What changed
The Prevention of Money Laundering (Amendment) Act, 2012 amended Section 13(2), empowering the Director to issue warnings, direct compliance, require reports, or levy fines ranging from ₹10,000 to ₹1 lakh per failure on reporting entities or their designated directors or employees. RBI now requires UCBs to nominate a designated director on their Board to oversee PMLA compliance.
What it means for you
UCBs must formally appoint a Board-level designated director responsible for AML/CFT compliance, making the board directly accountable for KYC/AML lapses. Non-compliance can now attract personal fines on the designated director or employees, increasing governance and risk management stakes for urban cooperative banks.
What you must do
- Nominate a director on your Board as the designated director for PMLA compliance immediately.
- Ensure the designated director is fully briefed on KYC/AML obligations under the amended PMLA.
- Update internal policies to reflect the new penalty structure and accountability framework.
- Conduct training for the designated director and relevant staff on compliance reporting and risk mitigation.
Who it affects
Primary Urban Cooperative Banks (UCBs), Board of Directors of UCBs, Compliance and AML/KYC teams at UCBs
What is the penalty range for non-compliance under the amended Section 13(2)?
The Director can levy a fine of not less than ₹10,000 and up to ₹1 lakh for each failure, applicable to the reporting entity, its designated director, or any employee.
Who should be nominated as the designated director?
Any director on the Board of the UCB can be nominated, but they must be formally designated to ensure compliance with PMLA obligations.
Does this circular apply to all UCBs?
Yes, it applies to all Primary (Urban) Cooperative Banks as specified in the circular.