1. RBI Initiative
2. RBI recommendations on KYC
3. Organized financial crime
As a district of the ‘Know Your Customer’ (KYC) principle, run batted in has issued several tips concerning the identification of depositors and prompt the banks to put in systems and procedures to help the management of cash frauds, establish concealing and suspicious activities, and for scrutiny/monitoring of monumental price cash. The Principal Officer shall be chargeable for making sure compliance, observance of transactions, and sharing and coverage information professional re nata below the law/regulations. The name, designation, and address of the Principal Officer shall be communicated to the FIU-IND.
- “Know Your Customer” (KYC) procedure got to be the key principle for identification of academic degree individual/corporate gap academic degree account. The shopper identification got to entail verification through academic degree introductory reference from academic degree existing account holder/a person acquainted to the bank or on the thought of documents provided by the shopper.
- The Board of directors of the banks got to have in place adequate policies that establish procedures to verify the bonafide identification of individual/corporate gap academic degree account. The Board got to even have in place policies that establish processes and procedures to observe transactions of suspicious nature in accounts and have systems of conducting due diligence and news of such transactions.
The Master Circular aims at consolidating all the instructions/ tips issued by run batted in on apprehending your shopper (KYC) norms/Anti-Money Laundry (AML) standards. Let see the list of circulars issued by run batted in below
• Customer identification
- The objectives of the KYC framework got to be two-fold,
- To guarantee applicable shopper identification and
- To monitor transactions of a suspicious nature.
• Procedures for existing customers: Banks area unit expected to possess adopted due diligence and applicable KYC norms at the time of gap of accounts in respect of existing customers in terms of our living directions aforesaid at intervals the Annexure. However, simply just in case of any omission, the requisite KYC procedures for shopper identification got to be got completed at the earliest.
• Ceiling and observance of cash transactions: The living run batted in recommendations on the subject is below:
- Banks area unit required to issue traveler’s cheques, demand drafts, mail transfers, and telegraphic transfers for Rs.50,000 and better than exclusively by debit to customers’ accounts or against cheques and not against cash.
- The bank’s area unit required to remain associate degree in-depth watch of cash withdrawals and deposits for Rs.10 lakhs and better than in deposit, cash credit, or bill of exchange accounts and keep a record of details of these big cash transactions in a very separate register.
- Branches of banks area unit required to report all cash deposits and withdrawals of Rs.10 lakhs and better than furthermore as transactions of suspicious nature with full details in fortnightly statements to their dominant offices.
• Risk management and observance procedures: In order to envision possible abuse of banking channels for dirty and anti-national activities, the Board got to clearly lay down a policy for adherence to the upper than wants comprising the following:
- Internal management Systems
- Terrorism Finance
- Internal Audit / examination
- Identification and news of Suspicious Transactions
- Adherence to the Foreign Contribution Regulation Act (FCRA), 1976
• Record Keeping: Financial intermediaries got to prepare and maintain documentation on their shopper relationships and transactions to satisfy the wants of relevant laws and rules, to change any event settled through them to be reconstructed. at intervals, in the case of wire transfer transactions, the records of electronic payments and messages ought to be treated at intervals constant approach as totally different records in support of entries at intervals the account. All cash event records got to be preserved for a minimum of five years once the event has taken place and perhaps getable for perusing and scrutiny of audit functionaries furthermore as regulators as and once required.
• Training of staff and management: It is crucial that everyone among the operative and management staff fully understand the requirement for strict adherence to KYC norms. All institutions ought to, therefore, have associate degree academic degree current program thus staff area unit sufficiently trained for his or her roles and responsibilities as applicable to their hierarchal level in compliance with anti-money laundry tips and for implementing KYC policies consistently.
Organized Financial crime
Over the last thirty years has additional and additional become of concern to governments throughout the world. This concern arises from a ramification of issues as a result of the impact of financial crime that varies in many contexts. It’s recently accepted that the prevalence of economically meant crime in many societies can be a considerable threat to the event of economies and their stability and varied varieties of cash crime:
- Organized criminals, also as terrorist groups, area unit additional and additional perpetrating large-scale frauds to fund their operations.
- Corrupt heads of state may use their position and powers to loot the coffers of their countries.
- Business leaders or senior executives manipulate or misreport cash info thus on misrepresent a company’s true cash position.
- Employees from the foremost senior to the foremost junior steal company funds and totally different assets.
- From outside the company, fraud is also perpetrated by a shopper, supplier, contractor, or by a person with no association to the organization.
- Increasingly, the external fraudster is colluding with academic degree employees to realize larger and better results further merely.
- Finally, the in individual criminal, serial or opportunist fraudsters in possession of their yield an extra cluster of people world organization agency have committed a cash crime.