'Stick to KYC norms for anti-money laundering'

Written by Sanjay Jog | Mumbai | Updated: Jan 3 2009, 05:01am hrs
The finance ministry, in a bid to implement anti-money laundering standards, has asked the regional rural banks (RRB) to strictly adhere to KYC norms while opening accounts. RRBs should initially focus on filing of cash transaction reports (CTRs) in electronic format. Besides, RRBs should have a process in place for identifying and filing of suspicious transaction reports (STRs).

RRBs would have to file counterfeit currency report (CCR) as required under Prevention of Money Laundering Act, 2002 (PMLA). RRBs need to sensitise their officers and staff on Anti Money Laundering Standard (AML)/ Combating of Financing of Terrorism (CFT) issues, for which Financial Intelligence UnitIndia (FIU-IND) proposes to extend faculty assistance in conducting workshop in collaboration with Reserve Bank of India (RBI)/National bank for Agriculture and Rural development (Nabard).

The anti-money laundering standards envisage verification of the identity and address of the customer via independent source documents as mandatory and banks are required to classify the accounts according to their risk perceptions. In order to ensure that the inability of persons belonging to low income groups to produce documents to establish their identity and address does not lead to their financial exclusion and denial of banking services, a simplified procedure has been provided for opening of account in respect of those persons who do not intend to keep balances above Rs 50,000 and whose total credit in one year is not expected to exceed Rs1,00,000. The anti-money laundering laws and standards require banks to capture suspicious transactions and report these.

According to sources, RRBs would have to ensure that AML/CFT issue is made part and parcel of audit/inspection curriculum. The principal officer is to be identified by the banks on Anti Money Laundering Standards with fixed accountability. RRBs have been asked to review the progress of implementation of these standards at their board meetings.