New Trade Rules Shift Cross-Border Compliance Burden Onto Banks
· Business · Economic Times
Starting October 1, banks in India will bear the responsibility of overseeing cross-border payment transactions to curb money laundering and suspicious trading practices. Under the new rules, financial institutions must verify the validity of service contracts and overseas entities, certify payments, track export revenues, and handle overdue export bills. Bankers have expressed concern that making a wrong call in good faith could put them under scrutiny by the Enforcement Directorate. The framework aims to stop dodgy clients from shopping around for less-compliant institutions. Previously, bankers referred shady transactions to the Reserve Bank of India or checked a regulatory caution list, but discretion now rests with the banks.
Why it matters
Indian banks face heightened legal and operational risks as they take on direct investigative duties for cross-border transactions, potentially slowing trade approvals for corporate clients.
Read the original report — Economic Times
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