RBI asks banks to check unusual accounts

In order to curb money laundering through official banking channels, regulator Reserve Bank of India (RBI) has asked banks keep watch on any...

In order to curb money laundering through official banking channels, regulator Reserve Bank of India (RBI) has asked banks keep watch on any accounts where unusual transactions were suspected.

In a circular to banks’ management, RBI has said the Know Your Customer (KYC) procedures to existing accounts would be applicable where the credit or debit summation of a customer for the year 2002-03 was more than Rs 10 lakh or where unusual transactions were suspected.

RBI had earlier asked banks to formulate a KYC policy in consultation with their board and adhere to the same while opening any new accounts.

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However, for ensuring that existing small account holders were not inconvenienced and the KYC procedure was completed in time, it has been decided that banks may limit the application of KYC procedures to existing accounts, RBI said in a notification.

This process may be completed by December 31, 2004. Banks are required to complete the KYC procedure in regard to existing accounts by this period, as scheduled.

Banks may, however, ensure that KYC procedures are applied to all existing accounts of trusts, companies/firms, religious/charitable organisations and other institutions, or where the accounts are opened through a mandate or power of attorney.

RBI’s action comes after Rs 336 crore were deposited in Mumbai banks and was withdrawn from their Kochi branches to fund the Coimbatore bomb blasts, which targeted former Deputy Prime Minister L.K. Advani. None of the bankers suspected any wrongdoing in cash deposits and cash withdrawals.

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