Govt to tighten vigil on money transfer bureaux

Government is mulling to tighten reporting norms for international payment gateways and money transfer agencies after some transactions in small tranches of few thousand rupees were reported to be suspicious by law enforcement agencies.

The security agencies have expressed fears that such outlets were being used by militants for money transfers involving small amounts, sources said.

The new norms would entail these entities to report even small transactions in the range of Rs 10,000-Rs 20,000 to both international and domestic destinations in the form of Suspicious Transaction Reports (STRs) and Cash Transaction Reports (CTRs) to agencies like the Financial Intelligence Unit and the Income Tax department.

The move follows a warning by intelligence agencies that militant groups were getting money in small amounts through foreign exchange bureaux, which have come up in every corner of the country.

The security agencies in their successive reports to the Finance Ministry have raised serious concerns over mushrooming of money transfer agencies, including some international players, who have their agents in various places.

Though RBI officials said that permission had been given to companies to have agents and sub-agents like banks, post offices and important financial institutions, they were unable to give an explanation when questions were raised about the appointment of "sub-sub agents" like grocery shop owners and travel agents by these firms.

Security agencies are apprehensive that militants were using such bureaux for bringing in money from abroad in small amounts to avoid detection and there was no mechanism in place to seek information from these exchanges and that there was no proper compilation of records.