my musings contents - kotak mahindra bank objective of kyc guidelines is to prevent banks being used...
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KYC stands for 'Know your Customer' and the term used does not confine merely obtaining of an identification and address proof document. It involves making reasonable efforts to determine true identity of the customer, nature of business, activity the customer is involved in, beneficial owners, sources of funds etc. The objective of KYC guidelines is to prevent banks being used intentionally or unintentionally by criminal elements for money laundering or as a conduit for financing of terrorism.Non adherence to KYC / AML / CFT guidelines can lead to penalty on the Bank.
Financial Literacy
Know Your Customer
My Musings
Circulars
Article
Foreign Exchange for You - FEMA Awareness Event
Case studies
KYC/ AML
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NSDL
IRDA
RBI
SEBI`̀
ContentsLet me touch upon the basic banking and Know Your Customer (KYC) in Banks. As per Section 5(b) of the Banking Regulation Act 1949, banking is defined as “accepting, for the purpose of lending and investments, deposits of money from the public, repayable on demand or otherwise”. Over the years, the nature and scope of services provided by Banks have changed and expanded so much, yet banking basically revolves around accepting deposits for the purpose of lending and investments. Banks thus play a key role in financial intermediation and payment systems. Banks are able to fulfill their kingpin role in economy because of the trust and confidence of the people that the banks will honour their commitments. If the trust is broken, it would lead to failure of a bank.
How to retain the trust of depositors? The banks will be able to repay deposits on demand if they deploy the deposits in loans and investments in such a manner that the borrowers will be able to service the loans in time. Hence quality of borrowers and selection process thereof is very significant. Also monitoring end use of the funds is very important to ensure safety of our funds. Similarly, the deposit customers will continue to have trust if they are certain that their deposits with the bank are safe and secure meaning thereby that no unauthorized person will be allowed to withdraw money from their accounts through any mode including electronic. This can be ensured by having robust processes and controls. But there is no substitute for having proper and complete KYC of the customer – both borrower and depositor. A banker should know about his customer as much as a good family physician knows about his patient. If we select customers – both depositors and borrowers – with full KYC and KYC means knowing customer beyond identity documents, we will end up spending much less time and money in control functions.
Compliance is not only the responsibility of the compliance staff and other control functions but each and every employee of the organization. Compliance and business cannot work in exclusivity.
Shyam SunderGroup Advisor – Compliance
Jan – Mar 2013
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To scale up financial literacy efforts in rural areas, RBI has released Financial Literacy Posters for the benefit of educating the financially illiterate.
Visit to view the poster : http://www.rbi.org.in/financialeducation/FinancialLiteracyPosters.aspx
News from theReserve Bank of IndiaRBI circulars can be accessed through the following link: http://www.rbi.org.in/scripts/NotificationUser.aspxhttp://rbicirc.kmbl.kg/kmt/
TRADE CPC
External Commercial Borrowings (ECB) Policy - Non-Banking Financial Company - Infrastructure Finance Companies (NBFC-IFCs)
RBI has enhanced the ECB limit for NBFC-IFCs under the automatic route from 50% of their owned funds to 75% of their owned funds, including the outstanding ECBs. NBFC-IFCs desirous of availing ECBs beyond 75% of their owned funds would require the approval of RBI and will be considered under the approval route. It has also been decided to reduce the hedging requirement for currency risk from 100% of their exposure to 75% of their exposure.
A.P. (DIR Series) Circular No.69 dated January 7, 2013
Exchange Earner's Foreign Currency (EEFC) Account Diamond Dollar Account (DDA) & Resident Foreign Currency (RFC) Domestic Account
RBI has decided to dispense with the stipulation that EEFC account holders henceforth will be permitted to access the forex market for purchasing foreign exchange only after utilizing fully the available balances in the EEFC accounts. The instructions would also apply to the RFC (Domestic) and Diamond Dollar accounts.
A.P.(DIR Series) Circular No.79 dated January 22, 2013
Foreign Exchange Management Act, 1999 Import of Precious and Semi Precious Stones - Clarification
RBI has clarified that Suppliers' and Buyers' Credit (trade credit) including the usance period of Letters of Credit opened for import of precious stones and semi-precious stones should not exceed 90 days from the date of shipment. The revised directions will come into force with immediate effect.
A. P. (DIR Series) Circular No.83dated February 20, 2013
RETAIL LIABILITIES
Declines in ATM Transactions - Reporting of
Banks are required to place a quarterly review of ATM transactions to the Board of Directors indicating the quantum of penalties paid, reasons thereof and the action taken to avoid recurrence of such instances.
In addition it has now been advised to simultaneously place a quarterly review of ATM transactions to its Board of Directors, indicating the denial of services to the customers at ATM sites, reasons thereof and the action taken to avoid recurrence of such instances.
DPSS.CO.PD.No.1207/02.10.002/2012-2013 dated January 17, 2013
Know Your Customer (KYC) Norms / Anti-Money Laundering
(AML) Standards / Combating of Financing of Terrorism (CFT) /
Obligation of Banks under Prevention of Money Laundering Act
(PMLA), 2002
RBI has eased the KYC process for customers who migrate to a new place on
account of new job, transfer, etc., The modifications are as follows:.
Shifting of bank accounts to another centre - Proof of address: Banks may
transfer existing accounts at the transferor branch to the transferee branch
without insisting on fresh proof of address and on the basis of a self-
declaration from the account holder about his / her current address, subject
to submitting proof of address within a period of six months. Banks may
also accept rent agreement duly registered with State Government or
similar registration authority indicating the address of the customer.
DBOD.AML.BC.No.78/14.01.001/2012-13 dated January 29, 2013
Opening of NRO Accounts by Individuals of Bangladesh
Nationality
RBI has decided that banks would now be permitted to open NRO account
of individual/s of Bangladesh nationality without the approval of RBI
subject to the following conditions:
l The bank should satisfy itself that the individual is holding valid visa
and valid residential permit issued by Foreigner Registration Office
(FRO) / Foreigner Regional Registration Office (FRRO)
l The bank should put in place a system of quarterly reporting
whereby each branch of the bank shall maintain a record of the bank
accounts opened by individual/s of Bangladesh nationality.
Opening of accounts by entities of Bangladesh ownership shall continue to
require approval of RBI.
A.P.(DIR Series) Circular No.82 dated February 11, 2013
KYC Norms / AML Standards /CFT Standards - Obligation of
Authorised Persons under PMLA, 2002 as Amended by PML
(Amendment) Act 2009 - Money Changing Activities
Rule 9(1A) of Prevention of Money Laundering Rules 2005 requires that
every Authorised Person under money changing activity shall identify the
beneficial owner and take all reasonable steps to verify his identity while
undertaking money changing activities.
The term "beneficial owner" has been defined as the natural person who
ultimately owns or controls a client and / or the person on whose behalf the
transaction is being conducted, and includes a person who exercises
ultimate effective control over a juridical person. Government of India has
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examined the issue and specified the procedure for determination of
Beneficial Ownership.
Complete details of the same have been given in the circular.
A. P. (DIR Series) Circular No.84 dated February 22, 2013
Memorandum of Instructions for Opening and Maintenance of
Rupee / Foreign Currency Vostro Accounts of Non-resident
Exchange Houses
Under the extant Rupee Drawing Arrangements (RDAs), cross-border
inward remittances are received in India by banks through Exchange
Houses situated in Gulf countries, Hong Kong, Singapore and Malaysia
With a view to extending the scope of the said arrangement to certain other
jurisdictions, it has been decided to extend the RDAs only under the Speed
Remittance Procedure to Exchange Houses situated in all countries which
are FATF compliant.
A. P. (DIR Series) Circular No.85 dated February 28, 2013
Standardization and Enhancement of Security Features in
Cheque Forms / Migrating to CTS 2010 Standards
RBI has decided to put in place the following arrangements for clearing of
residual non-CTS-2010 standard cheques beyond the cutoff date of March
31, 2013.
l All cheques issued by banks (including DDs / POs issued by banks)
shall necessarily conform to CTS-2010 Standard.
l Banks shall not charge their savings bank account customers for
issuance of CTS-2010 standard cheques when they are issued for the
first time.
l All residual non-CTS-2010 cheques with customers will continue to
be valid and accepted in all clearing houses up to July 31, 2013,
subject to a review in June 2013.
l Cheque issuing banks shall make all efforts to withdraw the
non-CTS-2010 Standard cheques in circulation before the extended
timeline of July 31, 2013 by creating awareness among customers
through SMS alerts, letters, display boards in branches / ATMs,
log-on message in internet banking, notification on the web-site etc.
l In addition, the bank-wise volume of inward clearing instruments
processed in the Cheque Processing Centers will be monitored with
respect to the CTS-2010 / non-CTS-2010 standard cheques
presented on them.
l No fresh Post Dated Cheques (PDC) / Equated Monthly Installment
(EMI) cheques shall be accepted by lending banks in locations where
the facility of ECS / RECS (Debit) is available. Lending banks shall
make all efforts to convert existing PDCs in such locations into ECS /
RECS (Debit) by obtaining fresh mandates from the borrowers.
DPSS.CO.CHD.No.1622/04.07.05/2012-13 dated March 18, 2013
CUSTODY
Foreign Investment in India by SEBI Registered FIIs in Government Securities and Corporate Debt
RBI has reviewed the regulations and has decided to implement the following changes :
(A) Government Securities
l Sub-limit of USD 10 billion for investment by FIIs and the long term
investors in dated Government securities stands enhanced by USD 5
billion, i.e., from USD 10 billion to USD 15 billion. Accordingly, the
total limit for investment in Government Securities stands enhanced
from USD 20 billion to USD 25 billion.
l The condition of three year residual maturity of the Government
securities at the time of first purchase for the above sub-limit shall no
longer be applicable.
(B) Corporate Debt
l The limit for FII investment in corporate debt in other than
infrastructure sector stands enhanced by USD 5 billion, i.e., from USD
20 billion to USD 25 billion. However, the enhanced limit of USD 5
billion shall not be available for investment in Certificate of Deposits
(CD) and Commercial Papers (CP).
l As a measure of further relaxation, it has also been decided to
dispense with the condition of one year lock-in period for the limit of
USD 22 billion (comprising the limits of infrastructure bonds of USD
12 billion and USD 10 billion for non-resident investment in IDFs)
within the overall limit of USD 25 billion for foreign investment in
infrastructure corporate bond. The residual maturity period (at the
time of first purchase) requirement for entire limit of USD 22 billion
for foreign investment in infrastructure sector has been uniformly
kept at 15 months. The 5 years residual maturity requirement for
investments by QFIs within the USD 3 billion limit has been modified
to 3 years original maturity.
A.P. (DIR Series) Circular No.80 dated January 24, 2013
CORPORATE BANKING / RETAIL ASSETS
Disclosure Requirements on Advances Restructured by Banks
and Financial Institutions
Banks are required to disclose annually all accounts restructured in their
books on a cumulative basis even though many of them would have
subsequently shown satisfactory performance over a sufficiently long
period. As such the present position of disclosures do not take into account
the fact that in many of these accounts the inherent weaknesses have
disappeared and the accounts are in fact standard in all respects, but
continue to be disclosed as restructured advances.
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Banks should henceforth disclose in their published Balance Sheets, under "Notes on Accounts", information relating to number and amount of
advances restructured, and the amount of diminution in the fair value of the restructured advances as per the specified format.
DBOD.BP.BC.No.80/21.04.132/2012-13 dated January 31, 2013
TREASURY
Risk Management and Inter-Bank Dealings
Previously the overnight open exchange position and the aggregate gap
limits required to be approved by RBI.It has now been decided to revise the existing guidelines on calculation of the Foreign Exchange Exposure Limits
of the banks. The complete revised guidelines can be referred to in the circular.
Further, it has been decided to withdraw the restrictions placed on open
positions limit of the banks involving Rupee as one of the currencies.
The following instructions shall however continue to be effective:
l The positions in the exchanges (both Futures and Options) cannot
be netted / offset by undertaking positions in the OTC market andvice-versa. The positions initiated in the exchanges shall be
liquidated / closed in the exchanges only.
l The position limit for the trading member bank in the exchanges fortrading Currency Futures and Options shall be US$ 100 million or 15
per cent of the Outstanding open interest, whichever is lower.
A. P. (DIR Series) Circular No.86 dated March 1, 2013
CORPORATE BANKING
Prudential Norms on Advances to Infrastructure Sector
RBI has decided that in case of Public Private Partnership(PPP) projects, the debts due to the lenders may be considered as secured to the extent
assured by the project authority in terms of the Concession Agreement, subject to the following conditions:
l User charges / toll / tariff payments are kept in an escrow account
where senior lenders have priority over withdrawals by theconcessionaire
l There is sufficient risk mitigation, such as pre-determined increase inuser charges or increase in concession period, in case project
revenues are lower than anticipated
l The lenders have a right of substitution in case of concessionaire default
l The lenders have a right to trigger termination in case of default in
debt service
l Upon termination, the Project Authority has an obligation of (I)compulsory buy-out and (ii) repayment of debt due in a pre-determined
manner.
In all such cases, banks must satisfy themselves about the legal
enforceability of the provisions of the tripartite agreement and factor in their past experience with such contracts.
In all such cases, banks must satisfy themselves about the legal
enforceability of the provisions of the tripartite agreement and factor in their past experience with such contracts.
DBOD.BP.BC.No.83/08.12.014/2012-13 dated March 18, 2013
FINCON
Priority Sector Lending-Treatment of Contingent Liabilities - Clarifications
RBI has clarified that including contingent liabilities / off-balance sheet
items as part of priority sector target achievement is not in conformity with
priority sector lending guidelines. Therefore, banks have been advised to declassify such accounts with retrospective effect, where a contingent
liability / off-balance sheet item is treated as a part of priority sector target achievement.
All types of loans, investments or any other item which are treated as
eligible for classifications under priority sector target / sub-target achievement should also form part of Adjusted Net Bank Credit.
RPCD.CO.Plan.BC.70/04.09.01/2012-13 dated March 22, 2013
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News from Securities and Exchange Board of IndiaSEBI circulars can be accessed through the link: http://www.sebi.gov.in/Index.jsp? ContentDisp=SiteMap
Rationalisation process for obtaining PAN by Investors
With a view to bring about operational flexibility and in order to ease the PAN verification process, SEBI has allowed the intermediaries toverify the PAN of their clients online at the Income Tax website without insisting on the original PAN card, provided that the client haspresented a document for Proof of Identity other than the PAN card.
CIR/MIRSD/01 /2013 dated January 4, 2013
Securities and Exchange Board of India (Investment Advisers) Regulations, 2013
SEBI has framed a regulation known as SEBI (Investment Advisors) Regulations, 2013. This regulation will come in into effect from the month of February, 2013. On and from the commencement of this regulation, no person shall act as an investment adviser or hold itself out as an investment adviser unless he/she/it has obtained a certificate of registration from SEBI under this regulation. Although the stock brokers and portfolio managers have been exempted from getting registration as investment advisors, they need to comply with chapter 3 which gives general responsibility of the investment advisors including carrying out checks to know risk appetite, investment objectives of the client and ensure that the advice given is suitable to the client.
LAD-NRO/GN/2012-13/31/1778 dated January 21, 2013
Intimation to Client about activation of its depository account
Participants were previously to ensure that the information regarding account opening is provided to clients only after the depository account is in “Active”status. In case the Participant isusing a separate series of Client IDs generated from the DPM system, the Client ID may be intimated to the Clients subject to the following conditions:
(1) At the time of intimation of such client ID, the client must be clearly communicated that the ID is yet to be activated and should notbe used for any purpose till communication is received from about the activation.
(2) After the Client ID is in “Active” status separate communication must be sent to the client.NSDL/POLICY/2013/0026 dated February 5, 2013
Account opening information to Client through email
NSDL now has advised that, subsequent to opening of a depository account, information such as Client Master Report alongwith a copy of the Agreement including charge structure may be provided to the client through email provided the following is ensured:
l It should be provided at the email address recorded in the DPM system. In case the Participant is not able to provide the same to its Clientsby email due to any reason, the same should be provided to the client in paper form.
l Maintain the records of delivery/non-delivery of emails to clients.
l When the client provides email address at the time of account opening, inform the client that such information will be sent by email to the Client.
l In case the client has opted for DIS booklet alongwith account opening or in case of BSDA, the DIS booklet must be separately issued to the client.
NSDL/POLICY/2013/0031dated February 22, 2013
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News from National Securities Depository Ltd.NSDL circulars can be accessed through the following link: https://nsdl.co.in/business/circular.php
News from Insurance Regulatory and Development AuthorityIRDA circulars can be accessed through the link:http://www.irda.gov.in/ADMINCMS/cms/Circulars_List.aspx?mid=3.1.3
AML/CFT guidelines-Procedures for Determination of Beneficial Ownership
In order to have a uniform approach across the financial sector, Government of India, Ministry of Finance in consultation with various financial sector
regulators has specified the procedures for determination of Beneficial Ownership, as under:
Customers other than individuals or trusts:
Where the customer is a person other than an individual or trust, the insurance company shall identify the beneficial owners of the customer and take
reasonable measures to verify the identity of such persons, through the following information:
(a) The identity of the natural person, who, whether acting alone or together, or through one or more juridical person, exercises control
through ownership or who ultimately has a controlling ownership interest.
Controlling ownership interest means:
l ownership of/entitlement to more than 25 percent of shares or capital or profits of the juridical person, where the juridical person is a
company;
l ownership of/entitlement to more than 15% of the capital or profits of the juridical person where the juridical person is a partnership;
or,
l ownership of/entitlement to more than 15% of the property or capital or profits of the juridical person where the juridical person is an
unincorporated association or body of individuals.
Customer which is a trust:
Where the customer is a trust, the insurance company, shall identify the beneficial owners of the customer and take reasonable measures to verify the
identity of such persons, through the identity of the settler of the trust, the trustee, the protector, the beneficiaries with 15% or more interest in the
trust and any other natural person exercising ultimate effective control over the trust through a chain of control or ownership.
Exemption in case of listed companies:
Where the customer or the owner of the controlling interest is a company listed on a stock exchange, or is a majority-owned subsidiary of such a
company, it is not necessary to identify and verify the identity of any shareholder or beneficial owner of such companies.IRDA/SDD/GDL/CIR/019/02/2013 dated 5th February 2013
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Foreign Exchange for You - FEMA Awareness Event
Ours is a company of construction materials in Coimbatore. We
import scrap from Germany. The company plans to open an office
abroad. We would like to know if taking an ECB would benefit us
apart from any exchange rate and interest benefits that they
may accrue. They also wanted to know whether opening of office
abroad would benefit them.
ECBs are permitted for capital expenditure in India to create
additional capacity and for overseas investment and not for
running expenses abroad. There is a separate provision for
remitting of money abroad for running expenses towards setting
up of offices. For the sake of imports, one can open an LO if it helps
in negotiating. Otherwise, the use of business visits for which
liberal foreign exchange is available can also be used. ECB for
overseas office is not permitted.
Two to three Indian banks are going to open branches in
Bangladesh shortly. The transaction appears to be that of quasi
factoring. Whether any foreign exchange accrues to India in the
transaction is to be seen.
The company clarified that 60% of the transaction accrues to India
as payment from Bangladesh for processed fabric exported from
Tirupur.
Though there is no provision to allow such request, the company
may send a detailed reference mentioning the details of the
transaction in a flow chart to FED, through its banker.
A company dealing mainly in garments is based in Tiruppur. It
has subsidiaries in Sri Lanka and Bangladesh. No Indian bank
except SBI is present in Chittagong. The Bangladesh company
exports to US. The party wanted to know whether the
Bangladesh company can send its bills relating to its exports to
US to a bank in India. The bank in India can negotiate the bills and
remit proceeds to Bangladesh. It can in turn realize payment
directly from the buyer in US. From India, processed fabric was
being sent to Bangladesh and from there readymade garments
were exported to US.
In the case of 120 days usance bill discounted against LC, where
does the payment risk lie? Public sector banks take the collateral
and private sector banks do not insist on collateral. At the end of
the period if the bank doesn't pay the amount who has to
bear the risk?
In case of usance bill accepted by the party, the risk would lie with
the LC opening bank. Collateral is a credit decision that would
depend on a bank's credit policy and the borrower's credit rating.
Only in the case where there is a dispute involved, the party would
be liable to pay.
The forex rates on the RBI site seem to be revised only by 12 noon.
Is there any way for live rates?
Most banks have systems where the rates are updated four to five times in a day. If one registers the mobile number with the bank, they would get the updated rates.
RBI does not determine the exchange rates which are market determined. RBI only published daily reference rates which are used mainly for settlement of derivative contracts.
In the case of lending under the PCFC, is base rate plus 4 per cent
mandatory?
RBI has deregulated all rates except those pertaining to DRI and
advances to staff.
Question Response
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In the case of ECGC premium there appears to be no
uniformity amongst banks. It appears that export credit is
given at sub base rate by some banks to certain high end
customers. Why can't there be interest subvention in the case
of export credit to MSME units?
No loan can be given below the base rate unless otherwise specified in the regulations, which is at present in cases of DRI and advances to staff. Bank can give a loan below the base rate if there is a subvention component available and the same is specifically allowed by RBI. As for interest subvention, only product specific subvention is given by the Government under the Foreign Trade Policy.
A student stated that in newspapers it was stated that
educational loans were available for 4% but on approaching the
bank, they asked for security. Some banks are not encouraging
education loans and making some excuses for the same.
Under the IBA scheme, education loans up to Rs.4 lakh do not need any collateral. For loans up to Rs.7.5 lakhs only guarantees are asked for. Collateral is asked for only for loans above Rs.7.5 lakhs. Preference is given to meritorious students. No bank can refuse education loans.
Is there any policy for the export of agri products?
There is huge potential for agri exports. EXIM bank has certain schemes for agri exports. NABARD also encourages the same. There are certain central and state schemes also for a particular group of products. Central and State Governments also offer incentives
There is no uniformity across banks in charging of ECGC
premium.
Representatives of AD banks clarified that while premium is charged for pre-shipment advances, it is not charged for post-shipment advances.
A textile company representative stated that they have to pay agency commission. Different banks have different procedures. In some cases they insist on the chartered accountant certificate or 15 CA / 15 CB form.
This has been the issue which has been pending with government and the government may issue a clarification in the regard shortly.
(Source: RBI Website: March 21, 2013)
An exporter stated that they have been hit hard by the recent volatility in exchange rates. He cited the example of China and wanted to know why India also can not follow a fixed exchange rate regime.
The floating rate system has stood the test of time and served the country well over the last twenty years. The rupee volatility is monitored by RBI and it intervenes to arrest the same when considered necessary. Going back to the fixed exchange rate regime may not be helpful to the country in the long run.
Many measures have been introduced for the benefit of the exporters such as increase in the limit for export credit refinance. RBI does not offer any sector specific refinance other than exports. Recently the limit for refinance has been raised from 15 per cent to 50 per cent thereby making additional resources to the tune of Rs.32,000crores available to the banks for the purpose of export credit. Further there is no limit on banks borrowings from abroad for giving loans to export purposes. If there is a bank specific problem, then the customer is free to choose from any other bank.
Although public sector banks have huge amounts of foreign
currency, they do not make PCFC available to small exporters
citing non availability of foreign exchange.
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Case Study 1:
XYZ Leather Impex Pvt. Ltd deals in manufacture and export of rexin goods, as per the documents provided. Transactions in the account were normal with no inward or outward remittances. Customer receives as inward remittance of INR 5.5m and issues cheques for smaller amounts to various persons. Customer explains the transaction as proceeds of an export of wrist watches to Dubai. No proof shown regarding trading in wrist watches and no explanation given for payouts and no export documents furnished in respect of export of wrist watches.
Message: Continuously look out for transactions not in line with the customer's known business activity
Case Study 2:
ABC Tours & Travels is a customer. Manager of this company introduced a person for opening a current account. AR, the person introduced claims to have business in Canada and intending to start property business in the country. KS, the Asst. manager approved opening of the account on the basis on National Identity Card and Certificate of Registration of business issued by the government.
Within a few days of opening of the account, address changed. Initial address same as that of ABC Tours & Travels. Within a month of opening of account, 4 remittances from Canada totaling USD 210,000 received in the account, followed by cash withdrawals. Most of the transaction were approved and / or were in the knowledge of Asst. Branch Manager and Branch Manager. Subsequent information revealed that the money was proceeds of a fraud perpetrated on the remitting bank. The owner of ABC Tours & Travels was arrested a few years back for suspected association with a terrorist group operating in the country. He was let off without framing any charges. This fact was known to the branch personnel. Inadequate KYC information about new business. No enquiries / verification regarding the claim of business in Canada. Large inward remittances in newly opened account followed by immediate withdrawals in cash – clear indicators to raise suspicion. Change of address soon after opening account, another indicator for suspicion.
Message: Do not let your judgment be influenced by extraneous matters like introduction by a known person or tall claims of business activities elsewhere. Always look for evidence to support the claims.
Case Study 3:
A person spends approximately INR 5 lakhs every month on his credit card. The spends are on only on particular merchant establishment. On closer analysis, the merchant establishment is an online Gambling site in a foreign country. It is suspected that the customer may be transferring value by way of credits into account of some other person holding account with the site. STR should be filed in such cases.
Message: Misuse of banking channels for illegal purposes should be reported as suspicious transactions.
Case studies : KYC/ AML
Disclaimer:
The material contained in this document aims at providing a summary of various guidelines, notifications, circulars etc. issued by various
regulatory authorities from time to time and is for information purposes only. The same should not be construed as an advice on any matter. for
complete information on the matter provided therein, readers are advised to refer to the detailed guidelines, notifications, circulars etc available
on the websites of the respective regulators or they may consult the respective compliance departments before acting on any matter.
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