WHAT ARE THE
Money laundering and terrorism financing laws in India?
In India, money laundering and terrorism financing are serious offenses and are governed by the following laws: The Prevention of Money-Laundering Act, 2002,The Unlawful Activities (Prevention) Act, 1967 additionally AML/CTF Guidelines and Regulations issued by regulatory bodies such as RBI, SEBI, IRDAI, and FIU-IND.
WHAT ARE THE
Key obligations reporting entities have under Indian laws?
- Customer due diligence (CDD): Identifying and verifying the identity of customers, including their beneficial owners.
- Monitoring customer transactions: Monitoring customer transactions involves identifying irregularities or suspicious patterns that may indicate money laundering or terrorism financing.
- Filing suspicious transaction reports (STRs): Submitting Suspicious Transaction Reports (STRs) to the FIU-IND is required whenever there is a suspicion of money laundering or terrorism financing.
- Implementing internal controls: Implementing internal controls is essential to prevent money laundering and terrorism financing.
- Keeping records: Reporting entities must keep records of transactions, customer identification information, and supporting documentation for at least ten years from the date of the last transaction.
- Training staff: Reporting entities must train their staff on AML/CTF compliance.
- Appointment of a compliance officer: Reporting entities must appoint a compliance officer to oversee AML/CTF compliance.
- Completing self-assessments: Reporting entities must complete self-assessments of their AML/CTF compliance.
WHO ARE THE
ML/TF regulators in India and what functions do they perform?
In India, the regulation of money laundering and terrorism financing is overseen by several key agencies:
- The Financial Intelligence Unit - India (FIU-IND): The FIU-IND is the central agency responsible for receiving and analyzing suspicious transaction reports (STRs) in India. It also provides guidance to reporting entities on AML/CTF compliance.
- The Reserve Bank of India (RBI): The RBI is the central bank of India and is responsible for regulating the banking sector. It has issued AML/CTF guidelines for banks and other financial institutions.
- The Securities and Exchange Board of India (SEBI): SEBI is the regulator of the securities market in India. It has issued AML/CTF guidelines for stockbrokers, mutual funds, and other entities that operate in the securities market.
- The Insurance Regulatory and Development Authority of India (IRDAI): IRDAI is the regulator of the insurance sector in India. It has issued AML/CTF guidelines for insurance companies and other entities that operate in the insurance sector.
WHAT ARE THE
Industry sectors subject to ML/TF regulations?
WHAT ARE THE
Penalties for non-compliance with AML/CTF laws?
- Imprisonment: Non-compliance with AML/CTF laws in India can lead to a maximum imprisonment sentence of 10 years, with the actual sentence imposed will depend on the specific circumstances of the case.
- Fine: India imposes fines of up to ₹50 million for non-compliance with AML/CTF laws, with the actual fine imposed depending on the specific circumstances of the case.
- Closure of the business: Non-compliance with AML/CTF laws may result in the closure of the business. This is a serious consequence, as it can have a significant impact on the business's employees, customers, and suppliers.
- Loss of licenses: Non-compliance with AML/CTF laws may result in the loss of licenses. This can prevent the business from operating in certain sectors or jurisdictions.
WHAT ARE THE
Largest fines for non-compliance with AML/CTF laws?
- Amazon Pay India: In 2022, Amazon Pay India was fined ₹3.06 crores for failing to file STRs for certain high-value transactions and for not properly implementing its AML/CTF compliance program.
- HDFC Bank: In 2019 HDFC Bank was fined ₹1 crore for violation of KYC norms.
- ICICI Bank: fined ₹50 lakhs for non-compliance with KYC norms
- Axis Bank: RBI fines Axis Bank ₹25 lakhs for flouting KYC norms
- Kotak Mahindra Bank: RBI imposes fine of ₹1 crores for non-compliance with loan and KYC directives.
- IndusInd Bank: RBI imposes fine of ₹1 crores for non-compliance with loan and KYC directives.