New Delhi: RBI has formulated the Know Your Customer (KYC) norms/Anti-Money Laundering (AML) standards/Combating of Financing of Terrorism (CFT) guidelines to be followed by banks, so as to prevent banks from being used, intentionally or unintentionally, by criminal elements for money-laundering or terrorist financing activities, said Minister of State for Finance, Mr. Namo Narain Meena in a written reply to a question in the Lok Sabha on Saturday.
KYC procedures also enable banks to know/understand their customers and their financial dealings better, which in-turn help them manage their risk prudently. Accordingly, all banks, including foreign banks, functioning in India have been advised to follow certain customer identification procedures for opening of accounts and monitoring transactions of a suspicious nature for the purpose of reporting it to appropriate authority, i.e. Financial Intelligence Unit-India (FIU-IND). The banks are also required to ensure that a proper Board approved policy framework on KYC/AML/CFT is formulated and implemented by them in accordance with the extant legal and regulatory framework.
This was stated by the Minister of State for Finance, Shri Namo Narain Meena in a written reply to a question in the Lok Sabha today.