1 PMLA Training

Prevention of Money
Training session
What is Money laundering?
 Requirements under the Act
 Arcadia’s policy
 Relevance to your routine
 Questions and Answers
What is money laundering?
Administered under the Prevention of
Money Laundering Act, 2002 and rules
 Regulated by many bodies like
Enforcement Directorate, Financial
Intelligence Unit, RBI, SEBI and
Money Laundering
 Directly or indirectly
 Attempts or assists knowingly or party to
any activity
 Connected with proceeds of crime
 Projecting it as untainted property
Proceeds of crime
Property or value of such property
derived or obtained
 Directly or indirectly
 Property is a result of crime related to a
“scheduled offence”
Scheduled Offence
Against the country
Terrorism, conspiracy, etc
Relating to Drugs
Possessing or dealing with Poppy straw,
opium, cannabis
Under the Indian Penal Code
Murder, Kidnapping, Extortion, counterfeit
notes and securities, etc
Scheduled Offence
Under the Arms Act
Acquire, possess or use prohibited weapons
Wildlife Protection
 Immoral Trafficking
 Prevention of Corruption Act
Public servant taking bribe, or taking bribe
to influence public servant
Requirements under the Act
Every Broker shall—
(a) maintain a record of all transactions, the nature and
value of which may be prescribed, whether such
transactions comprise of a single transaction or a
series of transactions integrally connected to each
other, and where such series of transactions take
place within a month;
(b) furnish information of transactions referred to in
clause (a) to the Director within such time as may be
prescribed; (i.e. every month)
(c) verify and maintain the records of the identity of all its
clients, in such manner as may be prescribed: (i.e.
Requirements under the Act
Every broker has to maintain the record of:
 All cash transactions of the value of more than Rs 10
lacs or its equivalent in foreign currency.
 All series of cash transactions integrally connected to
each other which have been valued below Rs 10 lakhs
or its equivalent in foreign currency where such series
of transactions take place within one calendar month.
 All suspicious transactions whether or not made in
cash and including, inter-alia, credits or debits into
from any non monetary account such as demat
account, security account maintained by the registered
Arcadia’s policy
As required by the Act and SEBI, Arcadia has
adopted a policy to effectively implement these
 The objectives are:
To protect the company from being used for Money
To follow thorough KYC practices
To take appropriate action and report any
To comply with the applicable laws
Money Laundering process
The proceeds of crime are injected into the system
Large amounts of money are divided and
distributed in a series of accounts
The money is spun in different accounts to different
ownerships and jurisdiction to confuse
The proceeds enter a legitimate business and the
financial economy as untainted property
Suspicious Transactions
Funds derived from illegal activities
 Conducted to disguise such funds
 No apparent purpose
 Not the sort of transaction the customer
would enter into
 No reasonable explanation considering
the background and purpose
Large transactions or patterns
Clients with links to criminals
 False ID documents or not face to face
 Multiple accounts
 Sudden activity in dormant accounts
 Use of different accounts alternately
 Activity inconsistent with financial
 Client of special category
 Value of transactions away from market prices
 Value just below threshold amount
 Off market transactions
Customer Due Diligence
Policy for acceptance of clients
 Client identification procedure
 Suspicious transaction identification and
Acceptance of clients
In-person verification
 Obtain complete information as laid
down by SEBI KYC guidelines
 Clients of special category
 Not to accept clients who
Have criminal background
 Submit fictitious documents
 Do not submit mandatory documents
Client identification procedure
PAN card- the most reliable
 Other documents such as election card,
Passport, PSU issued cards
 Address proof such as election/
telephone bill, bank pass book
 Other doocuments as are relevant to
individuals, firms, companies, trusts,
Risk profiling
Category A- Low Risk
 Category B- Medium Risk
 Category C- High Risk
Thank You
Any Questions?