Page 151 - DMGT303_BANKING_AND_INSURANCE

Banking and Insurance

Notes

Case Study Briefing on Compliance to 'KYC Norms and AML
Measures'

April 12, 2006 - Hotel Hilton Towers, Mumbai
9.30 a.m. - 2.00 p.m.
briefing on know your customer (KYC) norms and anti-money laundering (AML)
measures was organised by the Indian Banks' Association (IBA) and IBS
AIntelligence, the consulting arm of IBS Publishing, at Mumbai on April 12, 2006.
Chaired by IBS Intelligence, over 130 bankers representing compliance and inspection
functions of banks participated in the event, which brought the banking regulator Reserve
Bank of India (RBI) and the Financial Intelligence Unit - India (FIU-IND) together as part of
the compliance focused forum. Mr. M. R. Umarji, Chief Advisor-Legal, IBA, commenced
the briefing with opening remarks that highlighted the responsibility of bankers to monitor
and control KYC compliance programs.

Mr. Sanjeev Singh, Additional Director, FIU-IND, made a detailed presentation to bankers
outlining the role and responsibilities of the agency. FIU-IND was set up under the Ministry
of Finance vide Government of India's Office Memorandum dated November 18, 2004, to
coordinate and strengthen the collection and sharing of financial intelligence through an
effective national, regional and global network to combat money laundering and related
crimes. A multi-disciplinary unit headed by a director, its core functions include intelligence
management, relationship management, policy review and development. The framework
comprises of inputs from diverse sources that span supervisory and regulatory agencies
(RBI, SEBI, DCA, IRDA); reporting entities (banking companies, financial institutions,
intermediaries); and intelligence and enforcement agencies; with the dissemination of
information back to the sources except to the reporting entities.

Covering the legal framework, the areas touched included PMLA 2002, the role of principal
officers, scheduled offences under PMLA, and KYC guidelines. Mr. Singh also listed
challenges within KYC in verification of identity. Providing further insight into the need
for furnishing information, cash transactions and suspicious transactions were expounded
in further detail. Analysing suspicious transactions, he mentioned, can be categorized into
six specific areas that encompass identification of clients, background of clients, multiple
accounts, activity in accounts, nature of transactions and value of transactions. In an effort
to encourage banks to comply, FIU-IND has also facilitated easy reporting formats to
ensure compatibility with transactional data generated by banks.
The FIU-IND website (www.fiuindia.gov.in) provides exhaustive information that spans
the scope of PMLA, as well as other informative inputs useful to bankers. With the Financial
Action Task Force (FATF) currently in India for dialogue with the Ministry of Finance,
Singh shared his expectations that India would soon be a part of the Egmont Group by
June 2006. Expanding the current definition of the FIU, India's role is expected to increase
with combating terrorist financing.
Contd....

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