NBFCs come under anti-laundering norm

The Reserve Bank of India has extended the anti-money laundering guidelines applicable to banks to non-banking financial companies (NBFCs).

RBI has asked all NBFCs to ensure that they are fully compliant with the provisions of the new "know your customer" guidelines and anti-money laundering measures before December 31, 2005.

The central bank has asked NBFCs to formulate within three months a proper policy framework with the approval of their respective boards.

RBI had issued in January 2004 guidelines to NBFCs on customer identification procedure for opening of accounts and monitoring transactions of a suspicious nature.

The "know your customer" guidelines have been revisited in the context of the recommendations made by the Financial Action Task Force on anti-money laundering standards and on combating financing of terrorism.

RBI has asked NBFCs to bear in mind that the information collected from customers has to be kept confidential. NBFCs should not divulge any customer details for cross selling or any other purposes.

NBFCs may, therefore, ensure that information sought from the customer is relevant to the perceived risk, is not intrusive, and is in conformity with the guidelines.

RBI said any other information from the customer should be sought separately with his /her consent and after opening the account.