Financial Daily from THE HINDU group of publications
Sunday, Oct 23, 2005
Financial Daily from THE HINDU group of publications Sunday, Oct 23, 2005 |
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Banking Money & Banking - RBI & Other Central Banks Cash deals above Rs 10 lakh to come under lens RBI plans system for banks to report suspicious transactions Our Bureau
Mumbai , Oct. 22 THE Reserve Bank of India is in the process of prescribing a system for banks to regularly report cash transactions above Rs 10 lakh or any other suspicious transactions to the Financial Intelligence Unit of India. Mr Anand Sinha, Chief General Manager in charge of Department of Banking Operations and Development, RBI, said that the central bank would be ready with a regular reporting system for banks for suspicious transactions or cash transactions above Rs 10 lakh. RBI had issued revised know your customer and money laundering guidelines in November 2004. Mr Sinha was speaking at a seminar on KYC and anti-money laundering organised by the Indian Banks Association (IBA) here on Saturday. He said that instructions issued by the RBI are in alignment with the recommendations of Financial Action Task Force, an inter-governmental body that develops and promotes national and international policies to combat money laundering and terrorist financing. Mr Sinha said that while the task force's recommendations have no statutory backing, satisfactory compliance is advisable. "If the compliance to the recommendations is not satisfactory, it will lead to problems in international relations. Banks will not be able to secure licences for branches and there will be a higher premium on funding," he said. He said that bankers should also be careful while establishing business with banks located in countries not complying with the task force's recommendations. Mr Sinha said that money laundering is no longer a local issue, but a globalised phenomenon. "Conservative statistics show that money laundered in a year is around $600 billion-$1.5 trillion, which constitutes 2-5 per cent of the world's GDP," he said. Mr M. R. Umarji, Chief (Legal) Advisor, IBA, said that the growth of technology had reduced face-to-face interactions with customers and increased the probability of money laundering. He added that laws in India are not as stringent as those in countries such as the UK. "In the future, one can expect the Indian law to be amended and made more stringent as per international standards," Mr Umarji.
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