PMLA Rules Amended: New KYC & NPO Reporting for UCBs
Current · Source: Reserve Bank of India · RBI/2009-10/303 · issued 03 Feb 2010 · ~2 min read
Quick answerRBI mandates UCBs to report NPO transactions above ₹10 lakh to FIU-IND monthly, verify identity for walk-in transactions ≥₹50,000, and maintain records for 10 years. Suspicious transaction reporting must remain confidential.
The rule, in the simplest words
If a non-profit organization (a charity or group that helps people) gets more than ₹10 lakh in one go, the bank must write it down and tell the government's financial crime office (FIU-IND) every month by the 15th.
If someone who is not a bank customer (a walk-in) wants to do a cash transaction of ₹50,000 or more, the bank must check their ID right away, even if it's a few small payments that add up.
The bank must keep all records of customer deals and transactions for 10 years.
If the bank sees a suspicious transaction (one that seems fishy), it must report it to the government but keep it a secret—no one else can know about the report.
The old rule that let banks check a customer's ID a little later after the deal is gone; now ID must be checked before or during the transaction.
How it plays out — a real example
Ravi, a compliance officer at a UCB in Surat, gets a monthly report showing a local NGO received ₹12 lakh in donations through three walk-in cash deposits of ₹50,000 each. He flags these as connected transactions, verifies the NGO's ID immediately, and files the report to FIU-IND by the 15th, keeping the suspicious transaction report confidential from branch staff.
What changed
The Prevention of Money-laundering Rules were amended in November 2009, introducing a definition for 'non-profit organization' and requiring banks to record all NPO receipts exceeding ₹10 lakh. The record retention period was extended to 10 years, and the requirement to verify identity for non-account based customers (walk-ins) for transactions of ₹50,000 or more was added. The earlier provision allowing identity verification within a reasonable time after the transaction was removed.
What it means for you
UCBs must now systematically monitor and report large NPO transactions, increasing compliance costs and operational focus on anti-money laundering. The stricter walk-in customer verification rule closes a loophole, requiring immediate KYC for cash transactions above ₹50,000. Banks need to update their systems to flag connected transactions and ensure confidentiality of STR filings.
What you must do
Update internal AML policies to include the new NPO definition and ₹10 lakh reporting threshold.
Configure transaction monitoring systems to flag walk-in transactions of ₹50,000 or more and connected smaller transactions.
Train staff on immediate identity verification for non-account based customers and on maintaining confidentiality of STR submissions.
Ensure monthly reporting to FIU-IND of all NPO transactions above ₹10 lakh by the 15th of the succeeding month.
Extend record retention for all client and transaction records to 10 years as per amended Rule 6.
Who it affects
All Primary (Urban) Co-operative Banks, Compliance and AML teams, Branch staff handling cash transactions, Non-profit organization account holders
❓ Common questions
What is the new reporting requirement for non-profit organizations?
UCBs 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 of ₹50,000 or more by a non-account based customer, you must verify their identity and address immediately. If you suspect a customer is splitting a larger transaction into smaller ones to avoid this threshold, you must still verify identity and consider filing a Suspicious Transaction Report.
What is the new record retention period?
All records referred to in Rule 3 (including transaction records and client identity documents) must be maintained for a period of ten years from the date of the transaction.
📜 Read the original circular — full text as issued by RBI
RBI/2009-10/303
UBD. BPD. (PCB).Cir. No. 41 /12.05.001/2009-10
February 3, 2010
The Chief Executive Officers of
All Primary (Urban) Co-operative Banks
Dear Sir,
UCBs - 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 :
(i) 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.
(ii) 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. Urban Cooperative Banks are advised to strictly follow the amended provisions of PMLA Rules and ensure meticulous compliance to these Rules.
Yours faithfully,
(A.K.Khound)
Chief General Manager-in-Charge
Encl: As above
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2009-10/303 · issued 03 Feb 2010. The plain-English explanation above is BankPulse’s own independent summary.
Configure transaction monitoring systems to flag walk-in transactions of ₹50,000 or more and connected smaller transactions.
📜 Compliance
Update internal AML policies to include the new NPO definition and ₹10 lakh reporting threshold.
Train staff on immediate identity verification for non-account based customers and on maintaining confidentiality of STR submissions.
Ensure monthly reporting to FIU-IND of all NPO transactions above ₹10 lakh by the 15th of the succeeding month.
Extend record retention for all client and transaction records to 10 years as per amended Rule 6.
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 Primary (Urban) Co-operative Banks, Compliance and AML teams, Branch staff handling cash transactions, Non-profit organization account holders), your first concrete step on “PMLA Rules Amended: New KYC & NPO Reporting for UCBs” is: “Update internal AML policies to include the new NPO definition and ₹10 lakh reporting threshold.” (RBI issued this 03 Feb 2010).
Circular: RBI/2009-10/303 -- PMLA Rules Amended: New KYC & NPO Reporting for UCBs
Issued: 03 Feb 2010
Action required: Update internal AML policies to include the new NPO definition and ₹10 lakh reporting threshold.
Action required: Configure transaction monitoring systems to flag walk-in transactions of ₹50,000 or more and connected smaller transactions.
Action required: Train staff on immediate identity verification for non-account based customers and on maintaining confidentiality of STR submissions.
Action required: Ensure monthly reporting to FIU-IND of all NPO transactions above ₹10 lakh by the 15th of the succeeding month.
Action required: Extend record retention for all client and transaction records to 10 years as per amended Rule 6.
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.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=5487&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.
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