What changed
RBI issued detailed procedures for determining beneficial ownership under PMLA Rules, 2005, as advised by the Government of India. This replaces earlier general guidance with specific thresholds and a stepwise identification process for juridical persons and trusts.
What it means for you
Banks must now systematically identify the natural person behind corporate, partnership, and trust clients using defined ownership thresholds. This tightens AML/CFT compliance and reduces opacity in client structures. Non-compliance could expose banks to regulatory action under PMLA.
What you must do
- Update your KYC policy to incorporate the three-step beneficial ownership identification process for non-individual clients.
- Train relationship managers and compliance teams on the new thresholds: >25% for companies, >15% for partnerships and unincorporated associations.
- For trust clients, capture details of settlor, trustee, protector, and beneficiaries with 15% or more interest.
- Exempt listed companies and their majority-owned subsidiaries from beneficial owner identification, but document the exemption basis.
- Review existing high-risk client files to ensure beneficial ownership is documented as per the new rules.
Who it affects
All Scheduled Commercial Banks (excluding RRBs), Local Area Banks, All India Financial Institutions, Compliance and KYC teams, Relationship managers handling corporate and trust accounts
What is the threshold for controlling ownership in a company?
For a company, controlling ownership interest means ownership of or entitlement to more than 25% of shares, capital, or profits.
Are listed companies exempt from beneficial ownership identification?
Yes, if the client or the owner of the controlling interest is a company listed on a stock exchange, or a majority-owned subsidiary of such a company, you do not need to identify or verify the beneficial owner.
What if no natural person is identified through ownership or control?
If no natural person is identified through controlling ownership or other control means, you must identify the natural person who holds the position of senior managing official.