Mumbai: A Reserve Bank of India (RBI) constituted group has suggested strengthening the existing framework against money laundering activities in India, including setting up of a nodal agency.

The group, chaired by RBI deputy governor Y V Reddy, called for improving procedures and policies for preparing appropriate customer profiles, co-ordination and co- operation among regulators for sharing information and reporting of suspicious activities.

According to International Monetary Funds (IMF) assessment of the financial sector in India, existing guidelines against money laundering and fraud were generally adequate, even though the Financial Action Task Force (FATF) norms had not been adopted, the group said.

It said there was a need for effective co-ordination between regulators, enforcement authorities and various agencies, which were regulating economic entities and where scope exists for money laundering and frauds to take place.

Establishing a nodal agency such as the serious frauds office (SRO), may have to be examined to deal with suspicious activities and for co-ordinating investigation and follow up, the group, which submitted its report on May 30, said.

The group said a relook at the existing deposit schemes available for non-residents with particular emphasis on establishing source of funds was also required.

There was a need to create a data bank for suspicious transactions and circulation of indicative list of such activities to assist banks in detecting patterns of behaviour by their customers.

Suspicious activity should be reported by banks in formats prescribed by the regulator. However, the banks should observe safeguards to ensure protection of customer's rights to privacy.

Close scrutiny was required of business transactions with countries that do not conform with international anti-money laundering standards, the group said.

The respective roles of financial supervisory authorities and enforcement and criminal/ terrorist detection agencies have to be delineated and regulatory gaps and overlaps removed, the group said.

At the same time, policy for individual banks would have to take into account the size and nature of operations of the bank and extent of computerisation.

PTI