RBI penalties up 88% in 3 yrs; KYC, AML top list
The number of penalties imposed by the Reserve Bank of India on financial institutions grew 88% in the past three years with Know Your Customer (KYC) and Anti Money Laundering (AML) topping the list of non-compliances.
The central bank collected 78.6 crore over the three years after imposing penalties on 261 occasions in 2023 alone, according to RBI reports compiled by Signzy, a fintech firm that manages regulatory compliance for institutions.
The KYC and AML regulations cover how companies should align their resources to uncover potential money laundering in their institutions.
Urban and rural co-operative banks have the most KYC and AML violations, with urban co-op banks paying 13.5 crore and rural cooperative banks paying 20.13 crore from 2021 to January this year.
Ankit Ratan, co-founder and CEO of Signzy, as saying, “Small organisations like co-operative banks and fintechs often lack adequate risk and compliance teams. This is not solely an issue of expertise but also involves systemic problems and limited bandwidth.”
The rise in penalties can also be attributed to the RBI’s stricter and more comprehensive auditing, particularly targeting fintechs and non-banking financial companies (NBFCs), the business-daily said.
