ and Combating the Financing of Terrorism measures with the approval of their Board.
 4.  These guidelines would also be applicable mutatis mutandis to all the agents and sub-agents of the Payment System Operators in India and it will be their sole responsibility to ensure that their agents and sub-agents also adhere to these guidelines.
 5. Payment System Operators should bring the contents of this circular to the notice of their constituents concerned.
 6. The directions contained in this circular have been issued under Section 18 of the PSS Act and non-compliance with the guidelines would attract penal provisions of the Act concerned or Rules made there under. 
 Please acknowledge receipt.  
 Yours faithfully 
 (G. Padmanabhan)
 Chief General Manager

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2009-10/269 · issued 22 Dec 2009. The plain-English explanation above is BankPulse’s own independent summary.

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Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=5432&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.