By Pinky Shah, Sonalee Godbole, Gaurang Gandhi, Tarun Ghia, Brijesh Cholera, Pratik Mehta | Chartered Accountants
Sejal Vasa | Company Secretary
fiogf49gjkf0d
New Page 2
Part C : RBI/FEMA
Given below are the
highlights of certain RBI Circulars.
33. 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)
Second Amendment Rules, 2010 — Obligation of Authorised Persons.
The Government of India has
vide Notification No. 10/2010-E.S./F.No.6/8/2009-E.S., dated June 16, 2010,
amended 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. A copy of the Notification is attached to this
Circular.
The highlights of the
amendments are :
(a) in Rule 2 in
sub-rule (1), after clause (g),
the following Explanation shall be inserted, namely :
Explanation :
Transaction involving financing of the activities relating to terrorism includes
transaction involving funds suspected to be linked or related to, or to be used
for terrorism, terrorist act or by a terrorist, terrorist organisation or those
who finance or are attempting to financing of terrorism.
(b) in Rule 9, for
sub-rule (1A), the following sub- rule shall be substituted, namely :
(1A) Every banking company,
financial institution and intermediary, as the case may be, shall determine
whether a client is acting on behalf of a beneficial owner, identify the
beneficial owner and take all reasonable steps to verify his identity.
(c) in Rule 9, for
sub-rule (1B), the following sub-rule shall be substituted, namely :
(1B) Every banking company,
financial institution and intermediary, as the case may be, shall exercise
ongoing due diligence with respect to the business relationship with every
client and closely examine the transactions in order to ensure that they are
consistent with their knowledge of the client, his business and risk profile and
where necessary, the source of funds.
(d) in Rule 9, for
sub-rule (1C), the following sub- rule shall be substituted, namely :
(1C) No banking company,
financial institution and intermediary, as the case may be, shall allow the
opening of or keep any anonymous account or account in fictitious names or
account on behalf of other persons whose identity has not been disclosed or
cannot be verified.
(e) in Rule 9, after
sub-rule (1C), the following sub- rule shall be inserted, namely :
(1D) When there is a
suspicion of money laundering or financing of activities relating to terrorism
or where there are doubts about the adequacy or vera-city of previously obtained
customer identification data, every banking company, financial institution and
intermediary shall review the due diligence measures including verifying again
the identity of the client and obtaining information on the purpose and intended
nature of the business relationship, as the case
may be.
(f) in Rule 10, after
sub-rule (3), the following Explanation shall be inserted, namely :
“Explanation : For the
purpose of this rule :
(i) the expression
‘records of the identity of clients’ shall include records of the
identification data, account files and business correspondence.
(ii) the expression
‘cessation of the transactions’ means termination of an account or business
relationship.
