RBI/2012-13/420 UBD CO PCB Cir.No.37/14.01.062/2012-13
February 25, 2013
The Chief Executive Officer All Primary (Urban) Co-operative Banks
Know Your Customer (KYC) Norms / Anti-Money Laundering (AML) Measures - Combating of Financing of Terrorism (CFT) / Obligations of Banks under Prevention of Money Laundering Act (PMLA), 2002
Please refer to the guidelines on KYC and Cash Transactions issued vide our circular UBD No. DS.PCB. Cir.17/13.01.00/2002-03 dated September 18, 2002 and the subsequent circulars issued from time to time on the captioned subject, last being circular UBD BPD (PCB) Cir. No.8/14.01.062/2012-13 dated September 13, 2012. Despite advising Urban Co-operative Banks (UCBs) to ensure strict adherence to the guidelines on the captioned subject, instances of UCBs being used as conduits for money laundering / other unlawful activities primarily due to non-adherence to KYC/AML guidelines, including absence of risk profiling of customers and lack of proper monitoring of transactions, continue to be observed during inspections / scrutinies by the Reserve Bank.
2. With a view to ensuring that the banking channels are not used for unlawful / illegal activities, it is reiterated that all UCBs may put in place a system of periodic review of risk categorization of customers and updation of customer identification data to ensure strict adherence to the KYC / AML / CFT guidelines issued by Reserve Bank from time to time. As already advised vide our circular dated September 13, 2012 ibid, Primary (Urban) Co-operative banks are once again advised to complete the process of risk categorization and compiling/updating profiles of all their existing customers by end- March 2013.