AML Policy

Prevention of Money Laundering Act, 2002 (PMLA) forms the core of the legal framework put in place by India to combat money laundering and related crimes. PMLA and the Rules notified there under came into force from 1 st July 2005. Under PMLA, all the entries registered with SEBI are required to furnish information of all the suspicious transactions whether or not made in cash to FIU-IND. Under Section 3 of PMLA, projecting of crime as untainted property is an offense of money laundering liable to be punished under section 4 of the PMLA.

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Money Laundering involves disguising financial assets so that they can be used without detection of the illegal activity that produced them. Through money laundering, the launderer transforms the monetary proceeds derived from criminal activity into funds as apparently legal sources.

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Financial Intelligence Unit-India (FIU-IND) is the central national agency of India responsible for receiving, processing, analyzing, and disseminating information of suspect financial transactions. FIU-IND is also responsible for coordinating and strengthening efforts of national and international intelligence, investigation, and enforcement agencies in combating money laundering and related crimes.

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Section 2 (1) (g) of PMLA Rules defines suspicious transaction whether or not made in cash
which, to a person acting in good faith:

• Gives rise to a reasonable ground of suspicious 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 suspicious that it may involve facing the activities relating to terrorism

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Some examples of suspicious transactions reported to FIU-IND are as under:

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• Identity of Clients:​

1. ​Identification documents were found to be forged.

2. Address details given by the account holder were found to be false

3. Doubt over the real beneficiary of the account.

• Suspicious Background:

  1. ​Positive match of name and date of births with the person on various lists

  2. Account of publicly known criminals

• Multiple Accounts:

  1. ​A large number of accounts having a common account holder, introducer, or authorized signatory with no rationale or bonafide purpose.

  2. Unexplained transfers between multiple accounts with no rationale

• Activity in Accounts:

  1. ​Unexplained activity in dormant accounts.

  2. Unexplained activity in account inconsistent with what would be excepted from the declared business.

• Nature of Transactions:

  1. ​Doubtful sources of funds.

  2. Doubtful overseas fund transfer

  3. Doubtful foreign remittance to non-relatives.

  4. Doubtful cash deposits in a bank account at multiple locations.

  5. Suspicious use of Debit/Credit card

  6. Doubtful foreclosure of loan account in cash

  7. Suspicious off-market transactions in Demat accounts

• Value of transactions:

  1. ​Multiple transactions of value just under the reporting threshold amount in an apparent attempt to avoid reporting

  2. Unexplained large value transaction inconsistent with the client's apparent financial standing

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