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Provisions under Anti Money Laundering Act. What is Money Laundering?.
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What is Money Laundering?.... People want to legitimize the ill – gotten money through money laundering which is gained through criminal means such as Illegal arms sales, Smuggling, Prostitution rings, Embezzlement, Insider trading, Bribery, Computer frauds, Fake Currency Notes circulation, Drugs trafficking etc. • The money so generated is tainted and is in the nature of ‘dirty money’. • Processing of conversion of such proceeds of crime, the ‘dirty money’ to make it appear ‘Legitimate Money’ is Money Laundering
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.
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.
What is PMLA and its Objective? • Prevention of Money Laundering Act 2002. • It has come into effect from 1st July 2005 amended on 1.6.2009 • 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.
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
Implementation of the following norms in the Post Offices: • 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.
Know your customer • Three risk categories defined • Norms for each category spelt out.
Low Risk : Norms- Three risk categories : Know your customer
Medium Risk : Norms- Three risk categories : Know your customer
High Risk : Norms- Three risk categories : Know your customer
FAQs • 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.
Record Keeping: Know your customer • 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
Definition of Suspicious transaction • A transaction including an attempted transaction, whether or not made in cash which, to a person acting in good faith- (i) 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: or (ii) appears to be made in circumstances of unusual or unjustified complexity: or (iii) appears to have no economic rationale or bonafide purpose: or • give rise to a reasonable ground of suspicion that involve financing of the activities relating to terrorism; • 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.
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.
