RBI directs all financial institutions to enforce restrictions under UAPA following the government’s designation of a new terrorist organisation listed in the First Schedule of the Act.
New Terrorist Entity Added to UAPA Schedule
The Reserve Bank of India has issued an advisory to all commercial banks, co-operative banks, non-banking financial companies (NBFCs), and financial institutions, notifying them of the designation of a terrorist organisation under clause (a) of sub-section (1) of Section 35 of the Unlawful Activities (Prevention) Act, 1967 (UAPA). The entity has been formally included in the First Schedule of the Act, triggering mandatory freezing of assets and reporting obligations for all regulated entities.
Pursuant to the UAPA, financial institutions are required to immediately identify and freeze any funds or financial assets linked to the designated organisation. They must also report such actions to the Financial Intelligence Unit-India (FIU-IND) without delay. The notification serves as a directive for strict compliance with anti-terrorism financing obligations under India’s AML/CFT framework.
Legal practitioners advising financial institutions must ensure clients have robust screening mechanisms in place for real-time updates on designated entities. This development highlights the interface between national security directives and financial regulation, requiring vigilance in transaction monitoring and customer due diligence, especially in cross-border payments and high-risk sectors.
Citations
- Unlawful Activities (Prevention) Act, 1967, section 35(1)(a)