What changed
RBI now requires APs (Indian Agents) under MTSS to formally identify and assess ML/TF risks across customers, geographies, products, services, and delivery channels. This goes beyond earlier guidelines that only required customer profiling and enhanced due diligence for high-risk customers. Agents must have board-approved policies and controls to manage these risks using a risk-based approach.
What it means for you
Banks acting as Indian Agents under MTSS must now implement a comprehensive risk assessment framework covering all aspects of their cross-border remittance business. This means more rigorous KYC/AML checks, especially for medium and high-risk customers, and the need to design risk parameters for transaction monitoring. Sub-agents must also comply, with the Indian Agent bearing full responsibility.
What you must do
- Conduct a thorough ML/TF risk assessment for all customers, countries, products, services, and delivery channels in your MTSS operations.
- Develop and get board approval for policies, controls, and procedures to manage and mitigate identified risks using a risk-based approach.
- Apply enhanced due diligence measures for customers, products, or services rated medium or high risk.
- Design risk parameters for transaction monitoring tailored to your business activities.
- Ensure all sub-agents under your MTSS adhere to these guidelines and update your internal procedures accordingly.
Who it affects
Indian Agents under Money Transfer Service Scheme (MTSS), Sub-agents of Indian Agents under MTSS, Banks and authorized persons handling cross-border inward remittances
What is the key change from the earlier 2009 circular?
The 2009 circular required customer profiling and enhanced due diligence for high-risk customers. This 2012 circular expands that to a full risk assessment covering customers, countries, products, services, and delivery channels, with board-approved policies and risk-based transaction monitoring.
Do sub-agents need to follow these guidelines?
Yes, these guidelines apply mutatis mutandis to all sub-agents. The Indian Agent is solely responsible for ensuring sub-agents comply.
What happens if we don't comply?
Non-compliance could lead to regulatory action under FEMA and PMLA. The circular emphasizes a risk-based approach, so failure to assess and mitigate risks may attract penalties.