RBI Mandates Complete Information for Money Transfers to Curb Money Laundering and Terrorism Financing

RBI Mandates Complete Information for Money Transfers to Curb Money Laundering and Terrorism Financing:

The Reserve Bank of India (RBI) has issued new instructions to all banks and financial institutions in the country to ensure that all wire transfers, whether domestic or international, contain complete information about the originator and beneficiary. The move is aimed at preventing wire transfers from being used as a channel for money laundering and financing terrorism. The updated instructions are part of the Master Direction on Know Your Customer (KYC) and are aligned with the recommendations of the Financial Action Task Force (FATF).

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Complete Information for Cross-border Wire Transfers:

As per the updated instructions, all cross-border wire transfers must be accompanied by accurate, complete, and meaningful originator and beneficiary information. This information must be available to appropriate law enforcement and prosecutorial authorities, as well as the Financial Intelligence Unit – India (FIU-IND) on receiving such requests with appropriate legal provisions.

Domestic Wire Transfers:

The RBI has also mandated that all domestic wire transfers, where the originator is an account holder of the ordering regulated entity, must contain originator and beneficiary information. Domestic wire transfers of ₹50,000 and above, where the originator is not an account holder of the ordering RE, shall also be accompanied by originator and beneficiary information as indicated for cross-border wire transfers.

Ordering Regulated Entity (RE):

The term ‘ordering RE’ refers to the financial institution that initiates the wire transfer and transfers the funds on behalf of the originator. These REs are now required to make all information on the wire transfers available to appropriate authorities on receiving such requests with appropriate legal provisions.

Exclusions:

The RBI has clarified that the latest instructions are not intended to cover any transfer that flows from a transaction carried out using a credit card, debit card, or Prepaid Payment Instrument (PPI) for the purchase of goods or services. These transactions will continue to follow the existing norms.