Provisions under Anti Money Laundering Act 1 14/02/2014PTC, Mys-10, PA-SDP

What is Money Laundering?.... The efforts for legitimizing the illegal money is known as money laundering. Sources of illegal money or ‘Dirty money ‘ – Illegal arms sales – Smuggling – Prostitution rings – Embezzlement – Insider trading – Bribery – Computer frauds, – Fake Currency Notes circulation, – Drugs trafficking etc. Processing to convert such proceeds of crime, the to make it appear ‘Legitimate Money’ is Money Laundering /02/2014PTC, Mys-10, PA-SDP

What is the offence of Money Laundering ? 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 /02/2014PTC, Mys-10, PA-SDP

Actions which can be taken against persons involved in Money Laundering? Attachment of property. The attached properties may be confiscated and disposed off. Persons found guilty are punishable with imprisonment for a term which shall not be less than three years but may extend up to seven years and shall also liable to a fine up to Rs.5 lakhs /02/2014PTC, Mys-10, PA-SDP

What is PMLA and its Objective? Prevention of Money Laundering Act It has come into effect from 1 st July 2005 amended on It extends to whole India including Jammu & Kashmir. To prevent money- laundering and to provide for confiscation of property derived from, or involved in, money – laundering. – Exercise 1 Exercise /02/2014PTC, Mys-10, PA-SDP

Obligations of Department of Posts Department has to – maintain a record of all transactions, the nature and value of which may be prescribed ( already prescribed will be discussed in future slides) – whether such transactions comprise a single transaction or series of transactions integrally connected to each other – furnish such information to the Enforcement Director within such time prescribed through Principal Compliance Officer in Postal Dte. – Records are to be maintained for a period of 10 years /02/2014PTC, Mys-10, PA-SDP

Implementation of norms in the POs: Know Your Customers (KYC) Customer Due Diligence (CDD) – For the purpose of implementations of provisions on prevention of Money laundering Act, MOF Department of Economic affairs (Budget division) has formulated the Prevention of money laundering & combating of financing Terrorism in small savings schemes. The above norms are to be applied in Post Office transactions /02/2014PTC, Mys-10, PA-SDP

Know your customer Three risk categories are defined Norms for each category spelt out /02/2014PTC, Mys-10, PA-SDP

Risk categories : Risk CategoryAccounts opened/Certificate purchased with initial deposit Low Riskupto Rs.49,999 Medium RiskRs.50,000 to Rs.10 lakh High Riskabove Rs.10 lakh /02/2014PTC, Mys-10, PA-SDP

Low Risk : Norms Low Risk Accounts opened/Certificate purchased with initial deposit below Rs.50,000 NormsProof Photograph 1 Recent Photograph (2 in case of EDBO) In case of SCSS accounts 2 photographs are mandatory. Identity proof Any one of the following : Electoral Photo identity card, Ration card, Passport, Driving License, POSB identity card, Govt. Identity card, (PPO, BPL, Job card). Note: PAN not mandatory. Address proof Any one of the following : Electoral Photo identity card, Bank/POSB PB, Current electricity bill/telephone bill, certificate from any public authority including area postman GDS or BPM, Aadhar card /02/2014PTC, Mys-10, PA-SDP

Medium Risk : Norms Medium Risk Accounts opened/Certificate purchased with initial deposit between Rs.50,000 to Rs.10 lakh NormsProof Photograph 1 Recent Photograph(2 in case of EDBO) In case of SCSS accounts 2 photographs are mandatory Identity proof PAN or Declaration in Form 60/61,if PAN card not available then any one of the following : Electoral Photo identity card, Ration card, Passport, Driving License, POSB identity card, Govt. Identity card, (PPO, BPL, Job card). Address proof Any one of the following : Electoral Photo identity card, Bank/POSB PB, Current electricity bill/telephone bill, salary slip of reputed employer with current address and Aadhar card /02/2014PTC, Mys-10, PA-SDP

High Risk : Norms High Risk Accounts opened/Certificate purchased with initial deposit above Rs.10 lakh NormsProof Photograph 1 Recent Photograph (2 in case of EDBO) In case of SCSS accounts 2 photographs are mandatory. Identity proof PAN or Declaration in Form 60/61,if PAN card not available then any one of the following : Electoral Photo identity card, Ration card, Passport, Driving License, POSB identity card, Govt. Identity card, (PPO, BPL, Job card). Address proof Any one of the following : Electoral Photo identity card, Bank/POSB PB, Current electricity bill/telephone bill, salary slip of reputed employer with current address and Aadhar card. Additional requirement Copy of source of funds to be collected /02/2014PTC, Mys-10, PA-SDP

Clarifications  Minors - If account/certificate holder is minor, norms are applicable to guardians  Joint Holders- In case of joint holders, norms are applicable to all joint account/certificate holders  KYC documents already submitted - Customer who have already submitted KYC documents in any purchase, need not to submit these again. Account number/purchase application number through which KYC documents were given earlier to be mentioned on the account opening / purchase application form. Note : Name and address of the customer should match with earlier KYC Documents.  Deposit is made through agent - The depositor/purchaser as well as the agent should attest all KYC documents. In case of direct investment, self attestation or attestation by Gazetted Officer is required.  Exercise 2Exercise /02/2014PTC, Mys-10, PA-SDP

Record Keeping: Record keeping and preservation of documents assumes very high significance in this exercise. – How the documents collected for accounts and certificates of various risk categories should be handled – Preservation of records /02/2014PTC, Mys-10, PA-SDP

Record keeping : Post OfficePOSB AccountsCertificates HO KYC documents (including those received from EDBOs or SOs )should be attached with Account Opening Forms and kept in guard files. KYC documents (including received from EDBOs) should be attached with Purchase Application Forms and kept in guard files. SO For SB/TD/PPF KYC documents should be retained in the SO in a guard file in the custody of SPM and for RD/MIS/SCSS kept in guard files a/w SB-3 KYC documents should be attached with Purchase Application Forms and kept in guard files. BO KYC Documents should be attached with account opening form and sent to Account Office. KYC Documents should be attached with Purchase Application form and sent to Account Office /02/2014PTC, Mys-10, PA-SDP

Record keeping : Documents Post Office POSB Accounts and CertificatesAttestation HO Photo should be pasted with Account Opening form/purchase application form. In case of SCSS account one photo to be pasted in the Pass book. APM to Attest photograph from ID proof. SO Photo should be pasted in the SS Book in case of SB/TD/PPF accounts on SB-3 in case of RD/MIS /SCSS accounts on purchase application form in case of certificates. For SCSS accounts, one photo to be pasted in the Pass book SPM to Attest photograph from ID proof. BO One photo should be pasted in SS Book and other to be sent to AO a/w SB-3 or purchase application form. BPM to Attest photograph from ID proof /02/2014PTC, Mys-10, PA-SDP

Record keeping : Preservation Details of recordPeriod of preservation Record relating to closure of account i.e. SB- 3, SB-7 (a) and KYC documents to be preserved by SBCO 5 years from the date of closure of account All Purchase Applications along with KYC documents5 years after discharge. Note /02/2014PTC, Mys-10, PA-SDP

Process flow of record keeping All post offices while sealing the daily vouchers will segregate the closed vouchers & seal them separately a/w account opening form and KYC documents. These closed vouchers a/w LOT & other vouchers will be sent to HO HO Ho will seal all closed voucher bundles of SOs and hand over to SBCO. At the time of closure of account of HO also, the account opening form along with KYC documents should be attached with closure voucher and transferred to SBCO /02/2014PTC, Mys-10, PA-SDP

Reporting of transactions Category (Cash Transaction)Method of monitoring All cash transactions exceeding 10,00,000/- Prepare list & send to : Head of Division on 3 rd of following month. Head of the Division to Circle by 5 th Head of the Circle to Principal officer at Directorate by 8 th All cash transactions in series which are less than 10,00,000/- at a time but are integrated & total exceeds 10,00,000/- in a month Category (Suspected Transaction)Method of monitoring Cash is accepted & Forged or counterfeit currency notes used or forgery of Security or documents Prepare list & send to : Head of Division on the same day. Head of the Division to Circle by same day of receipt from PO Head of the Circle to Principal officer at Directorate by same day of receipt from Head of the Division. Any attempted transaction of Forged or counterfeit currency notes used or forgery of Security or documents Suspected transaction /02/2014PTC, Mys-10, PA-SDP

Definition of Suspicious transaction A transaction including an attempted transaction, whether or not made in cash which, to a person acting in good faith- 1.gives rise to a reasonable ground of suspicion that it may involve proceeds of an offence specified in the schedule to the Act regardless of the value involved 2.appears to be made in circumstances of unusual or unjustified complexity 3.appears to have no economic rationale or bonafide purpose 4. give rise to a reasonable ground of suspicion that involve financing of the activities relating to terrorism; 5.Transaction includes deposit, w/d, exchange or transfer of funds in whatever currency, whether in cash or in cheque payment order or other instruments or by electronic or other physical means /02/2014PTC, Mys-10, PA-SDP

Instructions for existing Accounts/Certificates EXISTING ACCOUNTS Nature of measures to be taken Procedure KYC1 – Give a notice to depositor while making first transaction after this order to submit KYC documents as per his/her existing balance on next transaction. 2 – Depositor to present KYC documents up to third transaction failing to which fourth transaction will not be allowed. 3 – in case of RD accounts opened through agent, agent has to attest the documents. 4 – If depositor has made a fresh investment with KYC documents,he has to produce the same pass book/certificate as proof. 5 – Necessary remark to be given in SS book or SB-3 of old account 6 – KYC to be obtained in case of transfer, revival and difference in signature. Record keepingSame as prescribed for new accounts/certificates. ReportingSame as prescribed for new accounts/certificates Suspected transaction Report be sent immediately as prescribed for new customer /02/2014PTC, Mys-10, PA-SDP

Remittances Domestic/International /02/2014PTC, Mys-10, PA-SDP

Objective A ntimoney laundering is applicable to domestic and international money remittance also Know Your Customers (KYC) Customer Due Diligence (CDD) /02/2014PTC, Mys-10, PA-SDP

Risk categories : Risk CategoryAll domestic remittances under MO,iMO,eMO,VPMO,IPO and FPO which are up to value Low Risk (a)of Rs.5000/- Low Risk (b)above Rs.5000/- and up to Rs.50, /02/2014PTC, Mys-10, PA-SDP

Risk Category All international remittances under money transfer services like Western Union, IFS, Money Order Videsh Medium Risk Up to Rs.10 lakh. High Risk Above Rs.10 lakh /02/2014PTC, Mys-10, PA-SDP

Low Risk (a) : Norms Low Risk (a) Category All domestic remittances under MO,iMO,eMO,VPMO,IPO and FPO which are up to value of Rs.5000/- NormsProof Photograph No KYC required. Identity proof Address proof /02/2014PTC, Mys-10, PA-SDP

Low Risk (b) : Norms Low Risk (b) Category -All domestic remittances under MO,iMO,eMO,VPMO,IPO and FPO which are above Rs.5000/- and up to Rs.50,000 NormsProof Identity proof Address proof In case of iMO Copy of any one of the following ID Proof for the remitter as well as the payee : (i)PAN Card (ii) Electoral Photo Identity card (iii) Ration Card (iv) Passport, Driving License (v) Any Photo Identity card issued by Central/State Government or PSU. In case iMO = Rs /02/2014PTC, Mys-10, PA-SDP

Medium Risk : Norms Medium Risk Category: All international remittances under money transfer services like Western Union, IFS, Money Order Videsh etc. remittance value up to Rs.10 lakh. NormsProof Identity proof Copy of any one of the following ID Proof for the remitter as well as the payee : (i)PAN Card (ii) Electoral Photo Identity card (iii) Ration Card (iv) Passport, Driving License (v) Any Photo Identity card issued by Central/State Government or PSU. Address proof Copy of any one of the following address proof for the r emitter as well as the payee : Electoral Photo identity card, Bank/POSB PB, Current electricity bill/telephone bill /02/2014PTC, Mys-10, PA-SDP

High Risk : Norms- Four risk categories : High Risk Category All international remittances under money transfer services like Western Union, IFS, Money Order Videsh etc. above Rs.10 lakh NormsProof Identity proofCopy of any one of the following ID Proof for the remitter as well as the payee : PAN Card (ii) Electoral Photo Identity card (iii) Ration Card (iv) Passport, Driving License (v) Any Photo Identity card issued by Central/State Government or PSU. Address proof Physical Verification of address:- Copy of any one of the following address proof for the remitter as well as the payee : Electoral Photo identity card, Bank/POSB PB, Current electricity bill/telephone bill. Address of such remitters should be got verified from State Govt./Gram Panchayat/Postman of that area before acceptance of remittance. Additional requirementCopy of the document proving source from which fund are received by remitter /02/2014PTC, Mys-10, PA-SDP

Record keeping Post OfficeMoney Remittances HO KYC documents should be attached with office copy of booking and payment voucher. SO KYC documents should be attached with office copy of booking and payment voucher /02/2014PTC, Mys-10, PA-SDP

Reporting of transactions Category (Cash Transaction)Method of monitoring All cash remittances exceeding /-Prepare list & send to Head of Division on 3 rd of following month. Head of the Division to Circle by 5 th Head of the Circle to Principal officer at Directorate by 8 th All cash remittances in series which are less than /- at a time but are integrated & total exceeds /- in a month in the name of same customer. Category (Suspected Transaction)Method of monitoring Cash is accepted & Forged or counterfeit currency notes used or forgery of Security or documents Prepare list & send to Head of Division on next working day. Head of the Division to Circle by next working day of receipt from PO Head of the Circle to Principal officer at Directorate by next working day of receipt from Head of the Division. Any attempted remittance of Forged or counterfeit currency notes used or forgery of Security or documents /02/2014PTC, Mys-10, PA-SDP

Penalty In case of non-implementation of AML/CFT norms, a penalty from Rs.10,000 to Rs. 1,00,000 can be imposed under PML Act and rules in addition to disciplinary action /02/2014PTC, Mys-10, PA-SDP

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Exercise 3& 4 14/02/2014PTC, Mys-10, PA-SDP

14/02/2014PTC, Mys-10, PA-SDP