AML Laws and Regulations for Mortgage Guarantee Companies in India

Last Updated on: 7th August 2026 | Last Reviewed on: 7th August 2026

Key takeaways at a glance

Who is covered: mortgage guarantee companies, that is, companies whose business is guaranteeing loans to lenders, as reporting entities under the PMLA and subject to RBI directions and supervision.
Why they are caught: a mortgage guarantee company is expressly included within the financial institution definition in section 2(1)(l) of the PMLA, so it is a reporting entity under section 2(1)(wa). No separate designation is needed.
Governing laws: the PMLA, 2002 and the PML (Maintenance of Records) Rules, 2005; the RBI (Mortgage Guarantee Companies) Directions, 2025 read with the RBI NBFC KYC Directions, 2025; the UAPA 1967 (Section 51A) and the WMD Act, 2005 (Section 12A).
Supervisor: the Reserve Bank of India (RBI). Reports go to the Financial Intelligence Unit – India (FIU-IND); the Enforcement Directorate (ED) enforces the PMLA.
Core duties: an internal risk assessment, customer due diligence and KYC, beneficial-owner identification, periodic updation, monitoring, prescribed-transaction reporting, five-year record-keeping and sanctions screening.

This guide is general information on Indian law, not legal advice. For your company’s specific position, speak to a qualified AML professional.

Mortgage guarantee companies are reporting entities under the Prevention of Money-Laundering Act, 2002. A mortgage guarantee company is a company whose business is to guarantee the repayment of housing and other loans to lenders, in return for a guarantee fee, and it is a specialised category of non banking financial company. Its AML, CFT and CPF duties flow from the PMLA, the PML (Maintenance of Records) Rules, 2005, the RBI Mortgage Guarantee Companies Directions, 2025 read with the RBI NBFC KYC Directions, 2025, Section 51A of the UAPA, Section 12A of the WMD Act, and the FIU-IND reporting framework. The Reserve Bank of India regulates and supervises mortgage guarantee companies, and reports are filed with FIU-IND.

The core instruments at a glance

Instrument	What it does for a mortgage guarantee company
PMLA, 2002	The primary legislation that designates and include mortgage guarantee company by including it within the financial institution definition and outlines duties like customer due diligence, record keeping and reporting.
PML (Maintenance of Records) Rules, 2005	Set out what to report and when, how to identify customers and beneficial owners, and the duty to appoint officers. Prescribes reporting requirements, timelines, customer and beneficial owner identification procedures, and other AML obligations.
RBI Mortgage Guarantee Companies Directions, 2025	The company’s sector rulebook, issued by the RBI on 28 November 2025 and updated as on 29 December 2025.
RBI NBFC KYC Directions, 2025	The KYC and AML baseline for the company, applied as a category of NBFC.
UAPA Section 51A and WMD Act Section 12A	Impose targeted financial sanctions for terrorism and proliferation financing.
FATF Recommendations 9 to 23	The international preventive measure standards for financial institutions that India’s framework is built to meet.

What counts as a Mortgage Guarantee Company in India?

A mortgage guarantee company is a non-banking financial company registered with the Reserve Bank of India to undertake the business of providing mortgage guarantees. It guarantees the repayment of outstanding housing loans (including accrued interest up to the guaranteed amount to creditor institutions such as banks and housing finance companies upon a borrower’s default, in consideration for a guarantee fee. It is a specific non-banking financial company. It does not lend to the public or take deposits; its counterparties are the lenders whose loans it guarantees.

The money laundering risk for a mortgage guarantee company is different because it does not receive customer deposits or pay out to individuals. Its exposure arises from the integrity of the counterparties, including lending institutions and their beneficial owners, the source and legitimacy of the guarantee fees received and the handling of guarantee claims. As a financial institution, it nonetheless applies customer due diligence to its counterparties and beneficial owners, monitors its transactions, and screens against sanctions lists.

Are Mortgage Guarantee Companies Reporting Entities under the PMLA?

Yes. The Prevention of Money-Laundering Act, 2002 creates the offence of money laundering and places core duties on reporting entities. A non-banking financial company is expressly named within the financial institution definition in section 2(1)(l) of the PMLA, and a mortgage guarantee company is a category of NBFC, so it is a reporting entity under section 2(1)(wa).

This places a mortgage guarantee company in the same broad category of reporting entities that file with FIU-IND as banks and other financial institutions, and within the wider AML laws and regulations for financial institutions in India. The obligations are calibrated to the size of the business, but the status is not optional.

Supervisory authority for Mortgage Guarantee Companies in India

The supervisor for mortgage guarantee companies is the Reserve Bank of India, which registers and supervises them. The RBI issues the sector rulebook, the Reserve Bank of India (Mortgage Guarantee Companies) Directions, 2025, dated 28 November 2025 and updated as of 29 December 2025, and applies its NBFC KYC Directions, 2025 as the KYC and AML baseline, read with the RBI Internal Risk Assessment Guidance of 2024.

The Financial Intelligence Unit – India receives, analyses and disseminates the reports a mortgage guarantee company files, and the Enforcement Directorate investigates and prosecutes the offence of money laundering under the PMLA. In short, the RBI sets and supervises the rules, FIU-IND receives the intelligence, and the ED enforces the criminal law.

Onboarding clients without a documented due-diligence process?

AML India can put client due diligence, beneficial-ownership checks and suspicious-transaction reporting in place for your practice, keeping you audit-ready without slowing your engagements down.

AML Regulatory Requirements for Mortgage Guarantee Companies in India

The law that governs a mortgage guarantee company does not sit in one place. It is a layered framework, and it helps to see it grouped as: the core legislation, the overarching infrastructure, the sectoral supervisor and its directions, the miscellaneous official reports, the international standards, and the allied laws. Each category below lists the instruments that apply, with a short note on what each does for a mortgage guarantee company.

The framework reads from the core. The PMLA is the parent Act; the PML Rules turn outline the operational duties; the RBI Directions translate it into instructions a mortgage guarantee company can follow; the UAPA and the WMD Act add counter terrorism and proliferation financing sanctions; and the allied laws, including each institution’s own establishing statute, shape the risk. The risk based approach carries it forward.

Core Legislation

The primary statutes and rules that create the AML, CFT and CPF obligations are grouped into three categories.

AML Legislation

Prevention of Money Laundering Act, 2002 (PMLA)

India’s principal anti-money laundering legislation and the basis for a mortgage guarantee company’s status as a reporting entity. It defines the offence of money laundering and establishes key obligations, including customer due diligence, identity verification, record maintenance and reporting requirements applicable to mortgage guarantee companies. As a financial institution under the Act, a mortgage guarantee company must assess the source and legitimacy of funds, identify customers and beneficial owners, and maintain appropriate records and controls in relation to its guarantee operations and associated transactions.

The PML (Maintenance of Records) Rules, 2005 (PMLR)

The rules framed under the PMLA provide the operational framework for a mortgage guarantee company’s daily AML compliance. They prescribe the transactions that must be reported and the applicable timelines under Rules 3 and 8, establish customer and beneficial owner identification procedures under Rule 9, and set out the requirement to appoint a Principal Officer and Designated Director under Rule 7. The PMLR has been amended through 31 Gazette notifications and orders.

The 31 PMLR Amendment Notifications, in Date Order:

Gazette notification and date	Key change or rule touched
G.S.R. 389(E), 24 May 2007	Amended the Prevention of Money-laundering Rules, 2005. It updates the definition of “suspicious transaction” to include those with no economic rationale or linked to terrorism financing, expands reportable cash transactions to cover forged currency or documents, and sets clear reporting deadlines to the Director. It also reduces the number of certified copies required for certain filings from three to one.
G.S.R. 816(E), 12 November 2009	It added new definitions for non profit organisation and Regulator, redefines suspicious transaction to cover unusual complexity, no economic rationale, or terrorism financing links, and mandates reporting of NGO cash receipts over ten lakh rupees. It also replaces references to RBI, SEBI, and IRDA with the generic term its Regulator, and extends the record retention period to ten years from the date of transaction.
G.S.R. 76(E), 12 February 2010	Tuned Rules 3, 4, 5 and 7 to strengthen record keeping and reporting requirements and introduced the first Explanation to Rule 9(1A), defining the beneficial owner as the natural person who ultimately owns or controls a client or the person on whose behalf a transaction is conducted.
G.S.R. 508(E), 16 June 2010	Revised Rules 2, 9 and 10, covering definitions, customer due diligence and record keeping requirements, to strengthen the framework for customer identification and the maintenance of records by reporting entities as part of the 2010 enhancement of the CDD and records regime.
G.S.R. 980(E), 16 December 2010	Introduced the small account framework by defining the Designated Officer and small account, expanding the list of officially valid documents under Rule 2 to include the NREGA job card and Aadhaar letter, and inserting Rule 9(2A) to prescribe the procedures for opening and monitoring such accounts.
G.S.R. 481(E), 24 June 2011	Introduced the short title by amending Rule 1 to replace the longer 2005 title with the abbreviated Prevention of Money-Laundering (Maintenance of Records) Rules, establishing the PMLR shorthand used thereafter.
G.S.R. 576(E), 27 August 2013	Introduced the definition of Designated Director under Rule 2 and amended Rules 3, 7, 8, 9 and 10, along with other related provisions, to strengthen reporting, governance, customer due diligence and record keeping requirements.
G.S.R. 288(E), 15 April 2015	It identified the documents which are valid officially and listed them through this notification.
G.S.R. 544(E), 7 July 2015	Introduced definitions including the Central KYC Records Registry and amended Rules 9 and 10 by inserting additional sub rules to strengthen the KYC framework.
G.S.R. 730(E), 22 September 2015	Made minor amendments to the definitions under Rule 2 and introduced related insertions across the Rules.
G.S.R. 882(E), 18 November 2015	Extended the prescribed timeline from 90 days to 180 days by amending the relevant provisions of the Rules.
G.S.R. 347(E), 12 April 2017	Introduced the definition of Regulator and inserted Rule 9B to strengthen the customer due diligence framework under the PML Rules, 2005.
G.S.R. 538(E), 1 June 2017	Amended Rules 2 and 9 by inserting additional sub rules to strengthen the operational AML framework.
G.S.R. 1038(E), 21 August 2017	Made minor amendments to the definitions under Rule 2 through the insertion of additional provisions.
G.S.R. 1318(E), 23 October 2017	Further amended Rule 2 by introducing an additional proviso relating to officially valid documents.
G.S.R. 456(E), 16 May 2018	Revised Rule 9 by inserting additional sub rules and requiring every reporting entity to establish and implement a client due diligence programme.
G.S.R. 1078(E), 31 October 2018	Amended Rule 9(1A) by extending the prescribed timeline from three days to ten days.
G.S.R. 108(E), 13 February 2019	Introduced extensive amendments to Rule 9, laying the groundwork for further changes to the customer due diligence framework during 2019.
G.S.R. 381(E), 28 May 2019	Introduced a special customer due diligence procedure for prisoners opening or operating bank accounts. It required signatures or thumb impressions to be certified by the officer in charge of the jail and permitted accounts to remain operational upon annual submission of a proof of address certificate issued by the same authority.
G.S.R. 582(E), 19 August 2019	Modernised the PML Rules by introducing digital KYC, equivalent e-documents and offline Aadhaar verification. It revised Rule 9 to recognise multiple modes of customer identification and established a detailed digital KYC process, including live photographs, geotagging, OTP authentication and verification standards.
G.S.R. 669(E), 18 September 2019	Introduced the definition of a depository receipt and simplified customer due diligence requirements for certain foreign investments. It permitted reliance on the beneficial ownership standards of notified foreign jurisdictions for specified investments and exempted listed companies and their subsidiaries from identifying and verifying individual shareholders or beneficial owners in specified cases.
G.S.R. 840(E), 13 November 2019	Allowed customers using Aadhaar for identity verification to declare a current address different from that recorded in the Central Identities Data Repository. Reporting entities were permitted to accept a self declaration of the current address for customer due diligence purposes, simplifying the address verification process.
G.S.R. 228(E), 31 March 2020	Temporarily extended the validity of small accounts that were otherwise due for closure under the customer due diligence requirements. The amendment allowed such accounts to remain operational from 1 April to 30 June 2020, with provision for further extensions by the Central Government in response to the COVID 19 pandemic.
G.S.R. 251(E), 13 April 2020	Extended the deadline for reporting entities to submit prescribed transaction reports under Rule 8. The temporary relaxation allowed eligible reports to be furnished up to 30 June 2020 to address operational disruptions caused by the COVID-19 pandemic.
G.S.R. 254(E), 16 April 2020	Clarified the scope of the temporary reporting relief by specifying the transaction reports eligible for the extended filing deadline. It covered reports under Rule 3(1)(A), (B), (BA), (C) and (E) for March, April and May 2020, and Rule 3(1)(F) reports for the January to March 2020 quarter, all of which could be submitted up to 30 June 2020.
G.S.R. 798(E), 28 December 2020	Designated real estate agents with an annual turnover of ₹20 lakh or more as persons carrying on a designated business or profession under the PMLA, bringing them within the scope of reporting entity obligations.
G.S.R. 575(E), 13 July 2022	Introduced dedicated AML and KYC provisions for reporting entities operating in an International Financial Services Centre. The amendment recognised the head of the reporting entity in India as the designated officer for IFSC entities, expanded the list of officially valid documents for foreign nationals, defined International Financial Services Centre in the Rules, and exempted IFSC reporting entities from certain Central KYC Records Registry requirements for foreign national clients.
S.O. 1074(E), 7 March 2023	Strengthened the AML framework by reducing the beneficial ownership threshold to 10 percent, introducing group wide AML policies, and adding definitions for group, politically exposed persons and non profit organisations. It also expanded customer due diligence requirements for legal entities and trusts and introduced registration related obligations for eligible non profit organisations.
G.S.R. 652(E), 4 September 2023	Reinforced governance and beneficial ownership requirements by requiring the Principal Officer to hold a management level position, reducing the beneficial ownership threshold for certain entities to 10 percent, and clarifying that control includes the ability to influence management or policy decisions. It also introduced trustee disclosure requirements and required reporting entities to retain AML risk assessment results alongside customer records.
G.S.R. 745(E), 17 October 2023	Enhanced customer due diligence by requiring identity verification through reliable and independent sources. It also expanded group wide AML programmes, required suspicious transaction reports to be filed promptly upon the formation of suspicion, and reinforced confidentiality obligations relating to AML records and reporting.
G.S.R. 419(E), 19 July 2024	Supported the Central KYC Records Registry framework by requiring reporting entities to use the KYC Identifier to retrieve customer records and restricting requests for duplicate KYC documents to specified circumstances. It also introduced a seven day timeline for updating KYC records and required reporting entities to retrieve, update and use revised KYC information maintained in the Central KYC Records Registry.

The PML (Manner of Receiving the Records Authenticated Outside India) Rules, 2005

Rules for accepting customer records authenticated outside India, relevant where a mortgage guarantee company deals with a foreign owned lender or counterparty and must rely on identity and ownership documents executed and certified abroad.

CFT Legislation

The Unlawful Activities (Prevention) Act, 1967 (UAPA)

India’s counter terrorism statute. Section 51A requires a mortgage guarantee company to screen customers and beneficial owners against the designated lists and to freeze, without delay, the funds and assets of listed persons and entities, whatever the size of the exposure.

Procedure for implementation of Section 51A of the UAPA (order dated 2 February 2021; corrigenda dated 15 March 2023 and 29 August 2023)

The official procedure a mortgage guarantee company follows to apply Section 51A. The RBI Directions fold the screening and freezing steps into the institution’s controls, turning the statutory order into a workable process.

The Weapons of Mass Destruction and their Delivery Systems (Prohibition of Unlawful Activities) Act, 2005 (WMD Act)

India’s counter proliferation financing statute. Section 12A provides the legal basis for targeted financial sanctions relating to the financing of weapons of mass destruction, and reaches a mortgage guarantee company, particularly where an acquired asset or a settlement has a cross border dimension.

Procedure for implementation of Section 12A of the WMD Act (dated 1 September 2023)

The official procedure for applying Section 12A mirrors the Section 51A screening and freezing steps, applied by a mortgage guarantee company alongside its terrorism list screening.

The WMD and their Delivery Systems (Prohibition of Unlawful Activities) Implementation Rules, 2016

Rules implementing the WMD Act and supporting the proliferation. financing controls a mortgage guarantee company must operate.

Not registered with FIU-IND yet, or unsure whether you have to be?

AML India can confirm whether your firm qualifies as a reporting entity under the PMLA, complete your goAML registration and appoint your principal officer and designated director.

Overarching

The shared national infrastructure that a mortgage guarantee company must fulfil as a reporting entity.

CERSAI Central KYC Records Registry (CKYCR) Operating Guidelines, 2025

The Central KYC Records Registry serves as a customer KYC records repository that a mortgage guarantee company can upload to and reuse a customer’s existing record, keeping KYC consistent and reducing duplication. Getting beneficial ownership and identity data right for an institutional customer at onboarding is what makes the registry useful.

FINnet 2.0 reporting formats (2024) and the FINGate 2.0 user manuals

The FIU-IND reporting platform and its current formats, through which a mortgage guarantee company enrols and files, with the FINGate 2.0 manuals covering enrolment, request response and reports.

Procedure for Aadhaar authentication under Section 11A of the PMLA (9 May 2019)

The procedure for reporting entities other than banking companies to apply to use Aadhaar authentication services, relevant where a mortgage guarantee company verifies an individual’s identity through Aadhaar.

Sectoral

The supervisor and its directions. The Reserve Bank of India regulates mortgage guarantee companies and issues the KYC Directions the institution works from, read with its consolidated master directions and internal risk assessment guidance.

Reserve Bank of India

The RBI (Mortgage Guarantee Companies) Directions, 2025

The sector rulebook, and the most important instrument on this page. Issued by the RBI on 28 November 2025 and updated as of 29 December 2025, and made under the RBI Act, 1934, the Directions govern the registration, prudential conduct and supervision of mortgage guarantee companies. They set the sector context within which the AML and KYC obligations are applied.

The RBI (Non Banking Financial Companies Know Your Customer) Directions, 2025

The KYC and AML baseline for a mortgage guarantee company. Issued by the RBI on 28 November 2025 and updated as of 29 December 2025 and applicable to all categories of NBFC, the KYC Directions set out customer identification and due diligence, beneficial owner identification, periodic updates, the ML and TF risk assessment, the appointment of a Designated Director and Principal Officer, reporting, record management and the implementation of Sections 51A and 12A. Where this article states a duty at the level of the law, the KYC Directions are where a mortgage guarantee company finds the detail.

RBI Internal Risk Assessment (IRA) Guidance for ML/TF Risks (2024)

The RBI guidance sets the internal risk assessment as the bedrock of the risk based approach and requires its documented outcome to go to the board, applied by every mortgage guarantee company in preparing and updating its risk assessment.

RBI Consolidated Master Directions and the KYC compliance notification (28 November 2025)

On 28 November 2025, the RBI issued its consolidated master directions and a notification on compliance with KYC norms, under which the category specific KYC Directions were made, and earlier KYC directions stand repealed or superseded to the extent provided.

Miscellaneous

Official reports and guidance that sit outside the binding rulebook but shape how a mortgage guarantee company reads its risk and its duties.

FIU-IND Annual Report 2024 to 2025

The national FIU’s annual account of the reports it received, analysed and disseminated, a useful read on reporting volumes and priorities across reporting-entity types.

Directorate of Enforcement Annual Report 2025 and 2026

The Enforcement Directorate’s annual account of investigations, provisional attachments and prosecutions under the PMLA, showing how the criminal-enforcement end of the framework is used.

FIU-IND and its Core Functions and FAQs

A plain language explanation of what FIU-IND does and how reporting works, a useful primer for an institution’s reporting function.

MHA National Counter Terrorism Policy and Strategy

The Ministry of Home Affairs statement of national counter terrorism policy, which frames the CFT duties that Section 51A places on a mortgage guarantee company.

International Standards

The global benchmarks India is measured against, and the sources a mortgage guarantee company can use to calibrate a risk based approach.

FATF Recommendations

The international AML, CFT and CPF standards. Recommendations 9 to 23 set the preventive measures for financial institutions, and Recommendation 6 on targeted financial sanctions was updated by FATF in June 2026. India’s framework for mortgage guarantee companies is built to meet them.

FATF Mutual Evaluation Report on India, 2024 (and Executive Summary)

The peer assessment of India’s AML and CFT system, which examined how the financial sector’s preventive measures and supervision work in practice.

Basel Committee, Sound Management of Risks Related to Money Laundering and Financing of Terrorism (2014, revised July 2020)

The Basel Committee guidance on managing ML and TF risk, a benchmark for the risk based approach and group wide controls that a mortgage guarantee company can read across to its own risk management.

FATF Risk Based Approach Guidance for the Banking Sector (2014)

FATF sector guidance on applying the risk based approach in banking and financial institutions, useful to a mortgage guarantee company in shaping its customer due diligence and monitoring.

Allied Laws

The wider body of law that defines each institution’s own mandate and the predicate offences and enforcement machinery around money laundering. A mortgage guarantee company operates under the RBI Act, 1934, while the predicate and enforcement Acts shape the risk it must assess and the conduct it may need to report.

The allied law most directly relevant to a mortgage guarantee company is the Reserve Bank of India Act, 1934, which empowers the Reserve Bank of India to regulate and supervise non banking financial companies, including mortgage guarantee companies. Other allied laws shape the company’s money laundering risk by governing corporate conduct, financial transactions, predicate offences and enforcement.

The Companies Act, 2013 establishes the corporate governance, transparency and beneficial ownership framework applicable to companies. The Bharatiya Nyaya Sanhita, 2023 creates a wide range of criminal offences that may generate proceeds of crime, while the Bharatiya Nagarik Suraksha Sanhita, 2023 provides the procedural framework for criminal investigations, searches, seizures and prosecutions.

The Foreign Exchange Management Act, 1999 regulates foreign exchange transactions and cross border fund flows. The Prohibition of Benami Property Transactions Act, 1988 prohibits benami property transactions and provides for the attachment and confiscation of benami properties.

The Prevention of Corruption Act, 1988 criminalises bribery and corruption, which are important predicate offences under the PMLA. The Narcotic Drugs and Psychotropic Substances Act, 1985 addresses offences involving narcotic drugs and psychotropic substances, another significant source of illicit proceeds.

The Fugitive Economic Offenders Act, 2018 enables the confiscation of assets belonging to individuals who evade criminal prosecution by remaining outside India. The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 targets undisclosed foreign income and assets held by Indian residents. The Foreign Contribution (Regulation) Act, 2010 regulates the receipt and utilisation of foreign contributions by specified persons and organisations.

The Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 provides for the preventive detention of persons involved in smuggling and foreign exchange violations. The Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 provides for the forfeiture of properties derived from smuggling and foreign exchange manipulation.

The Arms Act, 1959 regulates the manufacture, possession, acquisition, transfer and use of arms and ammunition. The Chemical Weapons Convention Act, 2000 implements India’s obligations under the Chemical Weapons Convention by prohibiting activities relating to chemical weapons. The Central Vigilance Commission Act, 2003 establishes the Central Vigilance Commission to oversee vigilance administration and strengthen anti-corruption oversight within specified public sector organisations.

Core AML, CFT, CPF Obligations for Mortgage Guarantee Companies in India

Across that framework, the regulations require a mortgage guarantee company to do the following. This article keeps each at the level required by law; a compliance requirements guide explains how to do each.

Register with FIU-IND. Enrol on the FINnet 2.0 / FINGate 2.0 portal so the institution can file its reports.
Appoint officers. Appoint a Designated Director and a management level Principal Officer under Rule 7 of the PMLR and the RBI Directions. The same person cannot hold both roles, and both are informed to FIU-IND and the RBI.
Conduct the internal risk assessment. Run an ML and TF risk assessment across customers, products, channels and geographies, document it, and take its outcome to the board, as the RBI Directions and the IRA Guidance require.
Document AML policy, controls and procedures. Adopt a board approved policy that turns the risk assessment into the institution’s operating procedures.
Customer identification and CDD. Identify and verify every customer and the beneficial owner (a controlling interest of more than 10 per cent for a company or partnership, and more than 15 per cent for an unincorporated association or body of individuals, with the separate trust test), with enhanced due diligence for politically exposed persons and high risk customers, under Section 11A of the PMLA, Rule 9 of the PMLR and the RBI mortgage guarantee company KYC Directions 2025. Given the guarantee business, the identification of the lenders it deals with and their beneficial owners, and the source of guarantee fees, are central.
Ongoing monitoring and periodic updates. Monitor transactions on an ongoing basis, and refresh KYC at least once every 2, 8 and 10 years for high, medium and low risk customers. Review each customer’s risk categorisation at least once every six months.
Sanctions screening. Screen customers and beneficial owners against the designated lists under Section 51A of the UAPA and Section 12A of the WMD Act, and freeze and report any match, verifying the relevant UNSC and domestic lists daily.
Regulatory reporting. File cash transaction reports for cash above Rupees 10 lakh, suspicious transaction reports of any value, counterfeit currency reportsand, where a transaction has a cross border element, cross border wire transfer reports of Rupees 5 lakh or more, where applicable, under Rule 3 and Rule 8 of the PMLR. Cash and related reports are filed monthly, by the 15th day of the succeeding month; suspicious transaction reports are filed promptly, through FINnet 2.0.
Record management, CKYCR and FINnet 2.0. Keep transaction records for five years from the date of the transaction, and identity records, account files and correspondence for five years after the relationship ends, under Section 12 of the PMLA. Upload customer KYC records to the CKYCR under Rule 9A, and file all prescribed reports through FINnet 2.0.
Training and awareness. Train staff by role to apply the controls and recognise red flags relevant to a guarantee business and its counterparties.
Independent testing and audit. Test the programme through internal audit, compliance assurance or independent review, and close every finding.
Run group wide controls. Where the institution has subsidiaries, apply AML and CFT programmes at group level, including for branches and majority owned subsidiaries, as the RBI Directions require.

What this article does not cover

This article explains the laws and regulatory instruments that apply to mortgage guarantee companies. It does not provide a control compliance manual, and it does not restate each institution’s own establishing statute or its developmental mandate, except where they bear on the AML duties. For implementation, a mortgage guarantee company separately documents customer acceptance, KYC and CDD procedures, beneficial owner identification, sanctions screening, transaction monitoring, suspicious transaction escalation, staff training, audit testing and board reporting. Those controls are the subject of the companion compliance guide.

To see how the mortgage guarantee company framework fits within the sector, see AML laws and regulations for financial institutions in India, and to place it within the national picture, see AML laws and regulations in India.

From regulation to compliance: your next step

Knowing the law is step one. These obligations only protect an institution when they are built into a working programme of risk assessment, policy, customer due diligence, monitoring, screening, reporting, training and independent review. For a mortgage guarantee company, the identification of borrowers and asset buyers and their beneficial owners and the scrutiny of the source of settlement funds are the controls that matter most. Understanding the stages of money laundering and how the sanctions screening process works is a useful starting point.

Want to confirm the 2025 directions for your institution?

AML India can walk you through the RBI mortgage guarantee company KYC Directions and build a proportionate programme for a mortgage guarantee business.

Frequently Asked Questions

What are the mortgage guarantee companies?

A company registered with the RBI to carry on the business of providing mortgage guarantees, that is, guaranteeing to a lender the repayment of an outstanding loan on a borrower’s default in return for a fee. It is a specialised non banking financial company and a reporting entity under the PMLA.

Are mortgage guarantee companies reporting entities under the PMLA?

Yes. A mortgage guarantee company is a reporting entity under section 2(1)(wa) of the PMLA because it is a financial institution within section 2(1)(l), which takes its meaning from section 45-I of the RBI Act, 1934. No separate notification is needed; a mortgage guarantee company is inside the regime.

Which RBI direction applies to a mortgage guarantee company?

The sector rulebook is the RBI (Mortgage Guarantee Companies) Directions, 2025, dated 28 November 2025 and updated as on 29 December 2025, and the KYC and AML baseline is the RBI NBFC KYC Directions, 2025, read with the RBI Internal Risk Assessment Guidance of 2024.

Do mortgage guarantee companies deal with retail customers?

A mortgage guarantee company deals mainly with corporate borrowers, selling banks and the buyers of acquired assets rather than retail customers over the counter, so its customer due diligence centres on those parties and their beneficial owners, and on the source of settlement funds. Where a mortgage guarantee company deals with individual borrowers or buyers, ordinary KYC applies. The full AML framework applies in either case.

What must a mortgage guarantee company report to FIU-IND?

Cash transaction reports for cash above Rupees 10 lakh, suspicious transaction reports of any value, counterfeit currency reports and, where a transaction has a cross border element, cross border wire transfer reports of Rupees 5 lakh or more where applicable. Cash and related reports are filed monthly by the 15th of the succeeding month, and suspicious transaction reports promptly, through FINnet 2.0.

Do the sanctions rules apply to mortgage guarantee companies?

Yes. The screening duties under Section 51A of the UAPA and Section 12A of the WMD Act apply to every mortgage guarantee company, whatever the size of the exposure. A mortgage guarantee company screens customers and beneficial owners against the United Nations and domestic designated lists and freezes and reports any match.

Official sources and review

Last reviewed: July 2026. This guide is grounded in the following primary official sources, linked to their official source where available.

This guide covers money-laundering law and compliance, a sensitive area where the rules change; confirm the current position for your institution with a qualified professional before acting.

Why work with AML India

AML India helps mortgage guarantee companies meet their PMLA and RBI obligations, from risk assessment and policy through to CDD, screening, monitoring, reporting, training and independent review.

Industries we serve: mortgage guarantee companies, NBFCs, housing finance and hire purchase, mortgage guarantee and asset reconstruction companies, insurers, payment system operators and aggregators, banks, DNFBPs, securities intermediaries and IFSC and GIFT City entities.

About the Author

Pathik Shah

FCA, CAMS, CISA, CS, DISA (ICAI), FAFP (ICAI)

Pathik is a Chartered Accountant with more than 26 years of experience in governance, risk, and compliance. He helps companies with end-to-end AML compliance services, from conducting Enterprise- Wide Risk Assessments to implementing the robust AML Compliance framework. He has played a pivotal role as a functional expert in developing and implementing RegTech solutions for streamlined compliance.

Reach Out to Pathik