financial institution play an important role in combating the financing of terrorism because terrorist often rely on the financial system especially banks to transfer money laws that require banks to perform due dilligence on their customer both new and existing and a report suspicious tranction such a high value cash tranction to the authorities can help to prevent terrorism statring in 2002 government naround the world upgrade money laundering laws and surveillance and monitoring system of financial tranction anti money laundering regulatin have become a much larger burden for financial institution and enforecement has stepped up significantly during 2011-2015 a number of major banks faced ever incresing fines for breaches of money laundering regulation the reserve banks of india RBI in july 2019 imposed a penalty of rs 1 crore on private sector lender HDFC banks for non compliance of know your customer kyc norms and anti money laundering norms and for failure frauds the reserve bank of india RBI has by an order dated june 25 2019 imposed monetery penalty on four banks for non compliance with certain provisions of direction issued by and opening of current account as detailed below
objectives of anti money laundering (AML) GUIDELINES ARE
- not to allow sophisticated methods of transferring funds to hide trail
- track persons /entities who misuse banking system to carry out illigal actvities
- to prevent unauthorized purches and sale of foreign currency notes & travelercheques and prevent
- in india antimoney laundering activities come under the PML act prevention of money laundering act 2002 is an act of the parliment of indian enacted to prevent money laundering and to provide for confisaction of property derivedd from money laundering PMLA came into force with effect from july 1 2005 the act wasamended in the year 2005 2009 and 2012
- REPORTING OBLIGATION UNDER PMLA ACT
- the act and rules notified there under impose obligation on banking companies fianacial institution and intermediaries to veryfy identity of client maintein recorded and furnish information in predscribed form to financial intelligence unit india FIU -ind
16.313 SRY