What changed
The PMLA Rules 2005 were amended effective November 12, 2009. Key changes include: a definition for 'non-profit organization' added; banks must record all NPO receipts exceeding ₹10 lakh and report monthly to FIU-IND; record retention period extended to 10 years; confidentiality mandated for suspicious transaction reports; identity verification required for walk-in customers for transactions of ₹50,000 or more; and the proviso allowing delayed verification of identity was deleted.
What it means for you
Banks must now closely monitor NPO transactions above ₹10 lakh and submit monthly reports, increasing compliance burden. Walk-in customer KYC for transactions ≥₹50,000 becomes mandatory, and structuring transactions below this threshold may trigger STR filing. The 10-year record retention and strict confidentiality rules require robust data management and training.
What you must do
- Update internal AML/KYC policies to include NPO transaction monitoring and monthly reporting to FIU-IND by the 15th.
- Implement identity verification for all walk-in customers for single or connected transactions of ₹50,000 or more.
- Ensure suspicious transaction reports are kept strictly confidential and not disclosed to clients.
- Extend record retention for all client transaction records to 10 years from the transaction date.
- Train staff on detecting structuring of transactions below ₹50,000 and filing STRs accordingly.
Who it affects
All scheduled commercial banks (excluding RRBs), Financial institutions, Local area banks, Compliance and AML teams, Branch staff handling cash transactions
What is the new reporting requirement for non-profit organizations?
Banks must maintain records of all transactions involving receipts by non-profit organizations exceeding ₹10 lakh (or equivalent in foreign currency) and report these to FIU-IND every month by the 15th of the succeeding month.
How should we handle walk-in customers under the amended rules?
For any transaction by a walk-in customer of ₹50,000 or more, whether single or connected, you must verify their identity and address. If you suspect structuring below this threshold, verify identity and consider filing a suspicious transaction report.
What is the new record retention period?
Records referred to in Rule 3 must be maintained for ten years from the date of the transaction between the client and the bank or financial institution.