Know Your Customer (KYC) norms/Anti-Money Laundering (AML) standards/Combating
of Financing of Terrorism (CFT)/Obligation of banks under Prevention of Money
Laundering Act (PMLA), 2002- Assessment and Monitoring of Risk
Please refer to our Master Circular DBOD.AML.BC.No.2/ 14.01.001 / 2011 -12 dated July 01,2011 on Know Your Customer (KYC)
norms /Anti-Money Laundering (AML) standards/Combating of Financing of Terrorism (CFT)/Obligation of banks under PMLA, 2002.
2. In terms of paragraph 2.3 (b) and (c) of the aforesaid Master Circular, banks are required to prepare a risk profile of each customer and apply enhanced due diligence measures on higher risk customers. Some illustrative examples of customers requiring higher due diligence have also been provided in the paragraph under reference. Further, paragraph 2.12 (a) of the Master Circular requires banks to put in place policies, systems and procedures for risk management keeping in view the risks involved in a transaction, account or banking/business
3. 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.
Detailed press release link: here