Anti-Money Laundering Guidelines

What is Money Laundering??? Section 3 of the Prevention of Money Laundering Act (PMLA), 2002 defines the offence of money laundering as “Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money laundering”. 'Money Laundering' is the process by which illegal funds and assets are converted into legitimate funds and assets.

Regulatory Agencies Reserve Bank of India (RBI). Insurance Regulatory and Development Authority (IRDA). Security Exchange Board of India (SEBI).

The AML Transition in India for Banks August 16, 2002 - The Reserve Bank of India (RBI) released its first circular on “Guidelines on "Know Your Customer" norms and “Cash transactions” January 17, 2003 – Prevention of Money Laundering Act (PMLA) published in the Gazette of India. November 24, 2004 - The first set of comprehensive guidelines on 'Know Your Customer' (KYC) Guidelines – Anti Money Laundering Standards issued. July 1, 2005 – PMLA Rules came into effect. November 27, 2006 – India becomes an 'observer' at the Financial Action Task Force (FATF) November 12, 2009 – Amendment to PMLA Rules, 2005 June 25, 2010 – India becomes a member of the FATF

Purposes of AML Guidelines To prevent the Banking system from criminal activities. To not allow sophisticated methods of transfers to hide transfer of huge money. To track those who misuse banks, financial institutions or intermediaries for illegal activities. To prevent Drug trafficking, Terrorism and other organized and serious crimes.

Background of PMLA The Prevention of Money Laundering Act, 2002 has come into effect from 1st July 2005. Necessary Notifications / Rules under the said Act have been published in the Gazette of India on 1st July 2005 by the Department of Revenue, Ministry of Finance, Government of India. As per the provisions of the Act, every banking company, financial institution and 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 .

Scheduled Offences included in PMLA 2009 Kidnapping Drug Trafficking Extortion Bribery & Corruption Smuggling (arms, people, goods)‏ Criminal Activities Gambling, Robbery, Cheating Prostitution Part A of Schedule to PMLA covers more serious offences such as Offences under Unlawful Activities Act, Offences under Narcotic Drugs and Psychotropic substances Act etc. No minimum monetary limit is required is required to be charged for Schedule Part A Offence under PMLA. Other offences under Indian Penal Code, Wild Life Protection Act etc are listed under Schedule Part B. However Rs 30 Lakhs is the minimum threshold limit set for charging any person for Schedule Part B Offence under PMLA. PMLA Amendment Act 2009 has added Part C to the schedule which covers offences of Cross border implication without any threshold limit. Counterfeiting & Forgery Terrorist Act

AML MEASURES INCLUDE: Identification of customer according to KYC norms Photocopies Identity Proof documents Address proof documents Pan card Recognition, handling and Disclosure of suspicious Transactions Appointment of Money Laundering Reporting officer Staff Training Maintenance of Records

GUIDELINES General Customer Identification Procedure (cIp) Customer Identification Requirements- Indicative Guidelines Trust/nominee Accounts Account s of companies and firms Client accounts opened by professional intermediaries Accounts of non-face-to-face customers

CLOSER OF ACCOUNTS RISK MANAGEMENT PRINCIPAL OFFICER CUSTOMER EDUCATION/EMPIOYEE’S TRAINING. INTRODUCTION OF NEW TECHNOLOGIES

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