What changed
The amendment inserts a definition for 'non-profit organization' and requires banks to record all receipts by such entities exceeding ₹10 lakh. It also mandates identity verification for non-account-based customers (walk-ins) for transactions of ₹50,000 or more, and for all international money transfers. The earlier provision allowing delayed identity verification after account opening has been removed.
What it means for you
Co-operative banks must now track and report large donations to non-profits, increasing compliance burden. Walk-in transactions above ₹50,000 require upfront KYC, and structuring transactions to avoid this threshold must be treated as suspicious. Banks must also ensure strict confidentiality around STR filings.
What you must do
- Update internal systems to capture and report all non-profit receipts over ₹10 lakh to FIU-IND by the 15th of each month.
- Implement KYC verification for walk-in customers for any single or connected transaction of ₹50,000 or more.
- Train staff to identify and report structuring of transactions below ₹50,000 as suspicious.
- Ensure all international money transfer operations include customer identity verification.
- Maintain records of transactions referred to in Rule 3 for ten years from the date of transaction and keep STR-related information confidential.
Who it affects
State Co-operative Banks (StCBs), Central Co-operative Banks (DCCBs), 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 submit a monthly report to FIU-IND by the 15th of the succeeding month.
How should we handle walk-in customers for transactions below ₹50,000?
If a bank suspects a customer is intentionally splitting a larger transaction into smaller ones to stay below ₹50,000, the bank must verify the customer's identity and address, and consider filing a Suspicious Transaction Report (STR) to FIU-IND.
What is the record retention period under the amended rules?
Records of transactions referred to in Rule 3 must be maintained for ten years from the date of the transaction between the client and the bank.