What changed
RBI modified the July 2010 KYC/AML master circular for NBFCs. Bullion dealers and jewelers must now be categorized as high-risk customers. These accounts require enhanced due diligence and intensified transaction monitoring for suspicious activity reporting.
What it means for you
NBFCs must update their KYC risk classification frameworks to include bullion and jewelry sectors as high-risk. This increases compliance costs and monitoring intensity for these accounts. Failure to comply may attract penalties under the PMLA and RBI Act.
What you must do
- Update internal KYC policies to classify bullion dealers and jewelers as high-risk customers.
- Apply enhanced due diligence measures for all such accounts, including sub-dealers.
- Implement intensified transaction monitoring for these high-risk accounts.
- Ensure suspicious transaction reports (STRs) are filed with FIU-ND for any suspicious activity in these accounts.
Who it affects
All Non-Banking Financial Companies (NBFCs), Residuary Non-Banking Companies (RNBCs), Compliance and KYC teams at NBFCs, Bullion dealers and jewelers as customers
Why are bullion dealers and jewelers now classified as high-risk?
RBI considers cash-intensive businesses like bullion and jewelry as inherently higher risk for money laundering, requiring enhanced due diligence.
What specific monitoring is required for these high-risk accounts?
NBFCs must apply intensified transaction monitoring and file Suspicious Transaction Reports (STRs) to FIU-ND for any suspicious activity in these accounts.
What are the penalties for non-compliance with this circular?
Contravention or non-compliance attracts penalties under the relevant provisions of the RBI Act, 1934 and the Prevention of Money-laundering Rules, 2005.