PMLA Policy
Policies and procedure for prevention of money laundering
(as per the requirements of the PMLA Act 2002) (reviewed on 27th July, 2021)
Constitution of Client | Proof of Identity | Proof of Address | Others |
---|---|---|---|
Individual | PAN Card Voter Id Card Driving License Passport MAPIN UID Card | Passport Bank Pass Book/Statement Ration Card Driving License Telephone Bill Electricity Bill | N.A. |
Company | PAN Card Certificate of incorporation Memorandum and Articles of Association Resolution of Board of Directors | As above applicable | Proof of Identity and address of the Directors/Others authorized to trade on behalf of the Company |
Partnership Company | PAN Card Registration certificate Partnership deed | As above applicable | Proof of Identity of the Partners/Others authorized to trade on behalf of the Company |
Trust | PAN Card Registration certificate Trust deed | As above applicable | Proof of Identity of the Trustees/ others authorized to trade on behalf of the trust |
AOP/ BOI | PAN Card Resolution of the managing body Documents to collectively establish the legal existence of such an AOP/ BOI | As above applicable | Proof of Identity of the Persons authorized to trade on behalf of the AOP/ BOI |
- If a potential or existing customer either refuses to provide the information described above when requested, or appears to have intentionally provided misleading information, our Company will not open the new account. intentionally provided misleading information, our Company will not open the new account.
- PAN shall be a mandatory requirement for account All PAN Cards received will verified form the Income Tax website before the account is opened.
- The Company will maintain records of all identification information for five years after the account has been
- As per the AML policy the company has a proper system to identify the name of entities mention in the list given by United Nation’s Security Council resolutions (UNSCRs) which can be accessed in the united nation website at http://www.un.org/sc/committees/1267/consolist.html before opening of any of the
- It will be required that senior management approval is obtained for establishing business relationships with PEPs. Where a client has been accepted and the client or beneficial owner is subsequently found to be, or subsequently becomes a PEP, The Company shall obtain senior management approval to continue the business
In order to achieve this objective, all clients should be classified in the following category:
Category B – Medium Risk
Category C – High Risk
Category C: clients are those who have defaulted in the past, have suspicious background, do not have any financial status, etc.
- Obtaining sufficient information in order to identify persons who beneficially own or control the securities Whenever it is apparent that the securities acquired or maintained through an account are beneficially owned by a party other than the client, that party shall be identified using client identification and verification procedures. The beneficial owner is the natural person or persons who ultimately own, control or influence a client and / or persons on whose behalf a transaction is being conducted. It also incorporates those persons who exercise ultimate effective control over a legal person or arrangement;
- Verify the customer’s identity using reliable, independent source document, data or information;
- Conduct on – going due diligence and scrutiny of the account / client to ensure that the transaction conducted are consistent with the client’s background / financial status, its activities and risk
- In case of clients with past background in trading and whose KRAs are already registered, the company will rely on the data received from such KRA Agencies for Client Due Diligence.
- Ensure that an account is not opened where the intermediary is unable to apply appropriate CDD measures / KYC
- The circumstances under which the client is permitted to act on behalf of another person / entity shall be clearly laid
Client Identification Procedure.
Monitoring of transactions.
Tracking and reporting Suspicious Transactions.
- Non – resident clients;
- High net worth clients (HNI);
- Trust, Charities, NGOs and organizations receiving donations;
- Companies having close family shareholdings or beneficial ownership;
- Politically exposed persons (PEP);
- Current / Former Head of State, Current or Former Senior High profile politicians and connected persons (immediate family, Close advisors and companies in which such individuals have interest or significant influence);
- Companies offering foreign exchange offerings;
- Clients in high risk countries (where existence / effectiveness of money laundering controls is suspect, where there is unusual banking secrecy, Countries active in narcotics production, Countries where corruption (as per Transparency International Corruption Perception Index) is highly prevalent, Countries against which government sanctions are applied, Countries reputed to be any of the following – Havens / sponsors of international terrorism, offshore financial centers, tax havens, countries where fraud is highly prevalent;
- Non face to face clients;
- Clients with dubious reputation as per public information available etc;
- Failure by prospective client to provide satisfactory evidence of identity shall be noted and reported to the higher authority within the intermediary
- Accept client whom we are able to meet personally. Either the client should visit the office / branch or concerned official may visit the client at his residence / office address to get the necessary documents filled in and signed. Preferably accept clients who live within the jurisdiction of the
- Obtain completes information from the client. It should be ensured that the initial forms taken by the clients are filled in All photocopies submitted by the client are checked against original documents without any exception. All supporting documents as specified by Securities and Exchange Board of India (SEBI) and Exchanges are obtained and verified.
- Check whether the client’s identify matches with any person having known criminal background or is not banned in any other manner, whether in terms of criminal or civil proceedings by any enforcement / regulatory agency worldwide.
- We should be careful while accepting clients of special category like NRIs, HNIs, Trust, Charities, NGOs, Politically Exposed Persons (PEP), persons of foreign origin, companies having closed share holding/ownership, companies dealing in foreign currency, clients in high risk countries, non – face to face
- For non – individual customers as part of the due diligence measures, sufficient information must be obtained for identification of ultimate natural person(s) who beneficially own or control such entity. Whenever it is apparent that the securities acquired or maintained through an account are beneficially owned by a party other than the client, that party should be identified and verified using client identification and verification procedures as early as possible. The beneficial owner is the natural person or persons who ultimately own, control, or influence a client and / or persons on whose behalf a transaction(s) is / are being conducted. It includes persons who exercise ultimate effective control over a legal person or arrangement.
- Ensure that no account is being opened in a fictitious / benami name or on an anonymous basis.
- Client’s account should be opened only on receipt of mandatory information along with authentic supporting documents as per the regulatory Do not open the accounts where the client refuses to provide information / documents and we should have sufficient reason to reject the client towards this reluctance.
- all cash transactions of the value of more than rupees ten lakhs or its equivalent in foreign currency;
- all series of cash transactions integrally connected to each other which have been valued below rupees ten lakhs or its equivalent in foreign currency where such series of transactions have taken place within a month;
- all cash transactions where forged or counterfeit currency notes or bank notes have been used as genuine and where any forgery of a valuable security has taken place;
- all suspicious transactions whether or not made in cash. Suspicious transaction means a transaction whether or not made in cash which, to a person acting in good faith, gives rise to a reasonable ground of suspicion that it may involve the proceeds of crime; or
- appears to be made in circumstances of unusual or unjustified complexity; or
- appears to have no economic rationale or bonafide purpose; or
- gives rise to a reasonable ground of suspicion that it may involve financing of the activities relating to
- the nature of the transactions;
- the amount of the transaction and the currency in which it was denominated;
- the date on which the transaction was conducted; and
- the parties to the
- All necessary records on transactions, both domestic and international, shall be maintained at least for the minimum period prescribed under the relevant Act and Rules (PMLA and rules framed thereunder as well SEBI Act) and other legislations, Regulations or exchange bye-laws or
- Registered intermediaries shall maintain and preserve the records of documents evidencing the identity of its clients and beneficial owners (e.g. copies or records of official identification documents like passports, identity cards, driving licenses or similar documents) as well as account files and business correspondence for a period of five years after the business relationship between a client and intermediary has ended or the account has been closed, whichever is
- In situations where the records relate to on-going investigations or transactions which have been the subject of a suspicious transaction reporting, they shall be retained until it is confirmed that the case has been
- Trades in the illiquid Securities as provided by the exchange;
- Daily client wise turnover and traded securities;
- Daily M2M and/or Profit & loss to the client for verifying any pattern;
- Trading pattern of the client in Particular script;
- Cross Trades within Spread X Group;
- All off market transfer through our DP of 5 Laces or more and / or any consistently off market transaction in any particular Demat Account.
- The customer exhibits unusual concern about the Company’s compliance with government reporting requirements and the Company’s AML policies (particularly concerning his or her identity, type of business and assets), or is reluctant or refuses to reveal any information concerning business activities, or furnishes unusual or suspicious identification or business documents.
- The customer wishes to engage in transactions that lack business sense or apparent investment strategy, or are inconsistent with the customer’s stated business or investment strategy.
- The information provided by the customer that identifies a legitimate source for funds is false, misleading, or substantially incorrect.
- Upon request, the customer refuses to identify or fails to indicate any legitimate source for his or her funds and other assets
- The customer (or a person publicly associated with the customer) has a questionable background or is the subject of news reports indicating possible criminal, civil, or regulatory violations.
- The customer exhibits a lack of concern regarding risks, commissions, or other transaction costs.
- The customer appears to be acting as an agent for an undisclosed principal, but declines or is reluctant, without legitimate commercial reasons, to provide information or is otherwise evasive regarding that person or entity.
- The customer has difficulty describing the nature of his or her business or lacks general knowledge of his or her industry.
- The customer attempts to make frequent or large deposits of currency, insists on dealing only in cash, or asks for exemptions from the Company’s policies relating to the deposit of cash.
- The customer engages in transactions involving cash or cash equivalents or other monetary instruments that appear to be structured to avoid the Rs.10,00,000 government reporting requirements, especially if the cash or monetary instruments are in an amount just below reporting or recording thresholds.
- For no apparent reason, the customer insists for multiple accounts under a single name or multiple names, with a large number of inter – account or third – party transfers.
- The customer engages in excessive journal entries between unrelated accounts without any apparent business purpose.
- The customer requests that a transaction be processed to avoid the Company’s normal documentation requirements.
- The customer, for no apparent reason or in conjunction with other red flags, engages in transactions involving certain types of securities, such as Z group and T group stocks, which although legitimate, have been used in connection with fraudulent schemes and money laundering activity. (Such transactions may warrant further due diligence to ensure the legitimacy of the customer’s activity.)
- The customer’s account shows an unexplained high level of account activity.
- The customer maintains multiple accounts, or maintains accounts in the names of family members or corporate entities, for no apparent purpose.
- The customer’s account has inflows of funds or other assets well beyond the known income or resources of the customer.
- When a member of the Company detects any red flag he or she will escalate the same to the Principal Officer for further investigation.
- False identification documents;
- Identification documents which could not be verified within reasonable time;
- Non-face to face client;
- Doubt over the real beneficiary of the account;
- Accounts opened with names very close to other established business entities
- Suspicious background or links with known criminals;
- Large number of accounts having a common account holder, introducer or authorized
- Unexplained transfers between multiple accounts with no rationale
- Unusual activity compared to past transactions;
- Use of different accounts by client alternatively;
- Sudden activity in dormant accounts;
- Activity inconsistent with what would be expected from declared business Account used for circular trading;
- Unusual or unjustified complexity;
- No economic rationale or bonafide purpose;
- Source of funds are doubtful;
- Appears to be case of insider trading;
- Investment proceeds transferred to a third part;
- Transactions reflect likely market manipulations;
- Suspicious off market transactions
- Value just under the reporting threshold amount in an apparent attempt to avoid reporting;
- Large sums being transferred from overseas for making payments;
- Inconsistent with the clients apparent financial standing;
- Inconsistency in the payment pattern by client;
- Block deal which is not at market price or prices appear to be artificially inflated /deflated.
11. Reporting to FIU IND
All dealing in Cash that requiring reporting to the FIU IND will be done in the CTR format and in the matter and at intervals as prescribed by the FIU IND.
- the transaction involves funds derived from illegal activity or is intended or conducted in order to hide or disguise funds or assets derived from illegal activity as part of a plan to violate or evade any the transaction reporting
- the transaction is designed, whether through structuring or otherwise, to evade the any requirements of PMLA Act and Rules framed thereof.
- the transaction has no business or apparent lawful purpose or is not the sort in which the customer would normally be expected to engage, and we know, after examining the background, possible purpose of the transaction and other facts, of no reasonable explanation for the transaction, or
- the transaction involves the use of the Company to facilitate criminal
12. Power of Central Government
We will hold STRs and any supporting documentation confidential. We will not inform anyone outside of a law enforcement or regulatory agency or securities regulator about a STR. We will refuse any requests for STR information and immediately tell FIU IND of any such request we receive. We will segregate STR filings and copies of supporting documentation from other Company books and records to avoid disclosing STR filings. Our Principal Officer will handle all requests or other requests for STRs.
Principal Officer will be responsible to ensure that AML records are maintained properly and that STRs are filed as required
As part of our AML program, our Company will create and maintain STRs and CTRs and relevant documentation on customer identity and verification. We will maintain STRs and their accompanying documentation for at least ten years.
The testing of our AML program will be performed by the Statutory Auditors of the company.
After we have completed the testing, the Auditor staff will report its findings to the Board of Directors. We will address each of the resulting recommendations.
We will subject employee accounts to the same AML procedures as customer accounts, under the supervision of the Principal Officer. We will also review the AML performance of supervisors, as part of their annual performance review. The Principal Officer’s accounts will be reviewed by the Board of Directors.
Employees will report any violations of the Company’s AML compliance program to the Principal Officer, unless the violations implicate the Principal / Compliance Officer, in which case the employee shall report to the, Mr. Nikhil Shah, Director Such reports will be confidential, and the employee will suffer no retaliation for making them.
19. Board of Directors Approval
We have approved this AML program as reasonably designed to achieve and monitor our Company’s ongoing compliance with the requirements of the PMLA and the implementing regulations under it.
The aforesaid AML policy is reviewed on yearly basis or as and when any new circulars issued by the SEBI or relative exchanges, within one month of the same with regard to testing its adequacy to meet the compliance requirements of PMLA 2002. The Principal Officer is the authority to give directions to undertake additions, changes, modifications etc. as directed by SEBI/ FIU-IND.
Paperless journey