What changed
Earlier, Indian Agents under MTSS had to keep prescribed records for at least 10 years. Now, following the Prevention of Money Laundering (Amendment) Act, 2012, the minimum retention period has been cut to 5 years. This revision is effective from June 25, 2014.
What it means for you
Banks and authorised persons acting as Indian Agents under MTSS can now purge older records after 5 years instead of 10, reducing storage and compliance costs. However, they must ensure that records for the full 5-year period are readily available for regulatory scrutiny. This change does not affect other legal or regulatory requirements.
What you must do
- Update your internal policies and procedures to reflect the new 5-year record retention period for MTSS-related KYC/AML/CFT records.
- Review and revise your record-keeping systems to ensure compliance with the reduced timeline, and dispose of records older than 5 years as per your data destruction policy.
- Train relevant staff on the updated retention requirement to avoid inadvertent non-compliance.
- Maintain a clear audit trail of record disposal actions taken under the new rule.
Who it affects
All Authorised Persons who are Indian Agents under the Money Transfer Service Scheme (MTSS), Banks and financial institutions acting as MTSS agents, Compliance and AML/KYC teams within these entities
Does this circular apply to all records or only specific ones?
It applies to the records mentioned in clause (a) of para 3.2 and clause (iii) of para 5.12 of the earlier circular (A.P. DIR Series No.18 dated Nov 27, 2009), which cover KYC, AML, and CFT-related documents under MTSS.
Can we immediately delete records older than 5 years?
Yes, but only after ensuring that no other legal or regulatory requirement mandates a longer retention period. Also, maintain a proper record of destruction as per your internal policies.
What if we have already kept records for 10 years as per the old rule?
You are now permitted to reduce retention to 5 years. You may dispose of records older than 5 years, provided you have no pending litigation or regulatory inquiry requiring them.