What changed
RBI has added bullion dealers (including sub-dealers) and jewellers to the list of customer categories that banks must treat as high risk. These accounts now require enhanced due diligence and intensified transaction monitoring, and any suspicious transactions must be reported to FIU-IND via STRs.
What it means for you
Co-operative banks must now apply stricter KYC/AML checks on bullion and jewellery accounts due to cash intensity and higher money laundering risk. This increases compliance burden but strengthens the fight against financial crime. Non-compliance can attract penalties under the Banking Regulation Act and PMLA rules.
What you must do
- Categorise all existing and new accounts of bullion dealers, sub-dealers, and jewellers as high risk.
- Apply enhanced due diligence measures on these accounts as per earlier KYC guidelines.
- Implement intensified transaction monitoring for these high-risk accounts.
- Identify and file Suspicious Transaction Reports (STRs) with FIU-IND for any suspicious activity.
- Ensure compliance with Section 35A of BR Act and PMLA Rules to avoid penalties.
Who it affects
State and Central Co-operative Banks, Bullion dealers and sub-dealers, Jewellers, Compliance and AML teams at co-operative banks
Why are bullion dealers and jewellers now considered high risk?
RBI has identified these businesses as cash intensive, which increases the risk of money laundering and terrorist financing. Hence, they require enhanced due diligence and monitoring.
What are the consequences of non-compliance with this circular?
Non-compliance can attract penalties under the Banking Regulation Act, 1949 and the Prevention of Money-laundering Act, 2002 rules.
Do we need to file STRs for all transactions in these accounts?
No, only suspicious transactions must be reported. However, intensified monitoring will help identify such transactions for STR filing to FIU-IND.