RBI Tightens Anti-Money Laundering Norms for Companies

The RBI has tightened the anti-money laundering (AML) norms by asking companies to appoint a designated director who can impose fines of up to Rs 1 lakh if an employee is found guilty of violation.

"If the director, in the course of any inquiry, finds that a reporting entity or its designated director on the Board or any of its employees has failed to comply with the obligations, he may by an order, levy a fine on such reporting entity or its designated director on the Board or any of its employees, which shall not be less than Rs 10,000 but may extend to Rs 1 lakh for each failure," RBI said.

Besides, the director has also been empowered to issue a warning in writing or direct the reporting entity or its designated director or any of its employees, to comply with specific instructions.

The director may also direct to send reports at interval prescribed on measures it is taking.

The RBI also said "the authorised persons may nominate a director on their boards as 'designated director' to ensure compliance with obligations under Prevention of Money Laundering (Amendment) Act."

In a separate notification, the RBI said "Indian agents under money transfer service scheme are also required to nominate a director on its board to ensure compliance with AML for Cross Border Inward Remittance under Money Transfer Service Scheme."