The Reserve Bank of India (RBI) has notified all scheduled commercial banks to implement better procedures and systems to track wire transfers, domestic as well as cross-border.
RBI has issued these guidelines under Section 35A of the Banking Regulation Act, 1949 and any contravention thereof may attract penalties under the relevant provisions of the Act.
According to the new guidelines, basic (but accurate and meaningful) information about the originator of the wire transfer should be immediately available to the Financial Intelligence Unit - India (FIU-IND).
In a letter to all SCBs, Vinay Baijal, Chief General Manager, RBI, wrote that owing to the potential terrorist financing threat posed by small wire transfers, the object is to be in a position to trace all wire transfers with minimum threshold limits.
Consequently, the regulatory authority has advised all banks that all cross-border wire transfers should be accompanied with the following information:
a) All cross-border wire transfers must be accompanied by accurate and meaningful originator information.
b) Information accompanying cross-border wire transfers must contain the name and address of the originator and where an account exists, the number of that account. In the absence of an account, a unique reference number, as prevalent in the country concerned, must be included.
c) Where several individual transfers from a single originator are bundled in a batch file for transmission to beneficiaries in another country, they may be exempted from including full originator information, provided they include the originator s account number or unique reference number as at (b) above.
Similarly, domestic wire transfers should be have the following information:
a) Information accompanying all domestic wire transfers of Rs. 50000 and above must include complete originator information i.e. name, address and account number etc., unless full originator information can be made available to the beneficiary bank by other means.
b) If a bank has reason to believe that a customer is intentionally structuring wire transfers to below Rs. 50000to several beneficiaries in order to avoid reporting or monitoring, the bank must insist on complete customer identification before effecting the transfer. In case of noncooperation from the customer, efforts should be made to establish his identity and Suspicious Transaction Report (STR) should be made to FIU-IND.
c) When a credit or debit card is used to effect money transfer, necessary information as (a) above should be included in the message.
Interbank transfers and settlements where both the originator and beneficiary are banks or financial institutions would be exempted from the above requirements.
Other provisions in the guidelines include:
1) The ordering bank must ensure that qualifying wire transfers contain complete originator information. The bank must also verify and preserve the information at least for a period of ten years.
2) For both cross-border and domestic wire transfers, a bank processing an intermediary element of a chain of wire transfers must ensure that all originator information accompanying a wire transfer is retained with the transfer. Where technical limitations prevent full originator information accompanying a cross-border wire transfer from remaining with a related domestic wire transfer, a record must be kept at least for ten years (as required under Prevention of Money Laundering Act, 2002) by the receiving intermediary bank of all the information received from the ordering bank
3) A beneficiary bank should have effective risk-based procedures in place to identify wire transfers lacking complete originator information. The lack of complete originator information may be considered as a factor in assessing whether a wire transfer or related transactions are suspicious and whether they should be reported to the FIU-IND. The beneficiary bank should also take up the matter with the ordering bank if a transaction is not accompanied by detailed information of the fund remitter. If the ordering bank fails to furnish information on the remitter, the beneficiary bank should consider restricting or even terminating its business relationship with the ordering bank.
