What changed
RBI added bullion dealers (including sub-dealers) and jewellers to the illustrative list of higher-risk customers requiring enhanced due diligence. Banks must now treat these accounts as high-risk and subject them to intensified monitoring for suspicious transaction reporting to FIU-IND.
What it means for you
Urban co-operative banks must update their KYC/AML risk classification to include bullion and jewellery businesses as high-risk. This means stricter customer due diligence, more frequent transaction reviews, and a lower threshold for filing Suspicious Transaction Reports. Non-compliance can attract penalties under the Banking Regulation Act and PMLA rules.
What you must do
- Reclassify all existing and new accounts of bullion dealers, sub-dealers, and jewellers as high-risk.
- Apply enhanced due diligence measures for these accounts, including source of funds and business rationale.
- Intensify transaction monitoring for these accounts and ensure timely filing of STRs to FIU-IND.
- Update internal KYC/AML policies and staff training to reflect this new risk category.
Who it affects
Primary (Urban) Co-operative Banks, Bullion dealers and sub-dealers, Jewellers, Compliance and AML teams at urban co-operative banks
Why are bullion dealers and jewellers now considered high-risk?
Cash-intensive businesses like bullion and jewellery are more vulnerable to money laundering and terrorist financing, so RBI mandates enhanced due diligence and monitoring for these accounts.
What specific actions must banks take for these high-risk accounts?
Banks must apply enhanced due diligence, intensify transaction monitoring, and identify suspicious transactions for filing STRs to FIU-IND, as per earlier KYC/AML circulars.
What happens if a bank fails to comply with this directive?
Non-compliance may attract penalties under Section 35A of the Banking Regulation Act, 1949 and the Prevention of Money-laundering Rules, 2005.