What changed
This master circular consolidates all previous KYC/AML/CFT guidelines issued up to June 30, 2012 into a single document. It includes updated procedures for implementing Section 51A of the Unlawful Activities (Prevention) Act, 1967 regarding freezing of assets. The circular also incorporates FATF recommendations on combating financing of terrorism.
What it means for you
Banks must ensure their KYC policies are board-approved and aligned with FATF standards on customer due diligence. The circular mandates strict monitoring of suspicious transactions and reporting to authorities. Non-compliance can lead to penalties under the Banking Regulation Act, 1949.
What you must do
- Review and update your bank's KYC/AML policy to align with this master circular and FATF recommendations.
- Ensure customer identification procedures are followed for all account openings and transaction monitoring.
- Implement procedures for freezing assets under Section 51A of the Unlawful Activities (Prevention) Act, 1967.
- Train staff on reporting suspicious transactions to the appropriate authority as per PMLA, 2002.
Who it affects
All scheduled commercial banks (excluding RRBs), All India Financial Institutions, Local Area Banks
What is the legal basis for these KYC/AML guidelines?
The guidelines are issued under Section 35A of the Banking Regulation Act, 1949 and Rule 7 of the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005.
What happens if a bank fails to comply with these instructions?
Any contravention or non-compliance will attract penalties under the Banking Regulation Act, 1949.
Does this circular apply to foreign branches of Indian banks?
Yes, the guidelines on KYC/AML/CFT are applicable to branches and subsidiaries of Indian banks outside India.