RBI tightens norms for wire transfers

The Reserve Bank of India has tightened fund transfer norms in a bid to curb financial terrorism and money laundering.

The Reserve Bank of India (RBI) has tightened fund transfer norms in a bid to curb financial terrorism and money laundering. Revising the KYC (know your customer) norms for wire transfers, the RBI has said banks will have to insist on complete information about customers wishing to transfer funds both locally and overseas.

According to the RBI, all cross-border wire transfers must be accompanied by accurate and meaningful originator information. “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,” it said.

“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,” the RBI said.

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In the case of domestic transfers, information accompanying all domestic wire transfers of Rs 50,000 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.

According to the RBI, a bank has reason to believe that a customer is intentionally structuring wire transfers to below Rs 50,000 to several beneficiaries in order to avoid reporting or monitoring, the bank must insist on complete customer identification before effecting the transfer. “In case of non-cooperation from the customer, efforts should be made to establish his identity and Suspicious Transaction Report (STR) should be made to Financial Intelligence Unit — India (FIU-IND),” the RBI said.

When a credit or debit card is used to effect money transfer, necessary information should be included in the message, the RBI said. However, settlements where both the originator and beneficiary are banks or financial institutions, they are exempted from these requirements. RBI also stated that the ordering bank — or the bank that originates the wire transfer—- must ensure that wire transfers contain the requisite information. It must also verify and preserve the information for at least 10 years.

Banks use wire transfers as an expeditious method for transferring funds between bank accounts. Wire transfers include transactions occurring within the national boundaries of a country or from one country to another. As wire transfers do not involve actual movement of currency, they are considered as a rapid and secure method for transferring value from one location to another.