Under the Prevention of Money Laundering Act (PMLA), 2002, Section 12 there are certain obligations on banks to preserve and report customer account information, for which RBI has issued directives (during Jan 2006) u/s 35A of Banking Regulation Act 1949 & Rule 7 of Prevention of Money laundering Rules as under:
Maintenance of records of transactions : cash transactions of above Rs.10 lac or its equivalent in foreign currency; series of cash transactions connected to each other, of- below Rs.10 lakh or its equivalent in foreign currency within a month and the aggregate value of such transactions exceeds rupees ten lakh; cash transactions in forged or counterfeit currency notes or bank notes and where any forgery of a valuable security has taken place; suspicious transactions in cash or otherwise.
Preservation of records : Banks should maintain, for at least 5 years from the date of cessation of transactions between the bank and the client, all necessary records of transactions, both domestic or international, which will permit reconstruction of individual transactions (including the amounts and types of currency involved if any) so as to provide, if necessary, evidence for prosecution of persons involved in criminal activity. As regards, the documents these are to be preserved for 10 years.
Reporting to Financial Intelligence Unit-India Banks are to report information relating to cash and suspicious transactions to the Director, Financial Intelligence Unit-India (FIU-IND), New Delhi (details of reports given above). KNOW YOUR CUSTOMER (KYC) KYC guidelines issued by RBI u/s 35(A) of B R Act (and Rule 7 of Prevention 1 Money Laundering Rules) keeping in view the recommendation of Financial Action Task Force.
Objective: Preventing use of banks by criminals for money laundering purposes. Accordingly the banks are required to verify the identity and address of the customers and do proper verification. Accordingly:
PERIODICAL UPDATION OF KYC SIMPLIFIED: The Reserve Bank has revised its earlier instructions on periodical updation of 'Know Your Customer' (KYC) and has advised banks as follows:
Features of Basic Saving Bank account (RBI Aug 10, 2012):
(1) it is subject to normal KYC compliance. Account opened as a small account, attracts conditions applicable to small a/c
(2) it is normal banking service available to all.
(3) No min balance
(4) No max no. of deposits but max no. of withdrawals 4 in a month including ATM
(5) No other account is allowed to be opened along with such account. If already opened, it is to be closed within 30 days.
Customer Identity Document: Passport, PAN card, Voter I-Card, driving license, Identity card to bank's satisfaction, UIDAI letter, and letter of recognized public authority. (NAREGA job card for opening Small Accounts only)
Address Documents: Telephone bill, bank a/c statement, electricity bill (even in name of relative with whom living), letter of recognized public authority, ration card, letter from employer, UIDAI letter, rent agreement is registered with Govt. / Registration Authority
Imp: If identity document contains address, separate document not to be taken.
Introduction: It is not to be insisted upon (RBI - Dec 10, 2012)