Regulatory Framework
India has a robust AML/CFT framework anchored by the Prevention of Money Laundering Act (PMLA) of 2002, with significant amendments in 2012, 2015, and 2019. Financial sector supervision is primarily conducted by:
- Reserve Bank of India (RBI) - Banking sector
- Securities and Exchange Board of India (SEBI) - Securities market
- Insurance Regulatory and Development Authority (IRDA) - Insurance sector
- Financial Intelligence Unit - India (FIU-IND) - Central reporting agency
FATF Status
India became a full member of FATF in 2010 and has made significant progress in strengthening its AML/CFT regime. The country is largely compliant with 33 of 40 FATF Recommendations and partially compliant with 7 Recommendations. Areas of strength include banking supervision and STR reporting, while areas for improvement include beneficial ownership transparency and virtual asset supervision.
Compliance Requirements
Core Obligations
- CDD/KYC: Implement comprehensive customer due diligence (CDD) based on risk. Verification using Aadhaar biometric ID increasingly common alongside traditional documentation.
- Transaction Monitoring: Automated systems required for monitoring suspicious patterns. Threshold-based monitoring for specific transaction types.
- Record Keeping: Maintain records for at least 5 years after cessation of relationship.
- Reporting: Submit suspicious transaction reports (STRs) within 7 days of forming suspicion. Report all cash transactions above INR 10 lakhs (CTRs).
- Risk Assessment: Implement documented risk assessment approaches at customer, product, and institutional levels.
Key Challenges
- Identity Verification: Complex identity documentation system transitioning to digital (Aadhaar) with ongoing legal frameworks.
- Shadow Economy: Large unbanked population and significant informal economy complicating monitoring efforts.
- Digital Payments: Rapidly evolving digital payment ecosystem requiring enhanced monitoring approaches.
- Regional Variations: Implementation inconsistencies across 28 states and 8 union territories.
- Remittance Volumes: High volume of inward remittances requiring specialized screening approaches.
Sanctions Considerations
India maintains independent sanctions lists separate from UN/OFAC. The country has complex trade relationships with sanctioned countries like Russia and Iran, requiring sophisticated screening approaches. Financial institutions must implement specialized handling for defense-related transactions and heightened screening for cross-border transactions with Pakistan.
As India's global economic role expands, financial institutions face increasing pressure to balance local regulatory requirements with global sanctions compliance expectations.
Key Compliance Challenges
Understanding the unique obstacles facing financial institutions in India
Regulatory Complexity
India's financial system is regulated by multiple authorities including RBI, SEBI, IRDAI, and PFRDA, each with their own AML/CFT requirements, creating a complex compliance landscape for financial institutions operating across different sectors.
Digital Identity Integration
The integration of Aadhaar and other digital identity systems with KYC processes requires careful management of data privacy and security while ensuring compliance with both AML regulations and data protection requirements.
Beneficial Ownership
Complex corporate structures, family-owned businesses, and nominee arrangements create challenges in identifying and verifying ultimate beneficial owners, particularly in cases involving multiple layers of ownership and control.
Sanctions Compliance
India's growing international trade and financial relationships require sophisticated sanctions screening capabilities, particularly for trade finance, correspondent banking, and cross-border transactions involving multiple jurisdictions.
Regulatory Expectations
Indian regulators maintain high expectations for AML/CFT compliance, requiring sophisticated transaction monitoring systems, regular independent audits, and continual enhancements to address emerging risks and typologies.
Reputational Risk
India's position as an emerging financial center creates heightened reputational risks for institutions operating in the jurisdiction, with potential AML/CFT violations attracting significant regulatory attention and media coverage.
Anqa's Approach for India
Our comprehensive AML solution tailored for India's complex regulatory requirements and diverse financial landscape.
Digital KYC & Onboarding Platform
Electronic KYC integration with India's Aadhaar system, centralized repository, and assisted onboarding tools for rural banking agents.
Customer Risk Assessment Engine
Five-dimensional risk classification aligned with RBI/SEBI/IRDA guidelines with behavior-driven risk adjustments for India's digital payment ecosystem.
Sanctions & Watchlist Screening
Screening against RBI/SEBI lists with fuzzy matching optimized for Indian naming conventions and continuous rescreening capabilities.
Loan Application & Approval
Loan origination for India's microfinance sector with offline support for rural areas and integration with KYC modules.
Compliance Workflow Platform
Centralized case management aligned with FIU-IND requirements, complete audit logging, and structured user permissions.
Deployment & Pricing
No setup fees, modular pricing, cloud-based with scalable licensing (user or transaction-based).
India — AML & Compliance FAQs
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In India, AML compliance is primarily regulated by the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), and the Financial Intelligence Unit-India (FIU-IND). These authorities oversee AML, KYC, and sanctions compliance requirements under the Prevention of Money Laundering Act (PMLA), ensuring that financial institutions, fintechs, and regulated businesses operate in line with national and international standards.
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Businesses in India, including fintechs, startups, and regulated entities, must comply with stringent AML compliance standards, such as thorough KYC verification, real-time transaction monitoring, periodic risk assessments, and sanctions list screening. Entities must also submit Suspicious Transaction Reports (STRs) to FIU-IND. Adhering to RBI KYC verification guidelines 2025 and understanding the STR filing process in India are critical steps to maintain compliance with PMLA regulations.
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A Suspicious Transaction Report (STR) must be filed with the Financial Intelligence Unit-India (FIU-IND) promptly when a transaction raises suspicion of money laundering, fraud, or terrorist financing. Filing STRs efficiently is a core part of India’s AML compliance framework, helping to identify illicit financial flows early. Businesses typically submit STRs via FIU-IND’s secure online reporting systems, following prescribed formats and timelines.
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Yes. Fintech companies, digital lenders, payment service providers, and wallet operators are required to comply with India’s AML/CFT framework under the supervision of the RBI and FIU-IND. As part of India fintech compliance requirements, these companies must implement customer KYC onboarding, transaction monitoring systems, STR filing, and maintain detailed audit trails to align with updated regulatory expectations in 2025.
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Anqa Compliance offers scalable, mobile-first AML compliance solutions built for Indian SMEs, fintechs, and financial institutions. Our platform simplifies KYC onboarding in line with RBI KYC verification guidelines, automates transaction monitoring, enables quick STR filing with FIU-IND, and helps businesses stay aligned with India AML compliance obligations. Empower your organization to meet evolving AML/CFT requirements confidently with Anqa’s smart tools.
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