Rapid revision
Test one fact at a time:open a card, recall the direct answer, then practise it in MCQ format.
What two pieces of legislation form the primary legal framework for Anti-Money Laundering (AML) and Countering Financing of Terrorism (CFT) in India?
Direct Answer
The Prevention of Money-Laundering Act, 2002 and the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005
What does the "Digital KYC" process involve?
Direct Answer
The capturing of a live photo of the customer and their officially valid document or proof of possession of Aadhaar, along with the latitude and longitude of the location.
A "Suspicious transaction" is a transaction that gives rise to a reasonable ground of suspicion for all of the following reasons except:
What does "On-going Due Diligence" mean?
Direct Answer
Regular monitoring of transactions in accounts to ensure they are consistent with knowledge about the customer, their business, risk profile, and source of funds.
What is a "Shell Bank"?
Direct Answer
A bank that has no physical presence in the country where it is incorporated and licensed, and is unaffiliated with a regulated financial group.
According to the Money Laundering (ML) and Terrorist Financing (TF) Risk Assessment guidelines,
what is the minimum frequency for reviewing the risk assessment exercise?
What is the rule regarding the outsourcing of Know Your Customer (KYC) norms?
Direct Answer
Regulated Entities (REs) shall ensure that decision-making functions of determining compliance with KYC norms are not outsourced.
What action should a Regulated Entity (RE) take if it forms a suspicion of money laundering and reasonably believes that performing the Customer Due Diligence (CDD) process will tip-off the customer?
Direct Answer
The RE shall not pursue the CDD process and instead file a Suspicious Transaction Report (STR) with FIU-IND.
What is the policy regarding the disclosure of a customer's risk categorization?
Direct Answer
The risk categorization shall be kept confidential and shall not be revealed to the customer to avoid tipping off.
For undertaking Customer Due Diligence (CDD) for an individual, what must be obtained in addition to their identity and address proof (like Aadhaar or an OVD)?
Regulated Entities (REs) may undertake Video based Customer Identification Process (V-CIP) for all of the following purposes except:
What is the minimum periodicity for a Regulated Entity (RE) to conduct a periodic review of the risk categorisation of accounts?
For an individual customer categorized as low risk,
what is the extended timeline provided for the updation of KYC that has fallen due?
Direct Answer
All transactions are allowed, and updation must be done within one year of its falling due or upto June 30, 2026, whichever is later.
What is the rule for Regulated Entities (REs) regarding professional intermediaries who are bound by client confidentiality?
Direct Answer
REs shall not open accounts of such professional intermediaries who are bound by any client confidentiality that prohibits disclosure of the client details to the RE.
What Customer Due Diligence (CDD) is required when opening a savings bank account for a Self Help Group (SHG)?
Direct Answer
CDD of all office bearers shall suffice for opening the account, and CDD of all members may be undertaken at the time of credit linking.
When a bank opens a Non-Resident Ordinary (NRO) account for a foreign student, what transaction limitations apply pending the verification of the local address?
Direct Answer
Allowing foreign remittances not exceeding USD 1,000 and a cap of rupees fifty thousand on aggregate.
What is the requirement for Regulated Entities (REs) regarding customers who are non-profit organisations (NPOs)?
Direct Answer
REs must ensure the details of such customers are registered on the DARPAN Portal of NITI Aayog.
When are Regulated Entities (REs) required to undertake countermeasures called for by an international or intergovernmental organisation?
Direct Answer
When India is a member of the organisation and the countermeasures have been accepted by the Central Government.
When dealing with persons from jurisdictions identified by the Financial Action Task Force (FATF) as having strategic deficiencies, what are Regulated Entities (REs) required to examine?
Direct Answer
The background and purpose of the transactions, and to retain written findings.
What is the maximum period for which payment instruments like cheques, drafts, and pay orders are valid for payment?
Direct Answer
They shall not be paid if presented beyond the period of three months from the date of such instruments.
How are "Money Mules" described in the context of banking operations?
Direct Answer
Third parties recruited by criminals to launder the proceeds of fraud schemes, such as phishing and identity theft.
What action must Regulated Entities (REs) take before launching new products, business practices, or using new technologies?
Direct Answer
They must identify and assess the Money Laundering (ML) and Terrorist Financing (TF) risks associated with them.
What must a beneficiary Regulated Entity (RE) have in place to determine when to execute, reject, or suspend a wire transfer that lacks required originator or beneficiary information?
When a Regulated Entity (RE) engages with an unregulated entity in the process of a wire transfer, what must the agreement or arrangement with that entity clearly include?
Direct Answer
The obligations under the wire transfer instructions and a termination clause.