RBI advises Co-ops to follow KYC norms

Reserve Bank of India has advised the co-operative banks to follow the Know Your Customers (KYC) norms more strictly. According to the bank it will prevent the illegal funding for terrorist and criminal activities and will be beneficial for the bank also to keep proper record of their customer.

RBI said "It has been brought to our notice that 'Money mules' can be used to launder the proceeds of fraud schemes (e.g phishing and identity theft) by criminals, who gain illegal access to deposit accounts by recruiting third parties to act as 'money mules',"

In a money mule transaction a person with a bank account is recruited to receive cheques, the person has to transfer money from his account to another account. These money mules are recruited by various methods including spam e-mails.

Many a times the account holders are found innocent but sometimes the account is found to be a fake or not up to date. That is why it becomes hard to locate such account holder. Such practices can be checked if the banks properly follow the Know Your Costumer guidelines.

In a statement RBI said to the executives of central and co-operative banks "State and central Co-operative Banks are, therefore, advised to strictly adhere to the guidelines on KYC/AML/ CFT...in order to protect themselves and their customers from misuse by such fraudsters