RBI asks banks to keep client records for 10 years
12 Sep 2009
The Reserve Bank of India (RBI) has asked banks to maintain records of all transactions with clients for a minimum of 10 years from the date of transaction. This has been done to keep track of funds involved in illegal activities, the Reserve Bank said today.
The RBI has modified an earlier circular detailing `Know Your Customer' guidelines, issued to banks on 1 July 2009, in bid to ensure that transactions are kept track of in compliance with the rules for preventing money laundering.
"The 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 (PMLA Rules) will permit reconstruction of individual transactions - both domestic or international (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," RBI said in its circular.
However, records pertaining to the identification of the customer and his address (eg, copies of documents like passports, identity cards, driving licences, PAN card, utility bills etc) obtained while opening the account and during the course of business relationship, as indicated in the master circular dated 1 July 2009, would continue to be preserved for at least 10years after the business relationship is ended, RBI said.
Politically-exposed persons
The RBI has issued detailed guidelines on `customer due diligence' (CDD) measures to be made applicable to `politically exposed person (PEP) and their family members or close relatives.
RBI has now advised banks that in the event of an existing customer or the beneficial owner of an existing account, subsequently becomes a PEP, banks should obtain senior management approval to continue the business relationship and subject the account to the CDD measures as applicable to the customers of PEP category, including enhanced monitoring on an ongoing basis.
The central bank has further asked banks to appoint a senior management officer, to be designated as `Principal Officer' with the role and responsibilities of verifying customer identification data and other CDD information, transaction records and other relevant information along with other appropriate staff.
The Prevention of Money Laundering (Amendment) Act, 2009 has come into force with effect from 1 June 2009 as notified by the Government of India.
