With the enactment of Prevention of Money Laundering (PML) Act in 2002, the responsibility of the banks with regard to opening and maintenance of accounts has increased manifold as it calls for enhanced awareness about opening and conduct of accounts, extra vigilance in the operation of accounts and increased reporting requirements to the controlling offices/regulators.

The Know Your Customer (KYC) guidelines state that besides knowing the customers, banks should know about the customer's means of earning income, sources of funds, customer's customers, etc. So, an additional responsibility has been laid upon the bankers at the time of opening the accounts, operation of the accounts and during the time of transactions. In short, banks are liable till the closure of the accounts unlike in the earlier days. Even after closure of the accounts, the law requires preservation of records with respect to the accounts for a minimum of 10 years. In short, bank officers have to go beyond introduction.

Introduction is a prerequisite for opening any type of account in a bank. Until 2002, the main purpose of introduction was to identify the account opener for avoiding benami accounts. It is quite pertinent to note that the introducer himself has no responsibility other than identifying the person opening the account. The introducer cannot be held responsible for any misdeed or irregularity of the account holder or for misconduct of the account. Until a few years ago, many bank officers did not stress on any introduction in case of fixed deposits. With the Reserve Bank of India (RBI) directing banks in August 2002 to follow KYC norms, the scenario has changed.

Professional Banker Magazine, Know Your Customer, KYC, Prevention of Money Laundering, PML, RBI, Reserve Bank of India, Financial Action Task Force, FATF, Combating of Financing of Terrorism, CFT, Banking Regulation, BR, Financial Institutions and Intermediaries, Department of Banking Operations and Development, DBOD, Commercial Banks, Demand Draft, DD, Mail Transfers, MT, Telegraphic Transfers, TT, Travelers Cheques, TC.