Reserve Bank of India will soon review the progress made by banks in implementing "Know Your Customer" guidelines at branch level to strengthen the mechanism to keep a check on money laundering activities.
The central bank had set a timetable in December for banks to adhere to KYC procedures for customer accounts, including individual and corporate clients and "we expect the phased implementation system to be in place by December 2004," RBI executive director Usha Thorat said in Mumbai on Thursday.
Addressing a seminar on money laundering, organised by Indian Banks Association, she said separate scrutiny would be done by special teams to assess the action taken at the branch level.
The detailed regulation and norms relating to money laundering monitoring would be notified soon, she said adding banks should designate an officer level person to report data on questionable transactions to financial intelligence unit.
"Post terrorist attacks in USA in 2001, the international system has become alert. Financing of terrorist activities, closely linked to arms and drug trade could give impetus to tainted money," she said.
Banks could unknowingly become conduit for tainted money transactions and to prevent it, the monitoring mechanism and awareness of bank staff should be strengthened, Thorat said.
Direct or indirect involvement of bank officials in money laundering transactions would make them guilty, Thorat added.
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