What changed
The Prevention of Money Laundering (Amendment) Act, 2012 amended Section 13(2) to explicitly empower the Director to impose fines ranging from ₹10,000 to ₹1 lakh for each compliance failure. Banks are now required to nominate a designated director on their Board to ensure adherence to PMLA obligations.
What it means for you
Banks must formally appoint a Board-level director responsible for AML/CFT compliance, creating clear accountability. Non-compliance can now result in direct financial penalties on the entity, its designated director, or employees, increasing the stakes for adherence to KYC/AML norms.
What you must do
- Nominate a director on your Board as the 'designated director' for PMLA compliance and inform RBI.
- Update internal policies to reflect the new fine structure and designated director responsibilities.
- Ensure all staff are aware of the enhanced penalty provisions under Section 13(2).
- Review and strengthen AML/CFT compliance frameworks to avoid failures attracting fines.
Who it affects
Scheduled Commercial Banks (excluding RRBs), Local Area Banks, All India Financial Institutions, Board of Directors of these entities, Compliance and AML/KYC teams
What is the fine range under the amended Section 13(2)?
The fine shall not be less than ₹10,000 but may extend up to ₹1 lakh for each failure to comply with PMLA obligations.
Who needs to be nominated as the 'designated director'?
A director on the bank's Board must be nominated to ensure compliance with the Prevention of Money Laundering (Amendment) Act, 2012.