Question
A bank employee receives information that a customer has deposited Rs. 10 lakhs in cash from an unclear source. The bank's compliance officer suspects the source may be linked to drug trafficking. Under the Bank Secrecy Act and PMLA, which statements are correct? Statement 1: The bank must file a Suspicious Transaction Report (ST
- R with the Financial Intelligence Unit. Statement 2: The bank can report to PMLA authorities directly without reporting to FIU. Statement 3: If the bank fails to report suspicious transactions, the bank and its officers can face penalties. Statement 4: Once the bank files an STR, it can freely discuss the details with other customers. Which statements are correct?
Solution
Section 29 of PMLA mandates reporting of suspicious transactions to FIU. Statement 1 is correct. Statement 2 is incorrect—FIU is the proper authority. Statement 3 is correct—non-reporting is a violation. Statement 4 is incorrect—STR details are confidential and protected under Section 36 of PMLA. Statements 1 and 3 are correct.
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