Anti Money Laundering Policy
Pursuant to the recommendations made by the Financial Action Task Force on anti-money laundering standards, SEBI had issued the Guidelines on Anti Money Laundering Standards vide their notification No.ISD/CIR/RR/AML/1/06 dated 18th January 2006, vide letter No.ISD/CIR/RR/AML/2/06 dated 20th March 2006 and vide Circular number CIR/MIRSD/1/2014 dated March 12th, 2014 had issued the compulsion of the intermediaries registered under the Section 12 of SEBI Act, 1992. According to SEBI guidelines, all intermediaries have been advised to ensure that proper policy frameworks are taken into account as per the Guidelines on the Anti Money Laundering Standards notified by SEBI.
What is Money Laundering?
It can be defined as involved in financial transactions that include income acquired from criminal
activity, transactions structured to cover up the true origin of criminally derived proceeds and emerged to
have been received via legitimate sources.
It is done in three phases:
- 1. Placement Phase
- 2. Layering Phase
- 3. Integration Phase
Prevention of Money Laundering Act, 2002
Prevention of Money Laundering Act, 2002 (PMLA 2002) maintains the core of the legal framework
put in place by India to deal with money laundering cases. PMLA 2002 and the Rules notified there, were
brought into reality from July 1, 2005.
The PMLA 2002 and associated Rules there, impose an obligation on intermediaries (including stock brokers and sub-brokers) to verify original identity of clients, maintain records and enhance the information to the Financial Intelligence Unit (FIU) – INDIA
Financial Intelligence Unit (FIU) INDIA
The Government of India set up Financial Intelligence Unit-India (FIU-IND) on November 18,
2004 as an
independent body to report directly to the Economic Intelligence Council (EIC) controlled by the Finance
FIU-IND has been established as the central national agency responsible for receiving, processing, analyzing and disseminating data associated to suspect financial transactions. FIU-IND is also responsible for coordinating and extending efforts of national and international intelligence and enforcement agencies in taking ahead the global efforts against money laundering and similar crimes.
Policy of Wisdom Capital Advisors Pvt. Ltd.
It has resolved as an internal policy, and takes an adequate steps to hamper money laundering
and would put in place a frame-work to report cash and suspicious transactions to FIU according to the
guidelines of PMLA Rules, 2002.
The policy is applicable to Wisdom Capital Advisors Pvt. Ltd. Employees and Authorised Persons (AP).
Objective of these Guidelines
These Guidelines target to guide all the employees of Wisdom Capital about the steps that they are required
to take and apply to identify any money laundering or terrorist financing activities. It will be the
responsibility of every concerned employee that they must be able to understand that the measures taken are
appropriate and follow the spirit of such measures and the requirements as mentioned in the Prevention of
Money Laundering Act, 2002.
Some of these suggested measures may not be applicable to every department, Branch / Sub-broker. However, every entity should analyze diligently the nature of its business, customer type and transaction to ensure itself that the measures taken by the employees are wise enough to follow the spirit of such guidelines.
Implementation of this Policy
Mr. Bharat Bansal(Director) will be the Principal Officer who will be responsible for
- Compliance of the provisions of the PMLA and AML Guidelines
- Ensure that Wisdom Capital discharges its legal obligation to report any suspicious transaction to the concerned authorities.
- Act as a central reference point and play an active role in identification & assessment of potentially suspicious transactions
Mr. Bharat Bansal (Director) is designated as Director for supervision of effective implementation of Internal Controls and Procedures required under the Prevention of Money Laundering Act, 2002.
The main focus of this policy is the Customer Due Diligence Process which is explained as:
- Collecting sufficient information about the client in order to recognize who is the actual beneficial owner of the securities or on whose name transaction is conducted.
- To Verify the customer’s identity with the help of reliable data or information, independent source or document.
- To Conduct on-going due diligence and scrutiny of the account to ensure that the transaction done are consistent with the client’s financial status, activities and risk of profile.
The Customer Due Diligence Process have following aspects :
- Policy for Acceptance of Clients
- Client Identification Procedure
- Suspicious Transactions identification & reporting
Customer Acceptance Policy
While accepting any new client following procedures / checks must be adhered to namely:
Each client should be met in person: Accept client whom we meet personally. Either he should visit the office/branch or concerned official can also visit the client at his residence / official place to collect the necessary documents to be filled in and signed. Preferably, accept clients who live within the jurisdiction of the branch. As far as possible, ensure that the new client is introduced with an existing client.
Accepts clients on whom we are able to apply appropriate KYC procedures: Obtain required information from the client. It should be checked that the initial forms taken from the clients are filled in completely. All photocopies submitted are checked against original documents. Ensure that the Know Your Client guidelines are followed without any problem. All supporting documents as specified by Securities and Exchange Board of India (SEBI) and Exchanges are obtained and verified further.
Do not accept clients with identity matching persons known to have criminal background: Check whether the client’s identity correlates with any person having criminal background or is not restricted in any other case, like in terms of criminal or civil proceedings by any enforcement/regulatory agency worldwide.
Be careful while accepting Clients of Special category: We should diligently accept the clients of special category like NRIs, Trust, Charities, HNIs, NGOs, Politically Exposed Persons (PEP), persons of foreign origin, companies dealing in foreign currency, companies having closed share holding/ownership, shell companies, overseas entities, clients in high risk countries, non face to face clients, clients with dubious background. Current/Former Head of State, Current/Former senior high profile politician, Companies offering foreign exchange, etc.) or clients from high-risk countries (like Libya, Afghanistan, Pakistan etc.) or clients belonging to countries where fraud level is comparatively high (like Burma, Nigeria, etc). Scrutinize quickly the records/documents pertaining to clients belonging to aforesaid category.
Guidelines on Identification of Beneficial Ownership: For non-individual clients being the part of due diligence measures, sufficient information should be obtained for identification of person(s) who beneficially own/control such entity. Whenever it is apparent that the securities obtained or maintained through an account are beneficially owned by the other party not the client, that party should be identified first and verified further using client identification and verification procedures as soon as possible. The beneficial owner is the person or persons who ultimately own, control, or influence a persons on whose behalf a transaction(s) is/are being conducted. It involves persons who exercise ultimate effective control over a legal person.
Do not accept client registration forms which are suspected to be fictitious: Check that no account is being opened in a fictitious/benami name or on any anonymous basis.
Do not compromise on submission of mandatory information/ documents: Customer’s account must be opened only on receipt of mandatory information along with authentic supporting documents in accordance with regulatory guidelines. Prevent opening the accounts where the client does not provide required documents and we should have enough reasons to reject the client on this reluctance.
Customer Identification Procedure (FOR NEW CLIENTS)
Objective: To establish identity of the client along with solid proof of address to avoid opening a fictitious / benami / anonymous account.
Documents which can be relied upon:
PAN Card: PAN card is mandatory and is most important
document as by the card issued to an individual, we can easily check its genuineness through IT website.
IDENTITY Proof: PAN Card itself can be used as proof of identity. If PAN card carrying an old photograph of the holder, does not match current facial features of the client, we will take other identity proof that may be Passport, Voter’s Identity card, Ration Card or PSU/Bank/Government issued photo identity card.
ADDRESS Proof: For valid address proof we can collect Bank Statement, Voter’s Identity Card, Passport, AadhaarLetter, Ration card and latest Electricity/telephone bill in the name of the client.
FINANCIAL DETAILS Proof: That can be in the form of Form 16, Salary Slip, Annual Accounts, Networth Statement, Bank Statement for Six Months, any other document proving the ownership of an Assets.
BANK DETAILS Proof: Copy of Pass Book, Bank Statement, Cancelled Cheque
Documents to be obtained as part of customer identification procedure for new clients:
In case of individuals, one copy of the following documents has to be obtained:
As PAN is mandatory, verify its originality with IT website and cross verify the PAN card copy
with the original one. Please attach verified with original and stamp as proof of verification.
Some other docs may include Voter’s Identity card, Ration Card, Passport, or any Government/PSU/Bank issued photo identity proof or any other document signed by the regulatory authorities.
Address proof in the form of Passport, Bank Statement, Ration card, Voter’s Identity Card, and latest Electricity/telephone bill in the name of the client or any other document prescribed by the regulatory authorities.
Copy of the Demat account statement / DP client master.
Copy of the Bank account statement / Pass Book.
Proof of financial details/data.
In case of corporates, one certified copy of the following documents must be obtained:
Copy of the Registration/Incorporation Certificate.
Copy of the Memorandum & Articles of the Association.
List of Directors, Copy of their PAN cards, Address Proofs, and the Director Index No. (DIN) and acknowledged copy of Form 32 for their appointment.
Copy of the latest audited Annual Statements of the corporate client. Latest Net worth Certificate.
Latest Income Tax return filed.
Board Resolution for appointment of the Authorized Person who will manage the account.
Photograph, Proof of Identity and Proof of address of all the persons authorized to deal on behalf of corporate List of Shareholders.
Copy of the demat account statement / DP client master.
Copy of the bank account statement / Pass Book.
In case of partnership firm one certified copy of the following must be obtained:
List of Partners, PAN card and address proofs of partners.
Authorization letter for the person authorized to open and operate the account
Copy of the bank account statement / Pass Book
Photograph, Proof of address and Proof of Identity of all the persons authorized to transact on behalf of firm
Annual statement/returns of the partnership firm
Copy of the demat account statement / DP client master
In case of a Trust, one certified copy of the following must be obtained:
Authorization letter for the entity authorized to act on their behalf
Photograph, Proof of address and Proof of Identity of all the persons authorized to transact on behalf of the Trust.
Copy of the bank account statement / Pass Book
Copy of the Demat account statement / DP client master
In case of unincorporated association or a body of individuals, one certified copy of the following must be obtained:
Resolution of the managing body of such association or body of individuals
PoA in favour of person authorized to transact
Any document required by organization to establish the legal existence of such an association or body of individuals.
Officially valid documents like PAN card, voters ID, passport, etc of the person(s) authorized to transact
In case of an NRI account ? Repatriable/non-repatriable, the following documents are required:
PIS permission copy issued by the bank
Overseas address and Indian address proof
If the account is handled through a mandate holder, copy of the valid PoA/mandate is required
Bank statement copy
Demat statement copy
- Don’t forget to check original documents before taking their copies.
- Latest photograph of authorized person(s)/account holder is demanded.
- Check for latest IT return of the client/Net worth Certificate for discovering the financial status of the client to know the client suitability of the product sold to the client.
- Track and review the above mentioned data to make sure that the transactions being conducted are updated to customers, its business and risk profile, taking into account, where necessary, the customer’s source of funds.
- Forms submitted by the client should be Scrutinized thoroughly and all the details must be cross checked with various documents obtained like source of income etc. If needed, ask for additional piece of information like salary slips, etc. to satisfy yourself whenever there is a doubt.
- For background check of the clients, websites like www.watchoutinvestors.com should be referred. Also, Prosecution Database / List of Vanishing Companies available on www.sebi.gov.in and RBI Defaulters Database available on www.cibil.com can be explored.
- Track the welcome kits returned with reason – undelivered. Compliance Officer should be alert and client should be contacted immediately on telephone and the trading, should be suspended.
- Employee of Wisdom Capital should not preferably sign as witness on the CRF
- If the Employee of Wisdom Capital introduces the client, exact relation of the client with that employee should be put on paper.
For all Existing clients
With the quick glance, the branches / Sub Brokers/ APs must check that the details filled in the KYC, by the client, is similar to the current details of the client. If necessary, we can ask for additional documents/information from the client to check their financial/general status.
If case is like:
There is any material negative change in the financial data of the customer from what is given
in the KYC.
There is a case where client is not contactable or contracts notes/ communications sent are received back undelivered.
If in case the client is prohibited by any regulatory authority.
If the client denied to provide any additional document asked for.
On any material change in the profile of mandate holder, the fact should be immediately informed to the Compliance Officer, who will, in turn, discuss the issue with the Principal Officer for the necessary course of action, including reporting to FIU.
Reliance on the third party for carrying out Client Due Diligence (CDD)
If the client is registered on KRA, we can collect data from KRA sites and compare the same with supporting documents submitted by him. In case, there is no inconsistency between them, the information downloaded from KRS website is considered for the client identification.
Risk Assessment of the Client
We should accept the clients, based on the risk they are likely to pose. Here, the main motive is to identify clients who are likely to pose a risk level above the average risk level of terrorist financing/ money laundering. For this purpose, the clients are categorized as Low risk, medium risk and high risk clients. By this categorization, we can smoothly apply the customer due diligence process. For an instance, for high risk clients, the higher degree of due diligence is applied. The factors of risk parameters depend on client’s location, nature of business activity, turnover, manner of payment, nature of transaction, etc.
Category A => Low Risk
Category B => Medium Risk
Category C => High risk
Category A clients are with low or zero risk. They are nice corporate/HNIs/Retail clients who pursue respectable social and financial standing. These clients generally are on time in the context of payment and get delivery of shares.
Category B clients are the intra-day clients/speculative clients who deal with transaction value of more than Rs 2 Crore per day. These are the clients who maintain existing account with Wisdom Capital.
Category C clients are :
- NRI/PIO/NRE/Foreign Clients
- Politically Exposed Persons (PEP): Politically exposed persons have the responsibility of prominent public functions in a foreign country. They can be Heads of States of Government, Senior politicians, senior government/military/ judicial officials.
- Trust, NGOs and Charities, organizations receiving donations
- The Clients who have defaulted in the past plus they have suspicious background and they do not have any financial status.
- The companies which offer foreign exchange.
- Clients in high risk countries: (where existence/effectiveness of money laundering are suspected or which don’t apply FATF standards, and there is unusual banking secrecy, countries active in narcotics production, countries where corruption (as per transparency international corruption index) is high, Countries where government sanctions are applied, Countries reputed to be any of the following – Havens/ sponsors of international terrorism, offshore financial centers, Countries, tax havens, where fraud holds high degree.
- Clients with questionable reputation as per public information etc.
- Non face to face Clients.
Be careful throughout the transactions of B and C category clients.
Determine if the existing I potential customer is PEP. The procedures may include additional information from the clients. Now the approval of senior management is needed for – making the business relationships with PEP & to hold the same in future.
High Risk Category should be put to counter measures while their transactions take place. These measures may include enhanced scrutiny of such transactions and relevant reporting mechanisms of transactions and applying intensified due diligence.
Any change in the risk profile of the client/mandate holder, has to be find out by the concerned branch officials, and informed to the Compliance Officer as soon as possible.
Mandate Holder Policy
The main objective of this policy is to make sure that we are aware that who is the ultimate beneficiary of any transaction and about the transactions being executed, through the mandate holder or bonafide.
It is also possible that some of the clients might appoint a mandate holder. Generally, the
is opened in the name of various family members and one of the family members will hold the mandate. And, in
case of NRI clients who are based abroad, there may be a PoA/Mandate in favour of a person residing in
Whenever any account is proceeded by a mandate holder, Get to know the relationship of the mandate holder with the client, further, establish the identity of the mandate holders by taking the identity and address proof.
Do not accept the payment from the account of mandate holder in favour of the client. The payments have to be received from the client’s bank account only. For this, the PoA holder may or may not have the mandate to run the bank account. Akin to the fact, pay-out cheques should be issued only in the name of the client and not in the name of the mandate holder.
If there is any doubt in the relationship between the mandate holder and the actual client or if the behavior of the mandate holder is suspicious, take necessary advice from the Compliance Officer.
Relationship Manager/ Dealer/ Branch Manager/ Branch Coordinator/ Compliance Officer:-
The RM/BM/Dealer/Coordinator should meet the client at least once before opening an account at
given by him. In the process he may reasonably verify the source of income, financial status, living
standards etc. of the client and check if the details given in the CRF (Client Registration Form) is same as
the actual status.
If the client is a walk-in client? then the concerned branch official must verify the background, and financial status of the client.
All the essential docs of identity, address and financial status of the client must be collected as per the regulatory authorities timely. The proofs should be compared and verified with the originals ones. If the prospective client is denying to give any information, do not proceed his/her account further to HO for opening process.
In person verification can be done by SUB BROKER for clients introduced by them.
The Compliance Officer check carefully the background, financial status, living standards of the client before recommending for opening an account. The Compliance Officer may ask for the information/documents from the client.
If the account is to be operated by a PoA /mandate holder, then find out what is the relationship between the client and the PoA/Mandate holder, establish the identity and background of the client and the PoA/Mandate holder (by obtaining the required documents) and check that the PoA Holder has the proper authorization.
For the corporate account, the branch officials must check properly that the authorized person has acquired required mandate with the help of Board Resolution. The identity and background of the authorized person has to be maintained by collecting the needed documents.
Foreign clients can deal in Indian market only to sell the shares allotted through ESOP or buy/sell as a foreign direct investment?. We cannot take into account, foreign clients under any other circumstances.
You can consult the Compliance Officer before proceeding with any NRE, PIO, NRO foreign clients.
Risk Management & Surveillance Team
Risk Management & Surveillance Team (RMS) provides exposure to clients as per the margin available in the system and clear exposure to selected clients with the help of tips/recommendations of the Business Managers. It is also the role of RMS to validate such exposures with respect to financial details provided by the client in their KYC forms. If there is a trading activity of the client, does not go with the financial details declared by the him/her, it should be analyzed and passed to the Principal Officer with reasons of suspicion detected
Monitoring Of Transactions
Scrutinize unusually the large transactions like, clients having traded in scrip/shares of a company for a quantity of 20,000 or more in a single day and volume in that scrip of that client is 25% or more of the total volume in that scrip of the Exchange.
Check trade log for indication of negotiated trades (if any)
Check for any relation of the client with the company/directors /promoters.
Check previous trading pattern of the clients in that particular scrip.
Inspect the bulk deal transactions by sample check. A ?bulk? deal constitutes transaction in a scrip (on each Exchange) where total quantity of shares purchased is more than 0.5% of equity shares value of the entity listed on the Exchange.
Choose randomly some clients and select their few transactions and scrutinize to check whether they are of suspicious nature or not.
If substantial increase in turnover in a dormant account is found, should be known to the senior management. Check balances and trading in the dormant accounts. Be vigilant on the movement of credit balances of the dormant account.
RMS identifies after analysis clients with huge and regular losses and are still placing trades/orders. Identify the Sources of funds in such cases.
Analysis be also carried out in respect of disproportionate profit/ loss booked by a client trading in ?F&O? segment vis-à-vis the value of the contract in illiquid scrips/ derivatives
Suspicious transactions to include ?transactions integrally connected? as well as ?transactions remotely connected or related?
Parameters for analyzing the transactions:
Analysis of top clients in terms of turnover
On a periodic basis identify top 100 clients on descending order of turnover and ascertain whether the same matches with the financial status of the client. Moreover, analyze whether there is commensurate fund movement, whether the payments are being made, in cheque and from the bank account(s) of the clients registered with Wisdom Capital Advisors Pvt. Ltd etc. Get the latest Income Tax return of the client up to the possible limit to know actually the financial capacity of the client.
Analysis of top client as per the increase in turnover.
Eventually identify the top 100 clients, on descending order of rise in turnover over a threshold amount of Rs 1Crore. Then analyze whether the same matches with the financial status of the client, if there are proportionate funds movement, whether the payments are being made through cheque from the bank account(s) of the client, etc. To the extent possible, we need to obtain the latest Income Tax return of the client to ascertain the level of income of the client.
Matched trades (where the buy and sell clients are with the same broker) on a daily basis to identify whether there is any buy and sell order from same/different branches of Wisdom Capital Advisors Pvt.in B1, B2 & group and penny stocks. Further analyze whether the client are indulging in any sort of manipulation like transfer of profits from one account to another, circular trading, volumes, indulging in price manipulation, creating artificial,shifting the beneficial ownership of shares, etc.
Inspect the trades in stocks less than Rs.10/- and beyond a specific quantity.
Analyze the trades done in penny stocks (stocks less than Rs.10/-) regularly. This will help us in identifying whether the client is indulging in any sort of manipulation like making of artificial volume, circular trading, artificial price movement etc.
Client focus in particular scrip or selected scrips.
Check, If any client is concentrating on any particular scrip, especially liquid or penny stocks. This will help in identifying whether the client is indulging in any sort of shuffling of artificial volume, artificial price movement, circular trading, etc. or if he is having any inside value.
Analysis of trades in illiquid counter (illiquidity can be related to the average volume in the scrip over the last 3 months down a particular level)
Analyzing the clients regularly for the volume with respect to the total traded volume at the exchange has to be done (TTQ analysis). This will help in identifying whether the client is indulging in any sort of manipulation like creation of artificial volume, artificial price movement, circular trading, etc.
Trades shifted from one client to another within the same branch/AP/Sub Broker.
On a daily basis, analyze the details of trade shifted from one client to another, either during the market hours or after the market hours. This will help us in identifying whether the client is trying to hide his identity, indulging in profit/loss transfer, availing exposure while in debit balance, etc.
Periodic analysis of the trades executed by NRI/Foreign clients/institutional clients should be undertaken. It should be supplemented by analysis of the trading patterns, payment patterns etc.
With respect to the institutions, check all the DVP trades and cancelled trades to see whether the institutional code is being misused. For these situations, also ascertain who are the final beneficiary of the trades.
Client payments in Pay order, DD, cash etc. must be analyzed.
Undertake a periodic analysis of all the payments received from client by way of DD/Pay order. This will help in ascertaining whether any client’s DD/ Pay Orders have been purchased against Cash or whether any client is doing payment via third party. That can be through employees.
It is also possible that the employees/sub brokers can be accepting cash from the clients and further execute the trades in their account. Similarly, it is also possible that the profit on trades of the clients being shifted to the employees/sub broker’s accounts.
Periodic analysis of change / modification in client details like demat account, bank account, address etc to identify the clients who are making continuous changes and to make sure whether the client is faking his identity.
Role of Sub Brokers / APs Team
Monitoring of Proprietary Transactions of Sub Brokers / APs:
For the inspection purpose of the Franchisee, websites such as www.watchoutinvestors.com must
be referred. Also, Prosecution Database / List of Vanishing Companies available on www.sebi.gov.in
Check for high volume in proprietary account of Sub Brokers /Sub-broker/ APs and his/her relations.
Analyze the Demat account of Sub Brokers / APs / Sub Broker ( if DP account is with Wisdom Capital Advisors Pvt. Ltd DP )
Enlist every off market transfers and if there is any doubt ask for explanation from concerned Sub Brokers / APs separately.
Go through the third party funds (cheques received from bank accounts other than demand drafts / pay orders and mapped bank accounts)
Role of Human Resource Department
The Human Resource Department and other Department Heads involved in hiring must apply proper
screening so as to employ the high standard employees to avoid risk.
Bona fides of employees are checked to make sure that the employees don’t hold any relation with terrorist or other anti-social organizations.
Not only Know Your Customer (KYC) policy but also Know Your Employee- procedures should be in place.
Self attested copies must be submitted by all the employees for identification of documents namely Identity Proof, Photograph, Educational documents and Address Proof need to be verified with originals documents by HRD officials under their seals and signatures.
Role of Legal Department
KYC forms and other documents drafted should invariably have undertaking from the client that
he is not indulging in or has not been associated with any money-laundering activity or terrorist activity
and that he is not convicted of any fraud/offence/crime by any regulatory authority in the country.
All disclosure documents info. must be given to the client informing about company’s right to obtain and disclose information about the client to the competent authority if required.
Role of Training Division
Giving brief to new employees in the form of introductory programs and rounds of small
meetings and presentations at branch locations.
Adequate training should be given to all the concerned employees to (a) ensure that the contents of the guidelines are understood and (b) develop awareness and vigilance to guard against money laundering and terrorist financing.
As of now, AML policy is covered during the induction training given to all new recruits and also during the on-going compliance sessions conducted time to time.
Role of Internal Audit
This Policy will be reviewed everyday by the Internal Audit Head for its impact since the person reviewing the policy should be different from the person framing the same.
As a policy Wisdom Capital Advisors Pvt. Ltd does not
accept any cash against settlement or
margin obligations for dealing in case of securities. All payments must be collected from the clients
strictly by account payee crossed cheques drawn in favour of Wisdom Capital Advisors Pvt. Ltd. Financial
Services Pvt. Ltd. or through NEFT/RTGS from client`s designated bank account only. The same is also needed
in accordance with the SEBI circular no. SMD/ED/IR/3/23321 dated November 18, 1993 and
SEBI/MRD/SE/Cir-33/2003/27/08 dated August 27, 2003.
In case account payee cheques have been received from a bank account other than the one registered with us, same shall be treated as third party transfer and no credit shall be given to the client until the client gets the same updated in our records by submitting a written request alongwith necessary supporting documents.
Only in specific cases, bank draft/pay-order may be accepted from the client provided client submits written declaration along with the bank statement/acknowledged copy of bank pay-in slip/ a certificate obtained from the issuing bank verifying the client`s credentials.
Analyze and furnish details of suspicious transactions, it does not concern much whether it is paid in cash or not. The condition must be checked avoiding any delay and reaching the conclusion is equally important..
What is a Suspicious Transaction?
Suspicious transaction means a transaction whether or not made in cash, which is appropriate
for the person.
Gives rise to a reasonable space of suspicion that it may involve the proceeds of crime;
Looks to be done in situation of unusual or unjustified complexity; or
That appears to have no economic rationale or bona fide goal.
Reasons for Suspicious:
Identity of client
- False identification documents
- Identity documents which could not be verified within proper time
- Non-face to face client
- Clients who is involved in high-risk jurisdiction
- Any doubt over the actual beneficiary of the account
- Accounts opened with names very close to other established business companies.
- Receipt back of well-come kit undelivered at the address provided by the client.
- Suspicious background/ relation with criminals
- Large number of accounts having a common parameters such as common partners promoters / address/ email address / directors / telephone numbers introducer/authorized signatory
- Subtle transfers between such multiple accounts.
Activity In Accounts
- Abnormal activity in relation with the past transactions
- Use of alternative accounts by client in the gap of one day.
- Activity in dormant accounts suddenly.
- Activity not as per what would be expected from declared business
- Account used for circular trading
Nature of Transaction
- Unusual complexity
- No economic rationale or Source of funds are under suspicion
- Appears to be case of insider trading/investing activity
- Buying through one’s own account and then transferred to a third party through an off market transactions with the help of DP account.
- Transactions reflect likely market handling
- Suspicious off market transactions
Value Of Transactions
- Value under the reporting threshold amount in an obvious attempt to keep away from reporting
- Large sums being transferred from overseas for making payments not continuous to the clients
- Obvious financial standing irregularity in the payment pattern by client
- Block deal which is not at market price or prices appear to be inflated/deflated by human intervention in it.
What to Report
The nature of the transactions
The exact amount of the transaction and the currency in which it was denominated
The date of transaction
The related parties to the transaction.
The reason of suspicion
When to Report
As per the PMLA rules, brokers/sub-brokers are required to report information relating to cash and suspicious transactions to the Director, Financial Intelligence Unit-India (FIU-IND) 6th Floor, Hotel Samarat, Chanakyapuri, New Delhi -110021 as per the schedule given below :
|CTR||All cash transactions of the value of more than Rs.10 Lakhs or its equivalent in foreign currency or||15th day of the succeeding month|
|CTR||All series of cash transactions integrally connected to each other which have been valued below Rs.10 Lakhs or its equivalent in foreign currency where such series of transactions have taken place within a month||15th day of the succeeding month|
|CCR||All cash transactions where forged or counterfeit currency notes or bank notes have been used as genuine or where any forgery of a valuable security or a document has taken place facilitating the transactions||Not later than seven working days from the date of occurrence of such transaction|
|STR||All suspicious transactions whether or not made in cash||Not later than seven working days from the date of occurrence of such transaction|
|NTR||Non Profit Organization Transaction Report||Not later than seven working days from the date of occurrence of such transaction|
According to the same, all the Concerned Departmental Heads, APs, Branch Heads, and Sub Brokers are required to collect information from the Branches/Departments/Sub-brokers subdued by jurisdiction and give report on Cash transactions on monthly basis to Mr. Nikhil Raj Gupta, Principle Officer by the 10th day of the following month and for suspicious transactions within 3 working days of assertion of such transaction to enable the Principal Officer to report the same to the Director, Financial Intelligence Unit-India (FIU-IND) within the stipulated time.
Other Important Points
Reasons for treating any transaction or a set of transactions as suspicious should be recorded
and stored. It should be ensured that there is no undue delay in reaching such a conclusion.
Appropriate focus should be maintained in providing the information.
The reports can be given through email/speed/fax/registered post at the Head Office addressed to the Principal Officer.
No hindrance should prevail on operations in the accounts where a suspicious Transaction Report has been made.
It should be ensured that there is no tipping off to the client at any point. An important factor for the success of the AML process is that the customers should not be known (i.e. tipped off) about the fact that their accounts are being monitored for suspicious activities and I or that a disclosure has been made to the designated authority namely Financial Intelligence Unit, India. (FIU-IND)
Formulation/Review/Training on ?The Internal Policy and Procedure? to All Staff/Sub-Brokers / APs
Principle officer and compliance officer would be responsible for periodic review and updation
of Internal Policy and procedures on “The Prevention of Money Laundering Act, 2002” under the various latest
amendments and regulatory circulars.
This policy and any revision and updates therein will be discussed with:-
All employees through Wisdom Capital Advisors Pvt. Ltd Intranet, internal circulars and during the periodic training programmes.
All Branches/sub-brokers/ APs through email and circulars and on the time of periodic training programmes.
Training programmes shall be conducted to enlighten the Staff and Business Associates about numerous compliance requirements and Internal Policy and procedures on “The Prevention of Money Laundering Act, 2002” from time to time for proper implementation of specific procedures for customer identification and restoring internal records of transactions.
The Internal Policy shall be placed in front of Board, and changes, if any, in the policy are warranted, the revised policy should be presented to the Head for review and approval of the same.
Record keeping requirements:
Records approving the identity of its clients and beneficial owners as well as account files and business related dealings shall be maintained and stored for a period of 5 years after the business relationship between a client and Wisdom Capital Advisors Pvt. Ltd has ended/the account has been closed, whichever is later.
The certain information is required to be collected, from clients which may be personal in
nature or has never been called before, for effective implementation of AML/CFT measures. Such data may
include documents approving source of funds/income tax returns/bank records etc. which may lead to raising
of questions by the client about the motive and purpose of collecting such information.
The dealing staff, therefore must educate clients about the AML/CFT needs and for their convenience this policy is availed on the company`s website www.adroitfinancial.com.
Contact Details of Principal Officer
In case of any further clarification, the Principal Officer can be contacted at:-
Mr. Bharat Bansal (Director)
M/s Ashlar Securities Pvt. Ltd.
A-38, Sector-67, Noida-201301
Mobile No. : 9311097610
Email ID :- firstname.lastname@example.org