KYC Guidelines
Principal Officer Registration with FIOU-India
Maintenance of Records
Reporting to FIU-India
Prevention of Money Laundering Act (PMLA) Compliance for NBFCs The Prevention of Money-Laundering Act, 2002 was enacted by the Government of India to prevent the money-laundering in India and to provide the regulations for the confiscation of the property derived from, or involved in, money-laundering and for matters incidental thereto. The Act has made the requirements for the Reporting Entities (REs) viz. Banks, Financial Institution, NBFCs, Virtual Digital Asset, etc. to comply with certain rules and regulation prescribed under the Act with the Reserve Bank of India (RBI) and Financial Intelligence Unit-India (FIU-India)
“Know your Customer” guidelines were issued in February, 2005 for framing an Anti Money Laundering and combating financing of terrorism policies by the regulatory authorities. Compliance with these standards by the Banks/financial institutions/NBFCs are considered necessary for international financial relationships. As such, they are required to frame the Anti Money Laundering measures and Know your Customer guidelines are adopted by passing a Board Resolution which needs to be intimated to RBI within the prescribed time.
NBFCs are required to appoint a Principal Officer and put in place a system of internal reporting of suspicious transactions and cash transactions of INR 10 lakh and above. In this connection, Government of India, Ministry of Finance, Department of Revenue, issued a notification dated July 1, 2005 in the Gazette of India, notifying the Rules under the Prevention of Money Laundering Act (PMLA), 2002. In terms of the Rules, the provisions of PMLA, 2002 came into effect from July 1, 2005. Section 12 of the PMLA, 2002 casts certain obligations on the NBFCs in regard to preservation and reporting of customer account information.
NBFCs are also required to follow a system of maintaining proper record of transactions prescribed under Rule 3 of Prevention of Money Laundering (Maintenance of Records) Rules, 2005 (PML Rules, 2005), for maintaining the following transactions:
All cash transactions of the value of more than ₹ 10 lakh or its equivalent in foreign currency
Series of all cash transactions individually valued below ₹ 10 Lakh, or its equivalent in foreign currency which have taken place within a month and the monthly aggregate of which exceeds INR 10 lakhs or its equivalent in foreign currency. It is clarified that for determining ‘integrally connected transactions’, ‘all accounts of the same customer’ should be taken into account.
All cash transactions where forged or counterfeit currency notes or bank notes have been used as genuine and where any forgery of a valuable security has taken place facilitating the transactions
All suspicious transactions whether or not made in cash and in manner as mentioned in the Rules framed by Government of India under the Prevention of Money Laundering Act, 2002.
NBFCs are required to adhere to the reporting requirements as per the amended rules.
Under Rule 3 of the PML (Maintenance of Records) Rules, NBFCs are required to report information relating to cash and suspicious transactions to the Director, Financial Intelligence Unit.
This includes maintaining records of:
All cash transactions valued above ₹ 10 Lakhs or its foreign currency equivalent.
A series of integrally connected cash transactions individually valued below ₹ 10 Lakhs, but taking place within a single calendar month, where the monthly aggregate exceeds ₹ 10 Lakhs.
All cash transactions involving the use of forged or counterfeit currency notes.
All suspicious transactions, whether executed in cash or digitally.
The reporting formats contain detailed guidelines on the compilation and manner/procedure of submission of the reports to FIU-IND. NBFCs are required to adopt the format prescribed for banks with modifications as applicable.
The cash transaction report (CTR) for each month should be submitted to FIU-IND by 15th of the succeeding month. While filing CTR, individual transactions below rupees fifty thousand may not trigger a CTR on their own, if they are integrally connected or part of a series that aggregates to more than ₹10 Lakhs in a month across a customer’s accounts, they must be reported. Cash transaction reporting by branches/offices of NBFCs to their Principal Officer should invariably be submitted on monthly basis and the Principal Officer, in turn, should ensure to submit CTR for every month to FIU-IND within the prescribed time schedule
The Suspicious Transaction Report (STR) should be furnished within 7 days of the Principal Officer forming a belief or receiving the initial alert/trigger that a transaction is suspicious, whether cash or non-cash, or a series of transactions integrally connected are of suspicious nature. The Principal Officer should record his reasons for treating any transaction or a series of transactions as suspicious. It should be ensured that there is no undue delay in arriving at such a conclusion once a suspicious transaction report is received from a branch or any other office. Such a report should be made available to the competent authorities on request.
Mandatory electronic filing by the 15th of the succeeding month for all institutional receipts by registered Non- Profit Organisation (NPOs) exceeding ₹ 10 Lakhs.
A report must be filed by the 15th of the succeeding month detailing all instances where forged or counterfeit bank notes were detected.
Mandatory reporting of all cross-border wire transfers/remittances exceeding ₹5 Lakhs (or foreign equivalent) where either the origin or destination is outside India.
Above compliances can be done through Easethebizz. To know more details you can call us at our customer support number or you can mail at our mail address.
Private Limited Company Registration
The Prevention of Money Laundering Act (PMLA), 2002 is an Indian law that aims to prevent money laundering, combat financial crimes, and confiscate assets derived from illegal activities. It also requires reporting entities to maintain records and report specified transactions to FIU-India.
PMLA compliance is mandatory for reporting entities such as:
These organizations must implement KYC, AML policies, and transaction monitoring systems.
Know Your Customer (KYC) is a mandatory process that verifies the identity of customers before establishing a business relationship. It helps financial institutions prevent money laundering, fraud, identity theft, and terrorist financing while complying with RBI and PMLA regulations.
The Principal Officer is responsible for ensuring an organization's compliance with PMLA. Their duties include monitoring suspicious transactions, maintaining AML records, filing reports with FIU-India, and acting as the official contact for regulatory authorities.
NBFCs must maintain records of:
These records must be preserved as required under the PMLA Rules.
A Cash Transaction Report (CTR) is a monthly report submitted to FIU-India for cash transactions exceeding ₹10 lakh or a series of connected transactions whose aggregate exceeds this limit. The report must be filed by the 15th of the succeeding month.
A Suspicious Transaction Report (STR) is filed when a transaction appears unusual, lacks a lawful purpose, or is suspected to involve money laundering or terrorist financing. The report should generally be submitted within 7 days after identifying the suspicious activity.
Reporting entities must report:
Failure to comply with the Prevention of Money Laundering Act may result in regulatory action, financial penalties, legal proceedings, reputational damage, and other consequences under applicable laws and RBI/FIU-India guidelines.
Easethebizz provides end-to-end assistance for PMLA compliance, including KYC and AML policy support, FIU-India registration guidance, Principal Officer compliance, transaction reporting (CTR/STR), documentation, and ongoing regulatory advisory to help businesses meet legal requirements efficiently.
