What changed
RBI observed a surge in fictitious cheap fund offers via letters, emails, and SMS, including fake RBI communications. It noted fraudsters collect processing fees through multiple bank accounts in India, then immediately withdraw funds. The circular reinforces existing prohibitions and directs AD Category-I banks to be extra cautious with such accounts.
What it means for you
Banks must tighten KYC/AML checks on accounts that may be used to collect fees for these scams. Any resident collecting or remitting payments for such schemes faces FEMA contravention proceedings. This increases compliance risk for lenders if they fail to detect and report suspicious transactions.
What you must do
- Review and strengthen KYC/AML procedures for accounts with unusual transaction patterns, especially multiple small credits followed by immediate withdrawals.
- Train branch staff to identify red flags like accounts opened in individual/proprietary names for collecting processing fees.
- Alert customers and constituents about fictitious offers and the prohibition on remittances for lotteries or money circulation schemes.
- Report any suspicious accounts or transactions to the appropriate authorities under FEMA and AML guidelines.
Who it affects
Authorised Dealer Category-I banks, Bank branches handling remittances and account openings, Compliance and AML teams, Customers and residents receiving such offers
What types of remittances are prohibited under this circular?
Remittances for participation in lotteries, money circulation schemes, or any fictitious offers of cheap funds, including fees like processing, transaction, or tax clearance charges, are prohibited under FEMA.
What should banks do if they suspect an account is being used for such scams?
Banks should exercise extra vigilance, apply enhanced KYC/AML checks, and report suspicious transactions to authorities. They must also avoid processing remittances linked to these schemes.
Are customers liable if they participate in these schemes?
Yes, any resident collecting or remitting payments for such schemes directly or indirectly outside India is liable for FEMA contravention and violation of KYC/AML norms.