SBI pens anti-laundering norms

State Bank of India, the country's largest bank, has come out with comprehensive guidelines to prevent anti-money laundering (AML).

Since the RBI has come out with the guidelines on anti-money laundering and Know Your Customer norms, this is one of the major banks to have come out with KYC norms , starting with the definition of customer for the bank, said a banking source.

As per the new guidelines, customers have been classified as high risk, medium risk and low risk. Among others, firms in the private sector , private limited companies, individuals with account balances of Rs 1 crore and above per annum, trusts, charities, non government organisations receiving donations from India and abroad have been classified as high risk accounts.

Similarly, individuals, firms in private sectors, private limited companies and public limited companies with balances of Rs 10 lakh to Rs 1 crore per annum have been categorised as low risk.

Along with some African and East European countries, customers domiciled in Burma, Russia and Philippines have been classified as high risk clients.

While the new guidelines are applicable for new accounts. existing customers whose accounts figure at Rs 10 lakh and above during the past 12 months will attract KYC review.

In addition to this, existing accounts of companies, firms, trusts, religious organisations, and other institutions will be subjected to KYC review irrespective of the amount in the balance.

Each branch is expected to report cash transactions of Rs 10 lakh and above of single accounts or, series of cash transactions integrally connected to each other, on a fortnightly basis. In foreign offices, individual cash withdrawals and deposits for $ 10,000 and above also need to be reported.

The guidelines also specified that the bank needs to be more cautious f or trust/nominee or fiduciary accounts , client accounts operated by professional intermediaries such guardians of estates, executors, administrators, assignees, receivers etc; accounts of politically exposed persons resident outside Indian, companies and firms, transactions conducted through correspondent relationships.

As for the correspondent banking, KYC procedures should be established to ascertain whether the correspondent bank or counter party is itself regulated for money laundering.

Moreover, if the correspondent bank is regulated under AML, its identity needs to be verified as per the norms of the Financial Action Task force.