Home › Circulars › RBI/2013-14/441

RBI: Nominate Designated Director for PMLA Compliance

Current · Source: Reserve Bank of India · RBI/2013-14/441 · issued 09 Jan 2014 · ~1 min read
Quick answerRBI directs RRBs and cooperative banks to nominate a Board Director as 'designated Director' to ensure PMLA compliance, following the 2012 amendment empowering the Director to impose fines for non-compliance.
The rule, in the simplest words
How it plays out — a real example

At a Regional Rural Bank, the CEO convenes a board meeting and nominates the Chairman as the designated Director. The Chairman now reviews AML compliance reports monthly and ensures staff training, avoiding personal fines under the amended PMLA.

What changed

The Prevention of Money Laundering (Amendment) Act, 2012 amended Section 13(2), giving the Director power to issue warnings, direct compliance, require reports, or levy fines ranging from ₹10,000 to ₹1 lakh per failure. RBI now asks RRBs and State/Central Cooperative Banks to nominate a designated Director on their Boards to oversee compliance with PMLA obligations.

What it means for you

Banks must ensure a specific Board member is accountable for AML/CFT compliance. This creates a clear point of responsibility and exposes the designated Director to personal fines for non-compliance. Banks should review their governance structures to align with this requirement.

What you must do

Who it affects

Regional Rural Banks (RRBs), State Cooperative Banks, Central Cooperative Banks, Board Directors of these banks

❓ Common questions

What is the fine range for non-compliance under the amended Section 13(2)?

The fine can be not less than ₹10,000 and may extend up to ₹1 lakh for each failure.

Who can be nominated as the designated Director?

Any Director on the Board of the bank can be nominated as the designated Director to ensure compliance with PMLA obligations.

Does this apply to all banks?

This circular specifically applies to Regional Rural Banks and State/Central Cooperative Banks.

📜 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 ( 338 kb ) RRBs/StCBs/CCBs- 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/2013-14/441 RPCD.RRB.RCB.AML.BC.No. 75/07.51.018/2013-14 January 09, 2014 The Chairmen / CEOs of all Regional Rural Banks / State and Central Co-operative Banks Madam / 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 circulars RPCD.No.RRB.BC.81/03.05.33(E)/2004-05 and RPCD.AML. BC.No.80/07.40.00/2004-05 both dated February 18, 2005 and the circulars issued from time to time 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, Regional Rural Banks and State/Central Cooperative 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, (A. 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Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-14/441 · issued 09 Jan 2014. The plain-English explanation above is BankPulse’s own independent summary.
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Worked example & action-note template

Example: if you are a Compliance officer at a bank this circular applies to (Regional Rural Banks (RRBs), State Cooperative Banks, Central Cooperative Banks, Board Directors of these banks), your first concrete step on “RBI: Nominate Designated Director for PMLA Compliance” is: “Nominate a Director on the Board as 'designated Director' for PMLA compliance.” (RBI issued this 09 Jan 2014).

  1. Circular: RBI/2013-14/441 -- RBI: Nominate Designated Director for PMLA Compliance
  2. Issued: 09 Jan 2014
  3. Action required: Nominate a Director on the Board as 'designated Director' for PMLA compliance.
  4. Action required: Ensure the designated Director is aware of their responsibilities under the amended Section 13(2).
  5. Action required: Update internal policies to reflect the designated Director's role in AML/CFT oversight.
  6. Action required: Communicate the nomination to all relevant staff and stakeholders.
  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.

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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=8686&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.
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