What changed
Previously, Authorised Persons had to maintain and preserve KYC/AML records for money changing activities for at least 10 years under PMLA. Following the 2012 amendment to Section 12 of PMLA, RBI has aligned its circular to reduce this period to a minimum of 5 years for such activities.
What it means for you
Banks and other Authorised Persons handling money changing can now purge older KYC/AML records after 5 years instead of 10, reducing storage and compliance costs. However, they must ensure that records are still preserved for the full 5-year period and comply with any other legal requirements.
What you must do
- Update your internal KYC/AML record retention policy to reflect the 5-year minimum period.
- Review and safely dispose of records older than 5 years that are no longer required under PMLA.
- Ensure compliance with other applicable laws that may require longer retention.
- Train staff on the revised retention timeline for money changing activities.
Who it affects
All Authorised Persons (banks, money changers) under FEMA engaged in money changing activities, Compliance and AML/KYC teams handling money changing records, Record management and legal departments
Does this circular apply to all KYC records or only those related to money changing?
This circular specifically addresses records related to money changing activities under PMLA. Other KYC/AML records may still be subject to different retention periods as per other regulations.
Can we destroy records that are exactly 5 years old from the date of transaction?
Yes, once the 5-year period from the date of the transaction or account closure (whichever is later) has elapsed, you may destroy those records, provided no other law requires longer retention.