What changed
This master circular consolidates all previous KYC/AML/CFT instructions issued up to June 30, 2013, into a single document. It includes updated guidelines on customer due diligence, monitoring suspicious transactions, and freezing assets under Section 51A of the Unlawful Activities (Prevention) Act, 1967.
What it means for you
Banks must ensure their KYC policies are board-approved and aligned with FATF recommendations. Non-compliance with these guidelines can attract penalties under the Banking Regulation Act, 1949. The circular reinforces the obligation to report suspicious transactions and freeze assets of designated individuals/entities.
What you must do
- Review and update your bank's KYC/AML policy with board approval to align with this master circular.
- Implement robust customer identification procedures for all account openings and monitor transactions for suspicious activity.
- Ensure compliance with Section 51A of the Unlawful Activities (Prevention) Act, 1967 for freezing assets as per RBI directives.
- Train staff on updated AML/CFT procedures and designate a principal officer for reporting to authorities.
Who it affects
All scheduled commercial banks (excluding RRBs), All India Financial Institutions, Local Area Banks
What is the legal basis for these KYC/AML guidelines?
These guidelines are issued under Section 35A of the Banking Regulation Act, 1949 and Rule 7 of the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005.
What happens if a bank fails to comply with these instructions?
Any contravention or non-compliance may attract penalties under the Banking Regulation Act, 1949.
Does this circular apply to foreign branches of Indian banks?
Yes, the circular includes a section on applicability to branches and subsidiaries outside India, requiring them to adhere to these standards.