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IIBF AML/KYC study materials
IIBF AML/KYC study resources

IIBF AML/KYC: Anti Money Laundering (AML)

IIBF AML/KYC · Work through your exam, one topic at a time.

All guide sections

Anti Money Laundering (AML)

This section covers the Anti-Money Laundering (AML) domain. The exam tests the reporting and record-keeping obligations of reporting entities under the PMLA 2002 and the PMLA (Maintenance of Records) Rules, the role of FIU-IND, the placement-layering-integration model, and typologies such as structuring, mule accounts and trade-based laundering.

Core obligations

  • Section 12 of the PMLA requires reporting entities to maintain records of transactions, verify customer identity and furnish prescribed information to FIU-IND.
  • Principal reports are the suspicious transaction report (STR), cash transaction report (CTR) and non-profit organisation transaction report (NTR). An STR has no monetary threshold and must be filed once suspicion is formed; CTR covers cash transactions above ₹10 lakh (or forged instruments); NTR covers receipts by NPOs above ₹10 lakh.
  • A designated principal officer and a board-approved AML policy are required, with independent testing of the programme.
  • Records must be retained for five years from the date of the transaction; identification records for five years after the business relationship ends.
  • Tipping off is prohibited: the customer must not be told that an STR has been filed.
  • Money laundering stages: placement (cash into the system), layering (obscuring the trail) and integration (reintroducing funds as legitimate).

Worked example

A customer makes twelve cash deposits of ₹90,000 each over ten days at two branches, totalling ₹10.8 lakh. Each deposit is below the ₹10 lakh CTR threshold, so no CTR is triggered. The reasoning is that the pattern - deliberately staying below the reporting line, using multiple branches - is classic structuring or smurfing. The aggregate and the intent matter, not the size of one deposit. The bank should file an STR, continue monitoring, and avoid any communication to the customer that could amount to tipping off.

Traps

An STR is not a police complaint and does not require proof of a predicate offence. Do not wait for a threshold before reporting suspicion. Do not confuse CTR with STR. Do not disclose an STR to the customer or to branch staff who do not need to know. Do not retain records only for five years from onboarding; the clock differs for transaction and identification records.