Help track dubious deals: RBI to banks

To tighten its focus on curbing money laundering activities, the Reserve Bank of India has now asked cooperative as well as regional rural banks to tweak their reporting mechanism to help agencies track all suspicious financial transactions.

 

For starters, these banks will be required to prepare a profile of each customer based on risk perception and put in place software applications to help generate an alert whenever a transaction is inconsistent with the risk profile.

 

At a time when terror financing has emerged as a central theme, the regulator has reiterated that cooperative banks and RRBs should ensure that they file cash transaction reports, involving dealings of over Rs 10 lakh, as well as suspicious transaction reports (STR) with the Financial Intelligence Unit (FIU).

 

In circulars issued this month, RBI said that these banks will have to submit the statements even if their branch networks are not fully-computerised. "The executive in-charge of reporting will have to cull out transaction details and submit it to FIU," it said.

 

In any case, any transaction where forged or counterfeit Indian currency notes have been used needs to be

reported. "These cash transactions should also include those involving forgery of valuable security or documents," the circular added.

 

Banks have also been advised to pay special attention to all complex and unusual large transactions that have no apparent economic or viable lawful purposes.

 

The RBI has also warned banks against customers being tipped off on suspicious transaction reports being sent to FIU. The apex bank fears that this may result in some of the transactions being abandoned. In such instances, even aborted transactions should be reported.

 

Of late, the finance ministry, RBI and FIU have been active in analysing cash and suspicious transaction reports to check for any instances of terror financing.

 

In addition, many reporting norms have been put in place as part of the global drive to combat terror funding. India is seeking to be a member of the Financial Action Taskforce (FATF), a global club of anti-money laundering agencies. A membership in this group will also help Indian banks access international markets, such as the United States, more easily.