AML / KYC Compliance (NBFCs)

NBFCs carry heavier AML and KYC obligations than ordinary businesses because they handle public money. Under the Prevention of Money Laundering Act 2002 read with the Prevention of Money Laundering (Maintenance of Records) Rules 2005, an NBFC as a reporting entity must maintain records of its customers and transactions, verify identities before onboarding, and report suspicious transactions to FIU-IND. The RBI's Know Your Customer (KYC) Master Direction layers detailed operational requirements — customer due diligence, risk-based classification, periodic updates and record retention — that NBFCs must build into their operations.

The KYC discipline is what makes an NBFC investable and licensable. When an NBFC applies to the RBI or faces an inspection, the quality of its KYC files is a first-order test: the RBI checks whether customer identification happened before transactions, whether beneficial owners were identified, whether risk classification is real rather than decorative, and whether the reporting obligations are being met. Gaps surface as inspection findings, conditions on operations, or worse.

Shortcuts in KYC are the classic entry point for fraud and money laundering. An NBFC that onboards customers without proper verification can find itself used as a conduit — and the PMLA's record-keeping and reporting obligations in Section 12 of the Act are backed by penal provisions that include rigorous imprisonment for wilful non-compliance (VERIFY: the current penalty regime as amended). For the directors and officers, the exposure is personal.

This service is for NBFCs of every size — from P2P platforms and microfinance to housing finance and factoring companies. We build the AML/KYC framework aligned to the PMLA Rules and the RBI KYC Master Direction, implement due diligence and risk classification, register with FIU-IND and set up reporting, and prepare the organisation for RBI inspections with a review of existing books and files.