Anti Money Laundering and Anti terrorism financing Policy

SEBI Master Circular on Anti Money Laundering (AML and Combating Financing of Terrorism (CFT)- Obligations of Intermediaries under the Prevention of Money Laundering Act, 2002 and Rules Framed there-under and all subsequent changes included by SEBI from time to time

BACKGROUND

The PMLA came into effect from 1st July 2005. Necessary Notifications/ Rules under the said Act were published in the Gazette of India on 1st July 2005 by the Department of Revenue, Ministry of Finance, Government of India. The PMLA has been further amended vide notification dated March 6, 2009, and inter alia provides that violating the prohibitions on manipulative and deceptive devices, insider trading and substantial acquisition of securities or control as prescribed in Section 12 read with Section 24 of the Securities and Exchange Board of India Act, 1992 (SEBI Act) will now be treated as a scheduled offence under schedule B of the PMLA.

As per the provisions of the PMLA, every banking company, financial institution (which includes chit fund company, a co-operative bank, a housing finance institution and a non-banking financial company) and an intermediary (which includes a stock-broker, sub-broker, share transfer agent, banker to an issue, trustee to a trust deed, registrar to an issue, merchant banker, underwriter, portfolio manager, investment adviser and any other intermediary, shall have to maintain a record of all the transactions; the nature and value of which has been prescribed in the Rules under the PMLA. Such transactions include:

            ▪ All cash transactions of the value of more than Rs 10 lakh or it's equivalent in foreign currency (7500 USD)
            ▪ All series of cash transactions integrally connected to each other which have been valued below Rs 10 lakh or it's equivalent in foreign currency where such series of transactions take place within one calendar month.
            ▪ All suspicious transactions whether or not made in cash and including, inter-alia, credits or debits into from any non-monetary account

POLICIES AND PROCEDURES TO COMBAT MONEY LAUNDERING AND TERRORIST FINANCING

Essential Principles

These Directives have taken into account the requirements of the PMLA This policy is drafted on the basis of nature of our business, organizational structure, type of client and transaction, etc. to satisfy itself that the measures taken by it are adequate and appropriate and follow the spirit of the suggested measures and the requirements as laid down in the PMLA.

Obligation to establish policies and procedures

Global measures taken to combat drug trafficking, terrorism and other organized and serious crimes have all emphasized the need for financial institutions, including securities market intermediaries, to establish internal procedures that effectively serve to prevent and impede money laundering and terrorist financing. The PMLA is in line with these measures and mandates that all intermediaries ensure the fulfilment of the aforementioned obligations.

To be in compliance with these obligations, the senior management of a registered intermediary is fully committed to establishing appropriate policies and procedures for the prevention of ML and TF and ensuring their effectiveness and compliance with all relevant legal and regulatory requirements. The Company shall:

• issue a statement of policies and procedures, on a group basis where applicable, for dealing with ML and TF reflecting the current statutory and regulatory requirements;
• ensure that the content of these Directives are understood by all staff members;
• regularly review the policies and procedures on the prevention of ML and  TF to ensure their effectiveness.
• adopt client acceptance policies and procedures which are sensitive to the risk of ML and TF;
• develop staff members’ awareness and vigilance to guard against ML and TF

Policies and procedures to combat ML cover:

• Communication of group policies relating to the prevention of ML and TF to all management and    relevant    staff    that    handle    account    information,    securities transactions, money and client records etc. whether in branches, departments or subsidiaries;
• Maintenance of records;
• Compliance with relevant statutory and regulatory requirements;
• Co-operation with the relevant law enforcement authorities, including the timely disclosure of information; and

Risk-Based Approach:

It is generally recognized that certain clients may be of a higher or lower risk category depending on the circumstances such as the client’s background, type of business relationship or transaction etc. As such,  we shall apply each of the clients due diligence measures on a risk sensitive basis. The basic principle enshrined in this approach is that the registered intermediaries shall adopt an enhanced client due diligence process for higher risk categories of clients. Conversely, a simplified client due diligence process may be adopted for lower risk categories of clients. In line with the risk-based approach, the type and amount of identification information and documents that may be necessary for the purpose depending upon the risk category of a particular client.

RECORD KEEPING

We shall ensure compliance with the record keeping requirements contained in the SEBI Act, 1992, Rules and Regulations made there-under, PMLA as well as other relevant legislation, Rules, Regulations, Exchange Bye-laws and Circulars.

We shall maintain such records as are sufficient to permit reconstruction of individual transactions (including the amounts and types of currencies involved, if any) so as to provide, if necessary, evidence for prosecution of criminal behaviour.

Any suspected drug related or other laundered money or terrorist property, the competent investigating authorities would need to trace through the audit trail for reconstructing a financial profile of the suspect account. To enable this reconstruction, The Company shall retain the information for the accounts of their clients in order to maintain a satisfactory audit trail:

INFORMATION TO BE MAINTAINED

We are required to maintain and preserve the following information in respect of transactions referred to in Rule 3 of PML Rules:

• the nature of the transactions;
• the amount of the transaction and the currency in which it is denominated;
• the date on which the transaction was conducted; and
• the parties to the transaction.

REPORTING TO FINANCIAL INTELLIGENCE UNIT-INDIA

Director, FIU-IND,
Financial Intelligence Unit-India,

The requirements and formats are divided into two parts- Manual Formats and Electronic Formats. Details of these formats are given in the documents (Cash Transaction Report- and Suspicious Transactions Report or as may be prescribed time to time). The detailed instructions for filing all types of reports are given in the instructions part of the related formats, intermediaries shall adhere to the following:

1. The Suspicious Transaction Report (STR) shall be submitted within 7 days of arriving at a conclusion that any transaction, whether cash or non-cash, or a series of transactions integrally connected are of suspicious nature. The Principal Officer shall record his reasons for treating any transaction or a series of transactions as suspicious. It shall be ensured that there is no undue delay in arriving at such a conclusion.
2. No nil reporting needs to be made to FIU-IND in case there are no cash/suspicious transactions to be reported.

REVIEW OF POLICY

The policy shall be reviewed from time to time as and when required by the Management but at least once in a year and also implement the change after any change in the Act through amendment in the Act, Provision or any circular issued in this manner