2️⃣ Key AML Regulations (India + Global Context)

🇮🇳 India

• Prevention of Money Laundering Act (PMLA), 2002

• RBI AML/KYC Master Directions

• Financial Intelligence Unit – India (FIU-IND)

🌍 Global

• FATF (Financial Action Task Force) Recommendations

• USA PATRIOT Act (U.S.)

• EU AML Directives

• Basel Committee Guidelines

3️⃣ Core AML Components in Banks

1. Customer Due Diligence (CDD)

Also called KYC (Know Your Customer).

Includes:

• Customer identification & verification

• Address proof & identity proof

• Beneficial ownership identification

• Risk categorization (Low/Medium/High risk)

Enhanced Due Diligence (EDD) for:

• Politically Exposed Persons (PEPs)

• High-risk countries

• High-value clients

2. Transaction Monitoring

Banks use automated systems to detect suspicious patterns like:

• Large cash deposits

• Structuring (smurfing)

• Rapid movement of funds

• Unusual international transfers

• Transactions inconsistent with customer profile

3. Suspicious Transaction Reporting (STR)

If suspicious activity is detected:

• Bank files STR with FIU-IND (in India)

• Confidential process (customer not informed)

• Mandatory reporting timelines

4. Sanctions Screening

Screening against:

• UN sanctions lists

• OFAC lists

• Domestic watchlists

• Terrorist databases

5. Record Keeping

• Maintain customer records for 5–10 years

• Maintain transaction history

• Ensure audit trails

6. Ongoing Monitoring

AML is not a one-time process.
Banks must:

• Periodically update KYC

• Reassess risk

• Monitor unusual behavior continuously