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PMLA Rules Amended: New KYC & NPO Reporting Norms

Current · Source: Reserve Bank of India · RBI/2009-10/285 · issued 12 Jan 2010 · ~2 min read

Quick answerRBI mandates banks to maintain records of NPO receipts over ₹10 lakh, report monthly to FIU-IND, verify walk-in customer identity for transactions ≥₹50,000, and keep STR confidentiality. Record retention extended to 10 years.

The rule, in the simplest words

Banks must keep a record of all money received by non-profit organizations (groups that help people without making profit) that is more than ₹10 lakh, and send a report about it every month to FIU-IND (the government office that watches for money laundering).
If a person who does not have an account at the bank comes in to do a transaction of ₹50,000 or more (or several smaller transactions that seem connected), the bank must check their identity (like asking for a photo ID).
Banks must keep all records of client transactions for 10 years from the date of the transaction.
Banks and their employees must keep suspicious transaction reports (reports about possibly illegal money moves) completely secret and not tell the client about them.
If someone tries to break a big transaction into smaller ones below ₹50,000 to avoid identity checks, the bank must report it as suspicious.

How it plays out — a real example

A KYC & compliance officer in Indore notices a walk-in customer wants to deposit ₹48,000 in cash. The officer remembers the new rule: for any transaction of ₹50,000 or more, identity must be verified. Since this is just under the limit, the officer stays alert and checks if the customer has done similar small deposits recently. Seeing three such deposits in one week, the officer flags it as possible structuring and files a confidential suspicious transaction report to FIU-IND, keeping it secret from the customer.

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

❓ Common questions

Regulatory timeline

Stated effective date effective November 12, 2009
Decoded by BankPulse 2026-06-19 07:44 IST

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

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.

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

RBI/2009-10/285

 DBOD. AML.BC. No. 68 /14.01.001/2009-10

 January 12,  2010

 The Chairmen and Chief Executive Officers 

 (All Scheduled Commercial Banks excluding RRBs) 

 / Financial Institutions/ Local Area Banks 

 Dear Sir,

 Prevention of Money-laundering (Maintenance of Records of the Nature and Value of Transactions, the Procedure and Manner of Maintaining and Time for Furnishing Information and Verification and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Amendment Rules, 2009 - Obligation of banks/Financial institutions 

 As you are aware Government of India vide its Notification No.13/2009/F.No.6/8/2009-ES dated November 12, 2009, has amended  the Prevention of Money-laundering (Maintenance of Records of the Nature and Value of Transactions, the Procedure and Manner of Maintaining and Time for Furnishing Information and Verification and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Rules, 2005. A copy of the Notification is enclosed for ready reference.

 2. Some of the salient features of the amendment, relevant to banks and financial institutions, are as under:

 Clause (ca) inserted in sub-rule (1) of Rule 2 defines "non-profit organization"

 Clause (BA) inserted in sub-rule (1) of Rule 3  requires  banks/financial  institutions  to maintain proper record of all transactions involving receipts by non-profit organizations of value more than rupees ten lakh or its equivalent in foreign currency.

 The amended Rule 6 provides  that the records referred to in rule 3 should be maintained for a period of ten years from the date of transactions between the client and the banking company/financial institution.

 A proviso has been inserted in  sub-rule (3) of Rule 8, which requires  that banks /financial institutions and its employees should keep the fact  of furnishing suspicious transaction information strictly confidential.

 Rule 9, now requires banks/financial institutions to verify identity of the non-account based customer while carrying out transaction of an amount equal to or exceeding rupees fifty thousand, whether conducted as a   single transaction or several transactions that appear to be connected.

 The amended sub-rule (1) of Rule 9, in terms of clause (b) (ii) requires verification of identity  of the customer  for all international money transfer operations.

 Proviso to Rule 9 (1) regarding the verification of  identity of the client within a reasonable time after opening the account/execution of the transaction has been deleted . 

 3. Accordingly, in view of amendments to the above Rules, banks  / financial institutions  are  required to :

 Maintain proper record  of all transactions involving receipts by non- profit organizations of value more than rupees ten lakh or its equivalent  in foreign currency  and to forward a report to FIU-IND  of all such transactions in the prescribed format  every month  by the 15th of the succeeding month.

 In case of transactions carried out by a non-account based customer, that is a walk-in customer, where the amount of transaction is equal to or exceeds rupees fifty thousand, whether conducted as a single transaction or several transactions that appear to be connected, the customer's identity and address should be verified.  Further, if a bank has reason to believe that a customer is intentionally structuring a transaction into a series of transactions below the threshold of Rs.50,000/-  the bank should verify identity and address of the customer and also consider filing  a suspicious transaction report (STR)  to FIU-IND. 

 4. Banks/ financial institutions are advised to strictly follow the amended provisions of PMLA Rules and ensure meticulous compliance to these Rules. 

 Yours faithfully,

 (Vinay Baijal)

 Chief General Manager

 Encl: As above

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2009-10/285 · issued 12 Jan 2010. The plain-English explanation above is BankPulse’s own independent summary.

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Who does what — compliance checklist

🏦 Branch Manager

Implement identity verification for all walk-in customers for single or connected transactions of ₹50,000 or more.

📜 Compliance

Update internal AML/KYC policies to include NPO transaction monitoring and monthly reporting to FIU-IND by the 15th.
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.

Grouped from the action items above — a single circular may involve more than one team.

Worked example & action-note template

Example: if you are a Compliance officer at a bank this circular applies to (All scheduled commercial banks (excluding RRBs), Financial institutions, Local area banks, Compliance and AML teams, Branch staff handling cash transactions), your first concrete step on “PMLA Rules Amended: New KYC & NPO Reporting Norms” is: “Update internal AML/KYC policies to include NPO transaction monitoring and monthly reporting to FIU-IND by the 15th.” (RBI issued this 12 Jan 2010).

Circular: RBI/2009-10/285 -- PMLA Rules Amended: New KYC & NPO Reporting Norms
Issued: 12 Jan 2010
Action required: Update internal AML/KYC policies to include NPO transaction monitoring and monthly reporting to FIU-IND by the 15th.
Action required: Implement identity verification for all walk-in customers for single or connected transactions of ₹50,000 or more.
Action required: Ensure suspicious transaction reports are kept strictly confidential and not disclosed to clients.
Action required: Extend record retention for all client transaction records to 10 years from the transaction date.
Action required: Train staff on detecting structuring of transactions below ₹50,000 and filing STRs accordingly.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________

Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.

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Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=5457&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.