KYC/AML: Bullion Dealers & Jewellers Now High-Risk Accounts
Current · Source: Reserve Bank of India · RBI/2010-11/396 · issued 02 Feb 2011 · ~1 min read
Quick answerRBI directs all state and central co-operative banks to categorise accounts of bullion dealers and jewellers as high risk, requiring enhanced due diligence and intensified transaction monitoring under PMLA, 2002.
The rule, in the simplest words
Banks must put bullion dealers (people who buy/sell gold bars) and jewellers in the 'high risk' group, meaning they need extra checks.
For these accounts, banks have to do 'enhanced due diligence' (extra careful checking of who the customer is and where their money comes from).
Banks must watch these accounts more closely ('intensified transaction monitoring') to spot anything fishy.
If a bank sees something suspicious in these accounts, it must tell the government's financial crime unit (FIU-IND) using a special report called an STR.
If a bank doesn't follow these rules, it can get fined under the Banking Regulation Act and PMLA rules.
How it plays out — a real example
A KYC & compliance officer in Surat, Priya, reviews a new account for a local jeweller. She marks it as 'high risk' and asks for extra documents like the jeweller's GST returns and proof of gold purchases. Later, when the jeweller makes several large cash deposits in one week, Priya flags the transactions and files an STR with FIU-IND, knowing she must follow the RBI's rule to avoid penalties.
What changed
RBI has added bullion dealers (including sub-dealers) and jewellers to the list of customer categories that banks must treat as high risk. These accounts now require enhanced due diligence and intensified transaction monitoring, and any suspicious transactions must be reported to FIU-IND via STRs.
What it means for you
Co-operative banks must now apply stricter KYC/AML checks on bullion and jewellery accounts due to cash intensity and higher money laundering risk. This increases compliance burden but strengthens the fight against financial crime. Non-compliance can attract penalties under the Banking Regulation Act and PMLA rules.
What you must do
Categorise all existing and new accounts of bullion dealers, sub-dealers, and jewellers as high risk.
Apply enhanced due diligence measures on these accounts as per earlier KYC guidelines.
Implement intensified transaction monitoring for these high-risk accounts.
Identify and file Suspicious Transaction Reports (STRs) with FIU-IND for any suspicious activity.
Ensure compliance with Section 35A of BR Act and PMLA Rules to avoid penalties.
Who it affects
State and Central Co-operative Banks, Bullion dealers and sub-dealers, Jewellers, Compliance and AML teams at co-operative banks
❓ Common questions
Why are bullion dealers and jewellers now considered high risk?
RBI has identified these businesses as cash intensive, which increases the risk of money laundering and terrorist financing. Hence, they require enhanced due diligence and monitoring.
What are the consequences of non-compliance with this circular?
Non-compliance can attract penalties under the Banking Regulation Act, 1949 and the Prevention of Money-laundering Act, 2002 rules.
Do we need to file STRs for all transactions in these accounts?
No, only suspicious transactions must be reported. However, intensified monitoring will help identify such transactions for STR filing to FIU-IND.
📜 Read the original circular — full text as issued by RBI
RBI/2010-11/396
RPCD.CO.RCB.AML.BC. No. 50/07.40.00/ 2010-11
February 2, 2011
The Chief Executives of
all State and Central Co-operative Banks
Dear Sir,
Know Your Customer (KYC) norms / Anti-Money Laundering (AML)
standards/Combating of Financing of Terrorism (CFT)/Obligation of banks
under PMLA, 2002
Please refer to our circulars RPCD.AML.BC.No.80/07.40.00/2004-05 dated February 18, 2005 and RPCD.CO.RF.AML. BC.No.51/07.40.00/2007-08 dated February 28, 2008 on Know Your Customer (KYC) norms /Anti-Money Laundering (AML) standards/Combating of Financing of Terrorism (CFT)/Obligation of banks under PMLA, 2002.
2. In terms of Paragraph 2 vi of the Guidelines on 'Know Your Customer' Norms and Anti Money Laundering Measures enclosed to our circular RPCD.AML.BC.No.80/07.40.00/ 2004-05 dated February 18, 2005 banks are required to apply enhanced due diligence measures on higher risk customers. Some illustrative examples of customers requiring higher due diligence have also been given in the paragraph under reference. It is further advised that in view of the risks involved in cash intensive businesses, accounts of bullion dealers (including sub-dealers) & jewellers should also be categorised by banks as ‘high risk’ requiring enhanced due diligence.
3. Accordingly, in terms of paragraph 4 of the Guidelines on 'Know Your Customer' Norms and Anti Money Laundering Measures enclosed to our circular RPCD.AML.BC.No.80/07.40.00/2004-05 dated February 18, 2005, banks are also required to subject these 'high risk accounts ' to intensified transaction monitoring. High risk associated with such accounts should be taken into account by banks to identify suspicious transactions for filing Suspicious Transaction Reports (STRs) to FIU-IND.
4. These guidelines are issued under Section 35A of the Banking Regulation Act, 1949 (As applicable to Co-operative Societies) read with Rule 7 of 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. Any contravention thereof or non-compliance shall attract penalties under the relevant Act/Rules.
Yours faithfully,
(B.P.Vijayendra)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2010-11/396 · issued 02 Feb 2011. The plain-English explanation above is BankPulse’s own independent summary.
Example: if you are a Compliance officer at a bank this circular applies to (State and Central Co-operative Banks, Bullion dealers and sub-dealers, Jewellers, Compliance and AML teams at co-operative banks), your first concrete step on “KYC/AML: Bullion Dealers & Jewellers Now High-Risk Accounts” is: “Categorise all existing and new accounts of bullion dealers, sub-dealers, and jewellers as high risk.” (RBI issued this 02 Feb 2011).
Action required: Categorise all existing and new accounts of bullion dealers, sub-dealers, and jewellers as high risk.
Action required: Apply enhanced due diligence measures on these accounts as per earlier KYC guidelines.
Action required: Implement intensified transaction monitoring for these high-risk accounts.
Action required: Identify and file Suspicious Transaction Reports (STRs) with FIU-IND for any suspicious activity.
Action required: Ensure compliance with Section 35A of BR Act and PMLA Rules to avoid penalties.
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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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=6247&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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