Monitoring & Reporting of Suspicious Transactions:

Ongoing monitoring of client accounts is an essential element of an effective Anti-Money Laundering framework. Such monitoring should result in the identification and detection of apparently abnormal transactions, based on laid down parameters. It’s important to devise and generate necessary reports/alerts based on their client’s profile, nature of business, trading pattern of clients for identifying and detecting such transactions. These reports/alerts should be analyzed to establish suspicion or otherwise for the purpose of reporting such transactions, ongoing monitoring is an essential element of effective KYC procedures.

A list of circumstances, which may be in the nature of suspicious transactions, is given below:

1. Clients whose identity verification seems difficult, or clients appear not to cooperate to comply in order to fulfill required documentation requirements.

2. Substantial increase in activity without any apparent cause.

3. Large number of accounts having common parameters such as common partners / directors / promoters / address / email Address / telephone numbers / introducers or authorized signatories.

4. Transactions with no apparent economic or business rationale.

5. Sudden activity in dormant account.

6. Source of funds are doubtful or inconsistent in payment pattern.

7. Unusual and large cash deposits made by an individual or business.

8. Transfer of investment proceeds to apparently unrelated third parties.

9. Multiple transactions of value just below the threshold limit specified in PMLA so as to avoid possible reporting.

10. Unusual transactions by clients and businesses undertaken by shell corporations, offshore banks /financial services businesses reported to be in the nature of export-import of small items.

11. Asset management services for clients where the source of the funds is not clear or not in keeping with clients apparent standing /business activity.

12. Clients in high-risk jurisdictions or clients introduced by banks or affiliates or other clients based in high risk jurisdiction.

13. Clients transferring large sums of money to or from overseas locations with instructions for payment in cash.

14. Purchases made on own account transferred to a third party through off market transactions through DP Accounts.

15. Suspicious off market transactions.

16. Large deals at prices away from the market.

17. Accounts used as ‘pass through’. Where no transfer of ownership of securities or trading is occurring in the account and the account is being used only for funds transfers/layering purposes.

18. Trading activity in accounts of high-risk clients based on their profile, business pattern and industry segment.

Broad categories for reason of suspicion are given below:

1. Suspicious criminal background of the client.

2. Multiple accounts having common account holder or introducer or authorized signatory with no rationale.

3. Unusual activity in dormant accounts or in aberration to past activities

4. Source of funds are doubtful.

5. Appears to be case of insider trading.

6. Suspicious off-market transactions.

7. Value of transaction being inconsistent to client’s financial standing.

Reporting of Suspicious Transactions to Financial Intelligence Unit (FIU) India

Flameback undertakes to report any Suspicious Activities in line with the requirements of the Financial Intelligence Centre (FIC). Flameback will maintain and retain all the relevant documentation for client accounts or transactions that it deems suspicious. Reporting will be done in pre-requisite format.

In terms of the PML Rules, intermediaries are required to report information relating to cash and suspicious transactions to the Director, Financial Intelligence Unit-India (FIU-IND) at the following address:
Director, FIU-IND,
Financial Intelligence Unit-India,
6th Floor, Hotel Samrat,
Chanakyapuri, New Delhi-110021.
Website: http://fiuindia.gov.in

AML Record keeping

Confidentially of Suspicious Transaction Reports (STRs) and other supporting documents will be maintained. Only law enforcement or regulatory authorities need be informed about it. Any request for STR information would not be entertained.

Principal Officer will be in charge of record keeping of STRs.

As part of our AML program, our firm will create and maintain STRs other relevant documentation about customer identity/verification.

Ongoing training to Employees:

Principal Officer would be responsible to impart necessary training to employees. Employees will be sensitized of the requirements under PMLA and the procedures laid down by the company.

It will be ensured that all the operating and management staff fully understands their responsibilities under PMLA for strict adherence to customer due diligence requirements from establishment of new accounts to transaction monitoring and reporting suspicious transactions to the FIU.

Training programs in regular intervals would be imparted wherever required for new staff, front-line staff, supervisory staff, controllers, and product planning personnel, etc.

Training may include written materials like pamphlets, audio, video material, in-person lectures and professional seminars. Employees of the compliance department should be asked to attend compliance programs organized by BSE, NSE, NISM and other such institutions.