KYC/AML/CFT Master Circular for Urban Co-op Banks

What changed

This July 2, 2012 master circular consolidates all prior KYC/AML/CFT instructions for urban co-operative banks issued up to June 30, 2012. It is based on FATF recommendations and the Basel Committee's Customer Due Diligence paper. The circular also includes updated UAPA orders and Government notifications related to terrorist financing.

What it means for you

Urban co-operative banks must ensure their KYC policies are Board-approved and cover customer acceptance, identification, transaction monitoring, and risk management. Banks need to identify beneficial owners and report cash/suspicious transactions to FIU-India. Failure to comply can lead to penalties under Section 35A of the Banking Regulation Act, 1949 (as applicable to co-operative societies).

What banks were required to do at the time

• Review and update your KYC/AML/CFT policy with Board approval, incorporating FATF and Basel CDD guidelines.
• Ensure customer identification procedures include beneficial owners and professional intermediaries as defined.
• Implement transaction monitoring systems to detect suspicious activities and report them to FIU-India.
• Maintain records of transactions as per PMLA requirements and preserve them for the prescribed period.
• Train staff on KYC norms, AML measures, and CFT obligations to prevent misuse by criminal elements.

Who it affects

Primary (Urban) Co-operative Banks, Chief Executive Officers of Urban Co-operative Banks, Compliance and risk management teams, Branch managers handling account opening and transaction monitoring