RBI Sets New Guidelines for Domestic and International Wire Transfers

The Reserve Bank of India (RBI) has issued new guidelines for all banks and financial institutions in the country, aimed at ensuring transparency and preventing money laundering and terrorist financing through domestic and international wire transfers. Under the new rules, banks must provide complete and accurate information about the originator and beneficiary for all wire transfers.

To align with the Financial Action Task Force (FATF) recommendations, the RBI has amended the Know Your Customer (KYC) instructions for wire transfers. The new guidelines stipulate that all cross-border wire transfers must include accurate, complete, and meaningful information about both the originator and beneficiary.

The RBI's guidelines covering domestic wire transfers now also extend to international wire transfers. In domestic transfers where the originator is the account holder of the originating regulated entity (RE), information about both the originator and recipient must be included. For domestic wire transfers of ₹50,000 or more, the same originator and beneficiary information as cross-border wire transfers must be provided if the originator is not an account holder of the ordering RE.

Upon receiving the applications, the RBI has ordered that full details of the remittance along with the relevant laws should be passed on to the relevant law enforcement authorities and/or prosecutors, as well as the Financial Intelligence Unit of India (FIU-IND).

However, the instructions do not apply to transfers made to purchase goods or services through credit cards, debit cards, or prepaid payment instruments (PPI).

The RBI also highlighted that any RE acting as an intermediary in the remittance chain must ensure that all sender and payee information related to the remittance is on the files of the remittance.

Conclusion: The new guidelines set by the RBI for domestic and international wire transfers aim to enhance the security and transparency of the financial system in India. With the mandate for complete information about originator and beneficiary for all wire transfers, the RBI intends to prevent the exploitation of such transfers for money laundering or terrorist financing. The RBI's directive for banks and financial institutions to align their KYC procedures with FATF recommendations is a step towards making the Indian financial system more compliant with global standards.

Important News Tags and Headlines for Readers

RBI Guidelines for Domestic and International Wire Transfers

Mandate for Complete Information about Originator and Beneficiary

KYC Guidelines Aligned with FATF Recommendations

Full Disclosure to Law Enforcement Authorities and FIU-IND

Exemptions for Transfers to Purchase Goods or Services

Intermediaries' Responsibility for Sender and Payee Information