Violation of laundering Act will be viewed seriously: RBI

Banks non-compliance with Prevention of Money Laundering Act by will be viewed seriously, the Reserve Bank of India (RBI) has warned.

The Act, which came into force in 2005, is aimed at combating channelling of illegally earned money into the banking system.

It provides for attachment and seizure of property and records. It also provides for stringent punishment, including rigorous imprisonment of up to 10 years and fine of up to Rs 5 lakh.

As per the Act, every banking company, financial institution and intermediary needs to maintain a record of all transactions, the nature and value of which is prescribed in the rules.

"The deadline for banks to comply with the Act was December 31, 2005. We are procuring reports on the compliance from various banking fraternities. Non-compliance with the Act will be viewed seriously," RBI Executive Director Anand Sinha said here today.

Sinha said it is imperative for banks to adopt and integrate international financial system.

"Banks that refused to comply with anti-money laundering measures worldwide had to pay a heavy price. In fact, other banks refused to transact business. Banks that do not comply with anti-money laundering measures assume the status of outcasts in the banking sector," he said.