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Informist, Wednesday, Mar. 26, 2025

 

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--RBI Malhotra: Private sector's role vital in keeping fincl system secure 
--CONTEXT: Comments by RBI Governor Malhotra at an event 
--Malhotra:Tech enabled ease of business, also new ways to launder money 
--RBI Malhotra: Determined to strength financial system further 
--RBI Malhotra: Must ensure steps to curb money laundering not overzealous 
--RBI Malhotra:Need to harness new-age tech to improve transaction screening 
--RBI Malhotra: Need to develop tools to detect suspicious activities early 
--RBI Malhotra: Need to widen and deepen financial inclusion 
--RBI Malhotra: Regulations should not create unintentional fincl barriers 
--RBI Malhotra: Lot of scope to improve due diligence by regulated entities
 

 

MUMBAI - With the rapid evolution of technology, regulatory bodies must develop appropriate tools to detect suspicious activities early, Reserve Bank of India Governor Sanjay Malhotra said at the Financial Action Task Force Private Sector Collaborative Forum on Wednesday.

 

"..(we should be) able to harness the evolving technologies that are coming in, whether it is artificial intelligence or blockchain technology or machine learning to help us in improving screening of transactions and detection of suspicious activities thereby reducing errors, false positives, false negatives," Malhotra said.

 

While technology has enabled ease of doing buisness, it has also led to new ways of money laundering, he said. Policymakers must, however, ensure that regulations to counter money laundering should not be overzealous, he added.

 

"While we continue to make our financial systems safe and secure against money laundering and terrorist financing, we as policymakers need to be mindful that our measures are not overzealous and do not stifle legitimate activities and investments," Malhotra said.

 

The RBI would continue to strengthen the financial system, he said, while noting that regulations should not create unintentional financial barriers. Talking about financial inclusion, Malhotra said that while India had made substantial progress, there was a need to widen and deepen its scope.

 

Malhotra stressed the importance of the private sector in preventing abuse of the financial system by conducting robust risk assessment, monitoring transactions, and reporting suspicious activities. He termed the private sector as the first line of defense in securing the financial system, in addition to recognising the importance of strong public-private partnerships.

 

While conducting due diligence, entities must be mindful of customers' rights and convenience, he said. Onboarding customers and undertaking customer due diligence increasingly use digitalisation. The central know-your-customer records registry with more than 1 billion records has the potential to make it easier and seamless for customers as well as regulated entities to carry out customer identification and due diligence, Malhotra said.

 

"This is an area which I mentioned even earlier, there is a lot of scope for improvement...more I think more from the side of regulated entities," he said. "I think we all together need to put our heads together...so that all regulated entities, all regulators can coordinate and make it easier for everyone to do the KYC process so that there is no repetition of unnecessary KYC multiple times by different regulated entities for the same person."  End

 

Reported by Kshipra Petkar and Sourabh Kumar

Edited by Avishek Dutta

 

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