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RBI panel for tightening money-laundering rules

A panel appointed by the Reserve Bank of India has recommended rules against money laundering should be tightened to help law enforcers track down sources of terrorist funding, according to the Reserve Bank of India's Web site, www.rbi.org.in.

The panel also said an agency should be set up to coordinate investigations of various regulatory and law enforcement agencies.

"The existing framework against money laundering activities in India...needs further strengthening," the panel said in its report released late on Tuesday.

"This can be done by improving procedures and policies for preparing appropriate (banks') customer profiles and coordination and cooperation with regulatory and other authorities."

The United States has asked India to play a more aggressive role in its global campaign against terrorist financing by joining groups striving to curb money laundering.

The Indian parliament is yet to pass The Prevention of Money Laundering Bill, 1999, and the country is yet to join the Paris-based Financial Action Task Force consisting of 29 nations, which was set up in 1989 to prevent international money laundering.

Since the September 11 attacks, cutting off money to terrorists has topped the agenda of FATF, which includes the United States, Britain, Canada, France, Brazil and Switzerland.

The panel has used FATF rules as a guideline.

Recommendations

The panel said banks operating in India should ascertain the source of funds in deposit schemes offered to expatriate Indians as part their drive to prevent money laundering.

It also suggested each bank appoint an anti-money laundering compliance officer and create profiles of customers.

It called for the creation of a databank of suspicious transactions, which could then be circulated to banks to help them detect patterns of suspicious behaviour.

The RBI did not say when it intends to implement the recommendations.

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