What changed
RBI observed that banks were not performing customer due diligence or maintaining records while marketing third-party products as agents, and were failing to file Cash Transaction Reports (CTRs) or Suspicious Transaction Reports (STRs) where required. Investigations also revealed violations for walk-in customers, prompting RBI to reiterate and strengthen existing KYC/AML/CFT guidelines for strict compliance.
What it means for you
Banks must now rigorously apply KYC norms to all third-party product distribution, treating these as business relationships requiring full customer due diligence. The ₹50,000 threshold for identity verification applies to both account-based and walk-in customers, and any structuring below this limit must trigger an STR. Non-compliance could lead to regulatory action, including penalties.
What you must do
- Review and update KYC/AML policies to explicitly cover third-party product distribution and walk-in transactions.
- Ensure identity verification for walk-in customers on transactions of ₹50,000 or more (single or connected series) and PAN quoting for specific high-value transactions (remittances, travellers' cheques, gold purchases, account opening/time deposits over ₹50,000).
- Implement monitoring systems to detect structuring of transactions below ₹50,000 and file STRs with FIU-IND when suspected.
- Train staff on enhanced due diligence for non-account-based customers and third-party agent activities.
- Conduct internal audits to verify compliance with CTR/STR filing requirements for structuring below ₹50,000.
Who it affects
All Scheduled Commercial Banks (excluding RRBs), Local Area Banks, All India Financial Institutions, Bank branches handling third-party product sales, Compliance and AML teams
What is the threshold for verifying identity of walk-in customers?
For any transaction equal to or exceeding ₹50,000, whether single or connected series, banks must verify the customer's identity and address. If structuring below ₹50,000 is suspected, identity must be verified and an STR filed.
Are banks required to file CTRs for third-party product transactions?
Yes, banks must file Cash Transaction Reports (CTRs) and Suspicious Transaction Reports (STRs) for structuring transactions below ₹50,000, including those related to third-party products distributed as agents, as per existing KYC/AML guidelines.
What documentation is needed for high-value remittances or travellers' cheques?
For remittances or travellers' cheques of ₹50,000 and above, the transaction must be debited to the customer's account or against a cheque, and the applicant must quote their PAN number on the application.