KYC NORMS AND ANTI-MONEY LAUNDERING

The RBI u/s 35 A of Banking Regulation Act has issued

directive to banks to put in place KYC policy and adopt antimoney laundering measures.
 Introduction- money laundering Act 2002  Objectives- understand the financial needs.

Money Laundering-Risk Perception

The inadequacy or absence of KYC standards can subject the

bank to serious customer and counter-party risks:

Reputation Risk Compliance Risk- due to failure with key regulations. Legal Risk- suffer losses and fines.

Policy on know your customer

1. 2.

Customer acceptance policy- classify customers into various risk categories. Customer identification policyDocuments to verify the name / identity of the customer Documents to verify the address are Obtention of proper Introduction

3. Monitoring of transactions 4. Risk management

Principal Officer (Money Laundering Reporting Officer) i. Monitoring and reporting of all transactions and sharing of information as required under the law. ii. Maintaining close liaison with law enforcement agencies, banks and any other institution which are involved in the fight against money laundering. iii. Ensuring submission of periodical reports to the Top Management/ Board/ Audit Committee of Board or any other authority, as may be required from time to time.

Record keeping
Record (nature and value) of (a) all cash transactions of the

value of more than rupees ten lakh or its equivalent in foreign currency; (b) all series of cash transactions integrally connected to each other which have been valued below rupees ten lakh or its equivalent in foreign currency where such series of transactions have taken place within a month; (c) all cash transactions where forged or counterfeit currency notes or bank notes have been used as genuine and where any forgery of a valuable security has taken place; (d) all suspicious transactions whether or not made in cash and by way as mentioned in the rules

FEMA
The Foreign Exchange Management Act (1999) or in short

FEMA has been introduced as a replacement for earlier Foreign Exchange Regulation Act (FERA). FEMA came into act on the 1st day of June, 2000.
The main objective behind the Foreign Exchange Management

Act (1999) is to consolidate and amend the law relating to foreign exchange with objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India.