1. BANKING ACTS

Banking Regulation Act

• The Banking Regulation Act, 1949 in India regulates all banking firms in India.
• The Act gives the Reserve Bank of India (RBI) the power to
  • license banks,
  • regulation over shareholding and voting rights;
  • appointment of boards;
  • lay down instructions for audits;
  • mergers and liquidation; and
  • impose penalties.
• RBI provide guidelines on how IT is deployed in banks.
• RBI also provides the technology platform for NEFT/ RTGS and other centralized processing from time to time.

 

NEGOTIABLE INSTRUMENTS ACT-1881 (NI ACT)

• Cheque includes truncated cheque and electronic cheque.
• These electronic cheque requires digital signature IT Act was amended in 2008 to make provision for electronic signature also which includes digital signature also.

 

MONEY LAUNDERING

Money Laundering is the process by which the proceeds of the crime and the true ownership of those proceeds are concealed so that the proceeds appear to come from a legitimate source.

 

Three stages of Money Laundering

• Placement

The first stage involves the Placement of proceeds derived from illegal activities like moving them to less suspicious and more convenient place.

•Layering

Layering involves using complex transactions designed to obscure the audit trail and hide the proceeds like making several bank transfers.

•Integration

Integration involves conversion of illegal proceeds into apparently legitimate business earnings through normal financial or commercial operations.

 

Financing of Terrorism

• Money to fund terrorist activities moves through the global financial system via wire transfers and in and out of personal and business accounts.
• The money frequently starts out clean i.e. as a 'charitable donation' before moving to terrorist accounts. It is highly time sensitive requiring quick response.
• As per compliance requirements of PMLA, CBS software should include various type of reports for filing with regulatory agencies.

 

Prevention of Money Laundering Act (PMLA)

• Every banking company, financial institution and intermediary, is required to maintain a record of transactions as may be prescribed by rules and furnish information to the Director within such time as may be prescribed.

 

INFORMATION TECHNOLOGY ACT

The Information Technology Act was passed in 2000 and amended in 2008.

 

Section 43: If any person without permission of the owner or any other person who is in- charge of a computer performs the below given acts, he shall be liable to pay damages by way of compensation to the persons so affected.

• Securing access to the computer;
• providing assistance to any person to access any computer
• downloading or extracting any data
• damaging any computer
• disrupting any computer, computer system or computer network;
• destroys, deletes or alters any information
• Steals, conceals, destroys or alters any computer source code
• introducing any computer virus into any computer

 

 

Nature of offence	Relevant section	Penalty
Tampering           with                              computer source documents	65 Offences	Punishment upto 3 years/ Fine upto Rs.2 lakhs/ or with both
Does any act specified in Section 43	66 (Amended Vide ITAA 2008)	Punishment upto 3 years/ Fine upto Rs.5 lakhs/ or with both
Receiving stolen computer resource of communication device	66 B (Amended Vide ITAA 2008)	Punishment upto 3 years/ Fine upto Rs.1 lakh/ or with both
Punishment for identity theft	66 C (Amended Vide ITAA 2008)	Punishment upto 3 years + Fine upto Rs.1 lakh
Punishment for cheating for personating using computer resource	66 D (Amended Vide ITAA 2008)	Punishment upto 3 years + Fine upto Rs.1 lakh
Punishment for violating privacy	66 E (Amended Vide ITAA 2008)	Punishment upto 3 years/ Fine upto Rs.2 lakhs/ or with both