Fulfill Obligations under PML rules: RBI to NBFCs

RBI getting Stricter

The Reserve Bank of India (RBI) is taking radical steps to ensure compliant, safe and healthy business practices from NBFCs. In the month of July 2018 alone, RBI canceled the license of over 100 NBFCs. RBI had blacklisted some of these organizations and some willingly surrendered their licenses. The RBI has also flagged over 1,200 NBFCs as "high-risk" because they did not fulfill the obligations under PML rules. PML basically stands for  Prevention of Money Laundering. The government introduced this act in the year 2002. Apart from these, an NBFC has to follow Annual Compliance guidelines as well. Check out Annual Compliance of NBFCs in India.

Comply or Close

With the RBI drilling down hard on the compliance with PML rules, NBFCs have to get their business in order. Under the PML rules, NBFCs(Reporting Entities{RE}) have to verify the identity of their clients, maintain records and provide the relevant information to the Financial Intelligence Unit(FIU). According to the FIU, these unregistered/non-compliant NBFCs are posing a threat to the country's financial system's integrity.

In order to avoid any type of miscommunication, the FIU has released a list of 'non-compliant NBFCs which have not fulfilled their obligation under PML Act and Rules relating to the non-registration of Principal Officer'. The FIU has released this list so that bankers proceed with due diligence about the operations of some of the non-compliant NBFCs.

The FIU is also enabling the ease of filing such information by releasing the FINnet portal. It is mandatory for NBFCs to register their Principal Officer (PO) with the FINnet gateway portal. Further, as per provisions of the PML Act and Rules, all NBFCs are required to intimate the details of their Designated Director to FIU-IND. (It may be noted that registration of RE and PO is only through the online mode, i.e. FINnet Gateway portal (https://finnet.gov.in/), while intimation of appointment/change of Designated Director is by way of a letter to FIU-IND).

Conclusion

Missing compliance deadlines? The process seems tedious? Call in the experts at LegalRaasta where we can help with ROC Compliances as well as new NBFC registration. Shoot us an e-mail at [email protected] or ring us up at +91-8750008585