AML/CTF compliance in India
The Prevention of Money Laundering Act was expanded to include all financial institutions and intermediaries on 1 July 2005.
The primary regulatory organisations that supervise the Indian financial industry and create anti-money laundering and counter-terrorism financing regulations are as follows:
Financial Intelligence Unit- India (Flu-IND)
Established in 2004 as a central national organisation tasked with the duty of gathering, classifying, analysing, and distributing information to law enforcement agencies and international financial intelligence units concerning suspected financial activity.
Reserve Bank of India (RBI)
The main financial regulator in the United States, responsible for granting bank licences, formulating and implementing anti-money laundering and counter-terrorist funding legislation. RBI complies with the FATF's anti-money laundering and counter-terrorist financing guidelines. The RBI is responsible for enforcing compliance with relevant rules by banks and financial institutions.
Securities and Exchange Board of India (SEBI)
SEBI was established on 12 April 1992 with the mission of protecting securities investors' interests and facilitating and regulating the securities industry. Additionally, it establishes standards for the financial markets' anti-money laundering and counter-terrorist funding compliance.
Insurance Regulatory Development Authority (IRDA)
This authority is in charge of regulating, promoting, and guaranteeing the orderly development of the insurance and reinsurance sectors.
How to comply with AML/CTF regulations in India?
As a designated service provider, the business must guarantee that it has a stringent anti-money laundering/counter-terrorism funding policy in place, which includes the following:
- Money Laundering and Terrorist Financing Policies, Procedures, and Controls
- Consumers' identities should be verified, customers should be profiled using risk categorisation, and customers should be reviewed on a regular basis.
- Transaction monitoring, with an emphasis on high-risk accounts
- AML/CTF programme that is properly managed, has appropriate systems and controls, division of roles, and training, among other things.
- Internal audits to examine and verify compliance with anti-money laundering and anti-terrorism financing policies and procedures
- Appointment of a suitably qualified compliance officer to supervise the anti-money laundering programme
Customised solution based on your entity
Since there is no "one size fits all" solution in the financial sector, each registered entity should take into account the specific nature of its market, corporate structure, clients and transaction types, and other factors when developing initiatives and procedures in order to ensure their efficacy and efficiency.
All anti-money laundering and counter-terrorist financing strategies must be risk-based. The risk assessment serves as the cornerstone for the complete anti-money laundering/counter-terrorist financing programme that you have implemented. A clear relationship must be shown between stated risks and the procedures, practises, and controls that are in place to mitigate those risks in your programme.
What are my AML/CTF reporting obligations?
As a designated service provider, a company is required to notify FIU-IND of certain purchases and suspicious activity. Notable ongoing reporting responsibilities are:
- Suggested Suspicious Transaction Report (STR): This report should be submitted within seven days after deciding that a transaction, whether cash or non-cash, or a series of transactions that are related in any manner is suspicious.
- Reports on cash transactions should be reported to FIU-IND by the 15th of the month following the month in which they were generated. All cash transactions with a total value of more than INR 1,000,000 (or the equivalent in foreign currency) should be reported to the appropriate authorities.
- Counterfeit Currency Report (CCR): When fabricated or stolen Indian cash notes are used as real currency, the Principal Officer shall promptly contact the FIU-IND and the Indian police department concerned.
- Non-profit transaction reports (NTR) are required for all purchases made by non-profit organisations involving the receipt of more than a lakh rupees (INR 10,00,000) or the equivalent in foreign currency, respectively.
- Records must be kept for a minimum of ten years after the transaction or commercial connection has come to a close.