AML/CFT : Organisation Structure @ India
1. National Level
The Government of India had constituted a National Money Laundering/Financing
of Terror Risk Assessment Committee to assess money laundering and terror
financing risks, a national AML/CFT strategy and institutional framework for
AML/CFT in India. Assessment of risk of Money Laundering /Financing of
Terrorism helps both the competent authorities and the regulated entities in
taking necessary steps for combating ML/FT adopting a risk-based approach. This
helps in judicious and efficient allocation of resources and makes the AML/CFT
regime more robust. The Committee has made recommendations regarding adoption
of a risk-based approach, assessment of risk and putting in place a system
which would use that assessment to take steps to effectively counter ML/FT. The
recommendations of the Committee have since been accepted by the Government of
India and need to be implemented.
Accordingly,
banks/FIs should take steps to identify and assess their ML/TF risk for
customers, countries and geographical areas as also for products/ services/
transactions/delivery channels, in addition to what has been prescribed in our
Master Circular dated July 1, 2011, referred to in paragraph 2 above. Banks/FIs
should have policies, controls and procedures, duly approved by their boards,
in place to effectively manage and mitigate their risk adopting a risk-based
approach as discussed above. As a corollary, banks would be required to adopt
enhanced measures for products, services and customers with a medium or high
risk rating.
In this regard, Indian Banks' Association (IBA) has taken
initiative in assessment of ML/FT risk in the banking sector. It has circulated
to its member banks on May 18, 2011, a copy of their Report on Parameters for
Risk Based Transaction Monitoring (RBTM) as a supplement to their guidance note
on Know Your Customer (KYC) norms / Anti-Money Laundering (AML) standards
issued in July 2009. The IBA guidance also provides an indicative list of high
risk customers, products, services and geographies. Banks may use the same as
guidance in their own risk assessment.
RBI has issued these guidelines are issued under Section 35A of the
Banking Regulation Act, 1949 read with Rule 7 of Prevention of Money-laundering
(Maintenance of Records of the Nature and Value of Transactions, the Procedure
and Manner of Maintaining and Time for Furnishing Information and Verification
and Maintenance of Records of the Identity of the Clients of the Banking
Companies, Financial Institutions and Intermediaries) Rules, 2005. Any
contravention thereof or non-compliance shall attract penalties under B R Act,
1949.
2. Sectoral Supervisor level
The sectoral supervisors are required to support efforts of FIU-Ind by providing assistance in data submission, investigation and enforcement, without tipping off , at any stage. Section 54 of the PMLA 2002 has listed the officers of the supervising sectoral regulators responsible in this respect.
54. Certain
officers and others to assist in inquiry, etc. - The following officers are hereby empowered and required to
assist the authorities in the enforcement of this Act, namely:
(a) officers of the Customs and Central Excise
Departments;
(b) officers appointed under sub-section (1) of
section 5 of the Narcotic Drugs and Psychotropic Substances Act, 1985 (61 of
1985);
(c) income-tax authorities under sub-section (1)
of section 117 of the Income-tax Act, 1961 (43 of 1961);
(d) members of the recognised stock exchange
referred to in clause (j) of section 2 and the officers of the stock exchanges
recognised under section 4 of the Securities Contracts (Regulation) Act, 1956;
(e) officers of the Reserve Bank of India
constituted under sub-section (1) of section 3 of the Reserve Bank of India
Act, 1934 (2 of 1934);
(f) officers of Police;
(g) officers of enforcement appointed under
sub-section (1) of section 36 of the Foreign Exchange Management Act, 1999 (40
of 1999);
(h) officers of the Securities and Exchange Board
of India established under section 3 of the Securities and Exchange Board of
India Act, 1992 (15 of 1992);
(ha) officers of the Insurance Regulatory and
Development Authority established under section 3 of the Insurance Regulatory
and Development Authority Act, 1999;
(hb) officers of the Forward Markets Commission
established under section 3 of the Forward Contracts (Regulation) Act, 1952;
(hc) officers and members of the recognised
association recognised under section 6 of the Forward Contracts (Regulation)
Act, 1952;
(hd) officers of the Pension Fund Regulatory and
Development Authority;
(he) officers of the Department of Posts in the
Government of India;
(hf) Registrars or Sub-Registrars appointed by the
State Governments under section 6 of the Registration Act, 1 908; 16 of 1908.
(hg) registering authority empowered to register
motor vehicles under Chapter IV of the Motor Vehicles Act, 1 988; 59 of 1988.
(hh) officers and members of the Institute of
Chartered Accountants of India constituted under section 3 of the Chartered
Accountants Act, 1949;
(hi) officers and members of the Institute of Cost
and Works Accountants of India constituted under section 3 of the Cost and
Works Accountants Act, 1959;
(hj) officers and members of the Institute of
Company Secretaries of India constituted under section 3 of the Company
Secretaries Act, 1980;;
(i) officers of any other body corporate
constituted or established under a Central Act or a State Act;
(j) such other officers of the Central Government,
State Government, local authorities or reporting entities as the Central
Government may, by notification, specify, in this behalf.
3. RE level
Every reporting is required to communicate to
the Director the name, designation and address of the Designated Director and
the Principal Officer. The Principal Officer shall furnish the information
referred to in Rule 3 of Prevention of Money-Laundering (Maintenance of
Records) Rules 2005, to the Director, FIU-IND on the basis of information
available with the reporting entity. A copy of such information shall be
retained by the Principal Officer for the purposes of official record.
The Principal Officer of a reporting entity
shall furnish the information promptly to the Director in respect of all
suspicious transactions not later than seven working days on being satisfied
that the transaction is suspicious.
The Ministry amended Rule 2, [PMLA 2002 second amendment 2023] which provides that the ‘principal officer of a reporting entity’ must be an ‘officer at the manager level’.
It shall be the duty of every reporting entity,
its designated director, officers and employees to observe the procedure andthe manner of furnishing information as specified by the Director in
consultation with its Regulator.
Rule 8 of the
Prevention of Money-Laundering (Maintenance of Records) Rules 2005 prescribes
time limit for furnishing information to the Director, FIU-IND
The time limit for furnishing information about cash transactions and
integrally connected cash transactions , transactions involving receipts by
non-profit organisations, cash transactions where forged or counterfeit
currency notes or bank notes have been used and cross border wire transfers,
every month, as referred to in clauses (A), (B), (BA), (C) and (E) of sub-rule
(1) of rule 3 of Prevention of Money-Laundering (Maintenance of Records) Rules,
2005 Shall be by the 15th day of the succeeding month.
In respect of all suspicious transactions referred to in clause (D) of sub-rule
(1) of rule 3 , the same shall be reported promptly and not later than seven
working days[ immediately after suspension is confirmed w e f 2023] on being satisfied that the transaction is suspicious.
Happy reading
Those who read this also read read:
1. Obligations of RE under Sec 12 , PMLA 2002
2. Financial Intelligence Unit-India(FIU-Ind)
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