RBI asks banks to weed out `rogue' accounts

29 Oct 2009

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The Reserve Bank has issued fresh circulars to banks and financial institutions in the country directing them to update the consolidated list of customers - both individuals and entities - accordingly. The RBI has also asked them to ensure, before opening any new account that the name of the proposed customer does not appear in the revised list.

The RBI circular lists the names of individuals and entities approved by the Security Council Committee established pursuant to various United Nations' Security Council Resolutions (UNSCRs) as received from the government of India.

RBI has asked banks to "ensure expeditious and effective implementation of the procedure (prescribed under Section 51A of UAPA) in regard to freezing/unfreezing of financial assets of the designated individuals/entities listed in the UNSCRs and especially, in regard to funds, financial assets or economic resources or related services held in the form of bank accounts." 

Further, RBI has asked banks to scan all existing accounts to ensure that no account is held by or linked to any of the entities or individuals included in the list. Banks have been asked to immediately inform RBI and the Financial Intelligence Unit (FIU-IND) in case of accounts whose full details bear resemblance to any of the individuals/entities in the list.

The government has suitably amended the Unlawful Activities (Prevention) Act, 1967 (UAPA) by the Unlawful Activities (Prevention) Amendment Act, 2008 and ahs since notified detailed the procedure for implementation of UAPA sections for the purposes of prevention of and for coping with terrorist activities. 

In regard to funds, financial assets or economic resources or related services held in the form of bank accounts, RBI said it would forward the designated lists to the banks requiring them to maintain updated designated lists in electronic form and run a check on the given parameters on a regular basis to verify whether individuals or entities listed in the schedule to the order (referred to as designated individuals/entities) are holding any funds, financial assets or economic resources or related services held in the form of bank accounts with them.
 
In case the particulars of any of their customers match with the particulars of designated individuals/entities, the banks should immediately, not later than 24 hours from the time of finding out such customer, inform full particulars of the funds, financial assets or economic resources or related services held in the form of bank accounts, held by such customers on their books, to the joint secretary (IS.I), ministry of home affairs and also convey over telephone. The particulars apart from being sent by post should necessarily be conveyed on e-mail, the release said.

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