The Central Registrar of Cooperative Societies has issued a circular mandating strict compliance with the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) guidelines for Multi-State Cooperative Societies (MSCS).
These guidelines, issued by the Financial Intelligence Unit-India (FIU-IND) recently aim to strengthen the legal framework against money laundering, terrorist financing, and related financial crimes within MSCS.
Under the Prevention of Money Laundering Act (PMLA), MSCS are required to appoint a Designated Director and a Principal Officer from their employees. These officials must ensure adherence to AML/CFT provisions, including the submission of monthly reports, timely reporting of suspicious transactions, and compliance with directives related to financial crimes.
Their responsibilities also include disseminating anti-money laundering policies across the organization, maintaining accurate records, and cooperating with law enforcement authorities.
The guidelines further emphasize the implementation of Know Your Customer (KYC) norms, Customer Due Diligence (CDD), and Enhanced Due Diligence (EDD). MSCS must conduct thorough background checks on clients, monitor large and unusual transactions, and apply enhanced scrutiny in cases involving higher risks of financial misuse.
EDD measures go beyond standard KYC protocols, requiring more rigorous checks to prevent the misuse of financial systems.
The circular also highlights the requirement for MSCS to register on FIU-IND’s FINnet portal and maintain detailed records of transactions and customer data for at least five years after the conclusion of a business relationship.
The prohibition against “tipping off” clients about investigations or reports is reiterated to preserve the confidentiality of compliance processes.
Risk assessment is another key aspect of the guidelines. MSCS are instructed to evaluate potential risks associated with their customers, operations, and delivery channels, implementing appropriate safeguards to mitigate vulnerabilities. Regular employee training and periodic policy reviews are also mandated to ensure ongoing compliance.
Non-compliance with these directives could result in severe penalties under the PMLA.
The FIU-IND has urged MSCS to prioritize these measures to align with national and international financial security standards. The circular, along with the detailed guidelines, is accessible on the official websites of the Central Registrar of Cooperative Societies and FIU-IND.
This initiative underscores a broader effort to enhance the accountability of Multi-State Cooperative Societies and safeguard the integrity of India’s financial system. The Central Registrar has called on all societies to implement these measures without delay and cooperate fully with regulatory authorities.