Home › Circulars › RBI/2013-14/421

RBI Amends PMLA Penalty Powers: Designated Director Required

Current · Source: Reserve Bank of India · RBI/2013-14/421 · issued 31 Dec 2013 · ~1 min read
Quick answerRBI, citing the PMLA (Amendment) Act 2012, now empowers the Director to fine banks up to ₹1 lakh per failure for non-compliance. Banks must nominate a 'designated Director' on their board to ensure adherence to KYC/AML/CFT obligations.
The rule, in the simplest words
How it plays out — a real example

Rohit, the compliance head at a mid-sized private bank, reads this circular and immediately schedules a board meeting. He proposes the nomination of the bank's independent director as the designated Director, ensuring that any future KYC lapses are overseen by a single accountable person, thus avoiding the new fines.

What changed

The Prevention of Money Laundering (Amendment) Act, 2012 amended Section 13(2), expanding the Director's powers to impose fines. The fine for each failure ranges from ₹10,000 to ₹1 lakh. RBI advises banks to nominate a designated Director on their boards to oversee compliance.

What it means for you

Banks face direct financial penalties for KYC/AML/CFT lapses, with the Director able to fine the entity, its designated director, or employees. Having a designated Director ensures clear accountability and may mitigate risk of individual penalties. This reinforces the need for robust compliance frameworks.

What you must do

Who it affects

All Scheduled Commercial Banks (excluding RRBs), Local Area Banks, All India Financial Institutions, Designated Directors on bank boards, Bank employees handling KYC/AML/CFT compliance

❓ Common questions

What is the new penalty range under Section 13(2)?

The Director can levy a fine of not less than ₹10,000 and up to ₹1 lakh for each failure to comply with PMLA obligations.

Who can be penalized under the amended section?

The reporting entity (bank), its designated director on the board, or any of its employees can be fined for non-compliance.

Is it mandatory to nominate a designated Director?

RBI advises banks to nominate a designated Director to ensure compliance; it is not explicitly stated as mandatory in this circular.

📜 Read the original circular — full text as issued by RBI
Notifications - Reserve Bank of India Skip to main content Selected Selected Change Language हिंदी Search the Website Search Home About Us ▼ About Us Organisation & Functions ▶ Organisation Structure Departments Offices Training Establishment ▶ College of Agricultural Banking Reserve Bank Staff College College of Supervisors RBI's Functions and Working Governors Deputy Governors Executive Directors Communication Policy of RBI Sources of Information ▶ Annual Publications Half-yearly Publications Quarterly Publications Monthly Publications Weekly Publications Occasional Publications SDDS NSDP Data Releases Publications available on Subscription General Information RBI History Museum ▶ The RBI Museum RBI Monetary Museum Notification ▼ Notifications Master Directions Master Circulars Amendment Directions Draft Notifications/Guidelines ▶ Draft Notifications/Guidelines Draft Directions (RE-wise) Index To RBI Circulars Standalone Circulars Circulars Withdrawn Press Releases Speeches & Media Interactions ▼ Speeches Media Interactions Memorial Lectures Podcasts Publications ▼ Biennial Annual Half-Yearly Quarterly Bi-monthly Monthly Weekly Occasional Reports Working Papers Legal Framework ▼ Act Rules Regulations Schemes Research ▼ External Research Schemes RBI Occasional Papers Working Papers RBI Bulletin History DRG Studies KLEMS State Statistics and Finances Statistics ▼ Data Releases Database on Indian Economy Public Debt Statistics Regulatory Reporting ▼ List of Returns Data Definition Validation rules/ Taxonomy List of RBI Reporting Portals FAQs of RBI Reporting Portals Home Notifications Notifications ( 310 kb ) Know Your Customer (KYC) Norms /Anti-Money Laundering (AML) Standards/Combating of Financing of Terrorism (CFT)/Obligation of banks under Prevention of Money Laundering Act (PMLA), 2002 – Amendment to Section 13(2) RBI/2013-14/421 DBOD.AML.BC. No.80/14.01.001/2013-14 December 31, 2013 The Chairmen / CEOs of all Scheduled Commercial Banks (Excluding RRBs)/Local Area Banks / All India Financial Institutions Dear Sir, Know Your Customer (KYC) Norms /Anti-Money Laundering (AML) Standards/Combating of Financing of Terrorism (CFT)/Obligation of banks under Prevention of Money Laundering Act (PMLA), 2002 – Amendment to Section 13(2) Please refer to our Master circular DBOD.AML.BC.No. 24/14.01.001/2013-14 dated July 1, 2013 on Know Your Customer (KYC) Norms / Anti-Money Laundering (AML) Standards/Combating of Financing of Terrorism (CFT)/Obligation of banks under PMLA, 2002. 2. With the enactment of Prevention of Money Laundering (Amendment) Act, 2012 and amendment to Section 13 of the Act which provides for “Powers of Director to impose fine”, the section 13(2) now reads as under: “If the Director, in the course of any inquiry, finds that a reporting entity or its designated director on the Board or any of its employees has failed to comply with the obligations under this Chapter, then, without prejudice to any other action that may be taken under any other provisions of this Act, he may— (a) issue a warning in writing; or (b) direct such reporting entity or its designated director on the Board or any of its employees, to comply with specific instructions; or (c) direct such reporting entity or its designated director on the Board or any of its employees, to send reports at such interval as may be prescribed on the measures it is taking; or (d) by an order, levy a fine on such reporting entity or its designated director on the Board or any of its employees, which shall not be less than ten thousand rupees but may extend to one lakh rupees for each failure.” 3. In view of the above amendment, banks may nominate a Director on their Boards as “designated Director” to ensure compliance with the obligations under the Prevention of Money Laundering (Amendment) Act, 2012. Yours faithfully, (Prakash Chandra Sahoo) Chief General Manager 2026 All Months January February March April May June July August September October November December 2025 All Months January February March April May June July August September October November December 2024 All Months January February March April May June July August September October November December 2023 All Months January February March April May June July August September October November December 2022 All Months January February March April May June July August September October November December 2021 All Months January February March April May June July August September October November December 2020 All Months January February March April May June July August September October November December 2019 All Months January February March April May June July August September October November December 2018 All Months January February March April May June July August September October November December 2017 All Months January February March April May June July August September October November December Archives 2016 All Months January February March April May June July August September October November December 2015 All Months January February March April May June July August September October November December 2014 All Months January February March April May June July August September October November December 2013 All Months January February March April May June July August September October November December 2012 All Months January February March April May June July August September October November December 2011 All Months January February March April May June July August September October November December 2010 All Months January February March April May June July August September October November December 2009 All Months January February March April May June July August September October November December 2008 All Months January February March April May June July August September October November December 2007 All Months January February March April May June July August September October November December 2006 All Months January February March April May June July August September October November December 2005 All Months January February March April May June July August September October November December 2004 All Months January February March April May June July August September October November December 2003 All Months January February March April May June July August September October November December 2002 All Months January February March April May June July August September October November December 2001 All Months January February March April May June July August September October November December 2000 All Months January February March April May June July August September October November December 1999 All Months January February March April May June July August September October November December 1998 All Months January February March April May June July August September October November December 1997 All Months January February March April May June July August September October November December 1996 All Months January February March April May June July August September October November December 1995 All Months January February March April May June July August September October November December 1994 All Months January February March April May June July August September October November December 1993 All Months January February March April May June July August September October November December 1992 All Months January February March April May June July August September October November December 1991 All Months January February March April May June July August September October November December Top Back to previous page More Links : Bank Holidays Banking Glossary Citizen's Charter Complaints Contact Us COVID-19 Measures E-LMS Events FAQs Financial Education Forms IFSC/MICR Codes Important Websites Opportunities @ RBI RBI Clarifications RBI Kehta Hai RBI’s Vision and Values (1257 kb)--> Right to Information Act Tenders Follow RBI RSS Twitter YouTube Instagram Facebook LinkedIn © Reserve Bank of India. All Rights Reserved. Sitemap | Disclaimer Website owned and managed by Reserve Bank of India. Contact us on helpdoc[at]rbi[dot]org[dot]in Website last updated date: Aug 01, 2026 Supports: Google Chrome 147+ | Firefox 150+ | Microsoft Edge Version 147+ | Safari 17+ Accessibility Statement | Screen Reader and Accessibility Help
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-14/421 · issued 31 Dec 2013. The plain-English explanation above is BankPulse’s own independent summary.
🧰 Tools — save, print, templates & related
Most relevant forCompliance TeamSenior Management / BoardKYC / AML AnalystInternal AuditRisk ManagementBusiness Head / Vertical Head
🛠 Banker’s toolkit — checklists & reply templates →
Related circulars · Department of Regulation
SFB Pillar 3 Disclosure Norms Aligned with BaselUCB Deposit Rate Disclosure & Uniformity Rules UpdatedLAB Deposit Rate Disclosure & Uniformity Rules TightenedPayments Banks: Interest Rates Must Match Disclosed ScheduleRBI Updates Bulk Deposit Rate Rules and Disclosure Timing
Browse all departments →
Worked example & action-note template

Example: if you are a Compliance officer at a bank this circular applies to (All Scheduled Commercial Banks (excluding RRBs), Local Area Banks, All India Financial Institutions, Designated Directors on bank boards, Bank employees handling KYC/AML/CFT compliance), your first concrete step on “RBI Amends PMLA Penalty Powers: Designated Director Required” is: “Nominate a designated Director on your board to oversee PMLA compliance.” (RBI issued this 31 Dec 2013).

  1. Circular: RBI/2013-14/421 -- RBI Amends PMLA Penalty Powers: Designated Director Required
  2. Issued: 31 Dec 2013
  3. Action required: Nominate a designated Director on your board to oversee PMLA compliance.
  4. Action required: Review and update KYC/AML/CFT policies to align with amended Section 13(2).
  5. Action required: Ensure staff are trained on the new penalty provisions and compliance obligations.
  6. Action required: Monitor compliance to avoid fines ranging from ₹10,000 to ₹1 lakh per failure.
  7. Owner: ____________ Target date: ____________
  8. Board/committee approval needed? Y / N
  9. Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.

💬 Banker Discussion

Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.

Loading comments…
BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=8659&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
Public beta — plain-English informational summaries. Always verify against the official RBI source (circular number cited on every page) before making compliance, credit, treasury, audit, or operational decisions. · Join our WhatsApp channel ↗
—