Unit – 66 : The Prevention of Money Laundering Act, 2002 Under the Prevention of Money Laundering Ac

Unit – 66 : The Prevention of Money Laundering Act, 2002 Under the Prevention of Money Laundering Act (PMLA), 2002, Section 12 there are certain obligations on banks to preserve and report customer account information, for which RBI has issued directives (during Jan 2006) u/s 35A of Banking Regulation Act 1949 ; Rule 7 of Prevention of Money laundering Rules as under: Maintenance of records of transactions : cash transactions of above Rs.10 lac or its equivalent in foreign currency; series of cash transactions connected to each other, of- below Rs.10 lakh or its equivalent in foreign currency within a month and the aggregate value of such transactions exceeds rupees ten lakh; cash transactions in forged or counterfeit currency notes or bank notes and where any forgery of a valuable security has taken place; suspicious transactions in cash or otherwise. Preservation of records : Banks should maintain, for at least 5 years from the date of cessation of transactions between the bank and the client, all necessary records of transactions, both domestic or international, which will permit reconstruction of individual transactions (including the amounts and types of currency involved if any) so as to provide, if necessary, evidence for prosecution of persons involved in criminal activity. As regards, the documents these are to be preserved for 10 years. Reporting to Financial Intelligence Unit-India Banks are to report information relating to cash and suspicious transactions to the Director, Financial Intelligence Unit-India (FIU-IND), New Delhi (details of reports given above). KNOW YOUR CUSTOMER (KYC) KYC guidelines issued by RBI u/s 35(A) of B R Act (and Rule 7 of Prevention 1 Money Laundering Rules) keeping in view the recommendation of Financial Action Task Force. Objective: Preventing use of banks by criminals for money laundering purposes. Accordingly the banks are required to verify the identity and address of the customers and do proper verification. Accordingly: · Banks to obtain introduction, identity of the customer and do proper verification before opening the account. · Small depositors: Simplified criteria of identification and introduction to followed where the balance shall not exceed Rs.50000 and transactions in a year does not exceed Rs.1 lac and withdrawal not more than Rs.10000 per month. In these cases the certification of address and photograph by the introducer enough. However, if the amount of total credit exceed Rs.80000 or balance exceeds Rs.40000, notice to be sent to the customer.