RBI Consolidates KYC/AML/CFT Norms for Banks (2010)

RBI/2010-11/75 DBOD. AML. BC. No. 2/14 .01.001/2010-11 July 1, 2010 The Chairmen/Chief Executive Officers All Scheduled Commercial Banks (excluding RRBs) / All India Financial Institutions/ Local Area Banks Dear Sir, Master Circular – 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 Master Circular DBOD.AML.BC.No.2/ 14.01.001 / 2009 – 10 dated July 01, 2009 consolidating instructions/guidelines issued to banks till June 30, 2009 on Know Your Customer (KYC) norms /Anti-Money Laundering (AML) standards/Combating of Financing of Terrorism (CFT)/Obligation of banks under PMLA, 2002. This Master Circular is a consolidation of the instructions on Know Your Customer (KYC) norms /Anti-Money Laundering (AML) standards/Combating of Financing of Terrorism (CFT)/Obligation of banks under PMLA, 2002 issued up to June 30, 2010. 2. The Master Circular has been placed on the RBI website: ( http://www.rbi.org.in ) Yours faithfully, (Vinay Baijal) Chief General Manager Master Circular on Know Your Customer (KYC) norms/Anti-Money Laundering (AML) standards/Combating of Financing of Terrorism (CFT)/Obligation of banks under Prevention of Money Laundering Act, (PMLA), 2002 Purpose Banks were advised to follow certain customer identification procedure for opening of accounts and monitoring transactions of a suspicious nature for the purpose of reporting it to appropriate authority. These ‘Know Your Customer’ guidelines have been revisited in the context of the Recommendations made by the Financial Action Task Force (FATF) on Anti Money Laundering (AML) standards and on Combating Financing of Terrorism (CFT). Detailed guidelines based on the Recommendations of the Financial Action Task Force and the paper issued on Customer Due Diligence (CDD) for banks by the Basel Committee on Banking Supervision, with indicative suggestions wherever considered necessary, have been issued. Banks have been advised to ensure that a proper policy framework on ‘Know Your Customer’ and Anti-Money Laundering measures with the approval of the Board is formulated and put in place. 2 . This Master Circular aims at consolidating all the instructions/guidelines issued by RBI on Know Your Customer (KYC) norms/Anti-Money Laundering (AML) standards/Combating Financing of Terrorism (CFT)/Obligations of banks under PMLA, 2002. The Master Circular has been placed on the RBI website ( http://www.rbi.org.in ). Previous instructions A list of circulars issued in this regard is given in Annex – IV Application i) The instructions, contained in the master circular, are applicable to All India Financial Institutions,  all scheduled commercial banks excluding RRBs and Local Area Banks. ii) These guidelines are issued under Section 35A of the Banking Regulation Act, 1949 and 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 Banking Regulation Act. iii) This Master Circular consolidates all the circulars issued on the subject up to June 30, 2010. Structure 1

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2010-11/75 · issued 01 Jul 2010. The plain-English explanation above is BankPulse’s own independent summary.

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