Module: General Practice
Q105: Cross-border banking operations require a strategic approach to conflicting regulations and risk management. Which of the following statements align with the RBI Master Direction on KYC and global best practices?
When a foreign branch of an Indian bank faces a conflict between Home Country (India/RBI) and Host Country AML regulations, the branch must strictly follow the "Stricter of the Two" rule.
If the Host Country's laws (e.g., secrecy jurisdictions) completely prohibit the implementation of Indian AML standards, the bank must inform the RBI and may be required to close the branch or prohibit the business relationship.
The "Risk-Based Approach" (RBA) permits banks to apply "Simplified Due Diligence" (SDD) to low-risk customers (like Self-Help Groups) to optimize resource allocation.
Indian banks are permitted to open accounts in secrecy jurisdictions without identifying the Beneficial Owner, provided they obtain an indemnity bond from the corporate client.
If the Host Country's laws (e.g., secrecy jurisdictions) completely prohibit the implementation of Indian AML standards, the bank must inform the RBI and may be required to close the branch or prohibit the business relationship.
The "Risk-Based Approach" (RBA) permits banks to apply "Simplified Due Diligence" (SDD) to low-risk customers (like Self-Help Groups) to optimize resource allocation.
Indian banks are permitted to open accounts in secrecy jurisdictions without identifying the Beneficial Owner, provided they obtain an indemnity bond from the corporate client.
✅ Correct Answer: B
The correct answer is Option B. The "Stricter of the Two" rule applies.
If compliance isn't possible, the branch must close.
RBA allows SDD.
Indemnity bonds cannot replace BO identification, making statement 4 incorrect.
Global compliance is the final test in the IIBF AML KYC Exam 2026.
If compliance isn't possible, the branch must close.
RBA allows SDD.
Indemnity bonds cannot replace BO identification, making statement 4 incorrect.
Global compliance is the final test in the IIBF AML KYC Exam 2026.