Tuesday, February 19, 2008

RBI asks banks to step up vigilance against misuse of banking channel by terrorists and criminals

RBI has issued a directive to the banks regarding stepping up vigilance against use of banking channels by terrorists and criminals. The directive was issued after the security agencies had complained to finance ministry that the banks were not reporting any suspicious transactions.

RBI asked banks to report any suspicious transactions to security agencies and guard against misuse of the system.

"Banks are advised to develop suitable mechanism... for enhanced monitoring of accounts suspected of having terrorist links and swift identification of the transactions and making suitable reports to the Financial Intelligence Unit-India on priority," it told bank chiefs.

RBI also instructed the banks to scan existing accounts to make sure that they are not linked to bodies which figure in the list of suspected persons available on UN website.

The central bank has asked the banks to review the risk profile of customers every six months, RBI said they should update the identification data of low risk customers every five years and for customers in high and medium risk categories every two years. "Adequate screening mechanism" for hiring was also proposed.

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