Abstract
This paper critically examines the role of the Indian banking sector in preventing financial crimes and safeguarding the integrity of the financial system. It explores the regulatory framework governing banks, focusing on key legislations such as the Prevention of Money Laundering Act and the Foreign Exchange Management Act. The paper highlights the challenges faced by banks in implementing anti-money laundering and know your customer norms, detecting and investigating suspicious activities, and maintaining a robust compliance culture. It also discusses future directions for strengthening the banking sector’s resilience against financial crimes, emphasizing the importance of leveraging technological advancements, promoting international cooperation, and investing in capacity building. The paper concludes by offering recommendations for policymakers, regulators, and banks to enhance their effectiveness in combating financial crimes and ensuring the stability of the financial system.