The Reserve Bank of India in its notification dated 20th April 2020 has amended the Master Direction (MD) on Know Your Customer (KYC) Direction dated 25th February 2016.
Whereby through this amendment a new section 5A related to “Money Laundering and Terrorist Financing Risk Assessment by Res” has been inserted which specifies that the regulated entities to carry out ML and TF risk assessment exercise periodically to identify, assess and take effective measures to mitigate its money laundering and terrorist financing risk for clients, countries or geographic areas, products, services, and transactions or delivery channels. The assessment process should consider all the relevant risk factors before determining the level of overall risk and the appropriate level and type of mitigation to be applied Further, the internal risk assessment carried out by the regulated entity should be commensurate to its size, geographical presence, complexity of activities/structure.
Also, the REs shall apply a Risk Based Approach (RBA) for mitigation and management of the identified risk and should have Board approved policies, controls, and procedures in this regard.
Click here to read the Notification.
