The Reserve Bank of India (RBI) has asked all the State and Central Co-operative Banks (StCBs/DCCBs) to adhere to 'know your customer' norms diligently to prevent their use by criminal elements for money laundering or terror financing activities. In a notification released today, the RBI asked the StCBs/DCCBs to prepare a risk profile of each customer and apply enhanced due diligence measures on higher risk customers. According to the regulator, assessment of risk of Money Laundering/Financing of Terrorism helps both the competent authorities and the regulated entities in taking necessary steps for combating ML/FT adopting a risk-based approach. “This helps in judicious and efficient allocation of resources and makes the AML/CFT regime more robust,” RBI said in its notification. StCBs/DCCBs have been further advised to take steps to identify and assess their ML/TF risk for customers, countries and geographical areas as also for products/ services/ transactions/delivery channels. “StCBs/DCCBs should have policies, controls and procedures, duly approved by their boards, in place to effectively manage and mitigate their risk adopting a risk-based approach. As a corollary, StCBs/DCCBs would be required to adopt enhanced measures for products, services and customers with a medium or high risk rating,” RBI said.
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