Financial Intelligence Unit (FIU-IND) Reporting — PMLA Compliance for NBFCs

NBFCs must report to FIU-IND: (1) Cash Transaction Reports (CTRs) for all cash transactions exceeding ₹10 lakh in a calendar month; (2) Suspicious Transaction Reports (STRs) for any transaction that raises suspicion of money laundering, terrorist financing, or related activities — regardless of amount; (3) Counterfeit Currency Reports (CCRs) if applicable; and (4) Cross-border Wire Transfer Reports (EWTRs) for international wire transfers above ₹5 lakh.

Every NBFC must designate a Principal Officer responsible for ensuring compliance with PMLA reporting obligations, filing STRs and CTRs with FIU-IND, and maintaining records. The Principal Officer must be a senior management official, be designated to FIU-IND, and their details must be registered on the FINnet portal. The Principal Officer is personally accountable for compliance failures in FIU-IND reporting.

An STR must be filed with FIU-IND within 7 working days of the NBFC forming a suspicion that a transaction is related to money laundering or terrorist financing. The 7-day period runs from the date the suspicion is formed — not from the transaction date. Late filing attracts penalties. Importantly, the NBFC must not "tip off" the customer that an STR has been or will be filed.

Failure to maintain records as required under PMLA is punishable with rigorous imprisonment from 3 months to 7 years and fine. Failure to furnish information, file STRs, or comply with FIU directions is also criminally punishable. Regulatory penalties include FIU-IND show cause notices, directions to improve AML frameworks, and referral to the Enforcement Directorate for serious cases.

NBFCs must maintain all KYC records and transaction records for a minimum of 5 years from the date of completion of the transaction, or from the date of cessation of the customer relationship — whichever is later. For accounts subject to a suspicious transaction report, records should be retained longer. AML records must be readily retrievable for RBI inspections and FIU-IND enquiries.