The Finance Ministry is likely to recommend freezing and closure of bank accounts found suspicious during the ongoing exercise by banks to collect information under the 'Know Your Customer'(KYC) norms.

Banks in both the national and private sector are at present undertaking a one-time exercise to ensure hundred per cent compliance of the KYC procedures from all-- new and old--customers.

The KYC filing includes sharing personal and other details by a bank customer to the respective banks. All the banks have asked their customers to file fresh and updated details to help compile a fresh list of the account holders as instructed by RBI.

The KYC-- suggested by banking regulator RBI to be mandatorily undertaken by all the banks-- is a vital procedure adopted by the financial institutions to check money laundering and tackling of terrorist-related financing.

"Once the KYC compliance, as notified by various banks on the directions of the RBI, is completed by this month end the enforcement agencies keeping track of suspicious transactions will suggest freezing or termination of non-KYC accounts," a senior Revenue Department official said today.

However, the final decision rests with the management of individual banks, the official said.

The guidelines for KYC, prepared by Indian Banking Association (IBA) in consultation with financial intelligence units of the country, have also underlined customer profile, account opening procedures, establishing relationship with specific categories of customers as well as an illustrative list of suspicious activities.

Financial enforcement agencies like the Enforcement Directorate (ED) and the Financial Intelligence Unit will also have a better input of the account holder from the banks once they demand information on spotting a suspicious account or transaction, the official said.

The step is aimed at strengthening Anti-money laundering mechanism and checking terror financing through Indian banking channels, the official said.

Under Section 12 (c) of the Prevention of Money Laudering (PMLA) Act-- banking companies, financial institutions and intermediaries of securities market have to mandatorily "verify and maintain the records of the identity of all its clients".