Here are some notes on the AML framework in India in detail:
- The Prevention of Money Laundering Act, 2002 (PMLA): The PMLA is the primary legislation that governs anti-money laundering (AML) in India. The PMLA defines money laundering and sets out the requirements for financial institutions and other businesses to comply with AML regulations.
- The Prevention of Money Laundering (Maintenance of Records) Rules, 2005: The PML Rules provide detailed guidance on how financial institutions and other businesses should comply with the PMLA. The PML Rules set out the specific requirements for customer due diligence, suspicious activity reporting, and record-keeping.
- The Financial Intelligence Unit – India (FIU-IND): The FIU-IND is the national agency responsible for receiving and analyzing suspicious activity reports (SARs). The FIU-IND also provides guidance to financial institutions on AML compliance.
- The Reserve Bank of India (RBI): The RBI is the central bank of India and has a significant role in AML compliance. The RBI has issued a number of circulars and guidelines on AML compliance, which are binding on all financial institutions regulated by the RBI.
The AML framework in India is constantly evolving to keep pace with the latest threats and trends in money laundering. The PMLA and the PML Rules have been amended several times since they were first enacted, and the RBI has issued new guidelines on AML compliance on a regular basis.
Financial institutions and other businesses that are required to comply with AML regulations in India need to be aware of the latest changes to the AML framework. They should also have a robust AML compliance program in place to ensure that they are meeting their legal obligations.
Here are some of the key features of the AML framework in India:
- Customer due diligence: Financial institutions are required to conduct customer due diligence on their customers. This involves verifying the identity of customers and understanding their financial activities.
- Suspicious activity reporting: Financial institutions are required to report suspicious activity to the authorities. This includes activity that may be indicative of money laundering or terrorist financing.
- Record-keeping: Financial institutions are required to keep records of their customers’ financial transactions. This includes records of customer identification, account opening, and transactions.
- Enforcement: The AML framework in India includes a number of enforcement mechanisms. These include fines, imprisonment, and asset forfeiture.
The AML framework in India is designed to prevent money laundering and terrorist financing. It is important for financial institutions and other businesses to comply with the AML framework to help prevent these crimes.