The Reserve Bank of India (RBI) has asked all banks doing business in the country to carry out better customer due diligence and maintain details of third party products sold by them.
The Central Bank observed that banks are not carrying out customer due diligence as required under Know-Your-Customer (KYC)/Anti-Money Laundering (AML)/Countering Financing of Terrorism (CFT) guidelines while marketing and distributing third party products as agents. Some banks are also not filing Cash Transaction Reports (CTRs) or Suspicious Transaction Reports (STRs) in such cases, wherever required,” the RBI said.
The RBI has asked all banks to ensure segregation of the marketing function from the approval/transactional process at bank branches and ensure that its employees do not receive cash/non-cash incentives directly from insurance companies, mutual funds and other third party product providers. It has also asked banks to maintain a board-approved policy to avoid mis-selling and conflict of interest in marketing and distribution of own or third party financial products.
The regulator will also issue guidelines on wealth management services offered by banks in June.