Fearing possible flow of black money into the system through jewellers and bullion dealers, the Reserve bank of India (RBI) has asked banks to treat such entities as ‘high risk’ customers and subject their accounts to strict monitoring.
The business transactions of jewellers and bullion dealers are highly cash-intensive in nature and it is feared that they could be used for flow of black money into the banking system.
Banks have been asked to conduct stricter than normal due diligence before opening accounts for such entities and subject the transactions in such accounts to strict monitoring.
Banks are also required to immediately inform the enforcement agencies about any suspicious activities in the accounts of these entities and non-compliance to the guidelines would attract hefty penalties, RBI said in a circular to the bank chiefs.
“In view of the risks involved in cash intensive businesses, accounts of bullion dealers (including sub-dealers) and jewellers should also be categorised by banks as ‘high risk’ requiring enhanced due diligence,” the RBI circular said.
RBI added that banks would also be required to subject these ‘high risk accounts’ to intensified transaction monitoring.
“High risk associated with such accounts should be taken into account by banks to identify suspicious transactions for filing Suspicious Transaction Reports (STRs) to FIU-IND,” RBI said.
Financial Intelligence Unit – India (FIU-IND) is the central national agency responsible for receiving, processing, analysing and disseminating information relating to suspect financial transactions.
Others being treated as high-risk customers by RBI include non-resident customers, HNIs, trusts, charities, NGOs and organisations receiving donations, companies having close family shareholding or beneficial ownership, politically exposed persons and those with dubious reputation.
On the other hand, salaried persons, people belonging to lower economic strata, government departments and government-owned companies, regulators and statutory bodies are treated as low-risk customers.
The high-risk accounts need to be subjected to intensified monitoring for issues like the background of the customer, sources of funds and high-value transactions.
