Provisions under Anti Money Laundering Act

1.8.1

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

1.8.2

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.

1.8.3

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.

1.8.4

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.

1.8.5

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

1.8.6

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.

1.8.7

Know your customer

• Three risk categories defined

• Norms for each category spelt out.

1.8.8

Three risk categories : Know your customer

1.8.9

Risk Category Accounts opened/Certificate purchased with initial deposit

Low Risk Up to Rs.50,000

Medium Risk Between Rs.50,001 to Rs.10 lakh

High Risk Above Rs.10 lakh

Low Risk : Norms- Three risk categories : Know your customer

1.8.10

Low Risk Accounts opened/Certificate purchased with initial deposit below Rs.50,000

Norms Proof

Photograph 1 Recent Photograph(2 in case of EDBO)

In case of SCSS accounts 2 photographs are mandatory.

Identity proof Any one of the following :Electoral Photo identity card, Ration card, Passport, Driving License, POSB identity card, Govt. Identity card, (PPO, BPL, Job card).Note: PAN not mandatory.

Address proof Any one of the following :Electoral Photo identity card, Bank/POSB PB, Current electricity bill/telephone bill, certificate from any public authority including area postman GDS or BPM, Aadhar card.

Medium Risk : Norms- Three risk categories : Know your customer

1.8.11

Medium Risk Accounts opened/Certificate purchased with initial deposit between Rs.50,000 to Rs.10 lakh

Norms Proof

Photograph 1 Recent Photograph(2 in case of EDBO)

In case of SCSS accounts 2 photographs are mandatory.

Identity proof PAN or Declaration in Form 60/61,if PAN card not available then any one of the following :Electoral Photo identity card, Ration card, Passport, Driving License, POSB identity card, Govt. Identity card, (PPO, BPL, Job card).

Address proof Any one of the following :Electoral Photo identity card, Bank/POSB PB, Current electricity bill/telephone bill, salary slip of reputed employer with current address and Aadhar card.

High Risk : Norms- Three risk categories : Know your customer

1.8.12

High Risk Accounts opened/Certificate purchased with initial depositabove Rs.10 lakh

Norms ProofPhotograph 1 Recent Photograph

(2 in case of EDBO)In case of SCSS accounts 2 photographs are mandatory.

Identity proof PAN or Declaration in Form 60/61,if PAN card not available then any one of the following :Electoral Photo identity card, Ration card, Passport, Driving License, POSB identity card, Govt. Identity card, (PPO, BPL, Job card).

Address proof Any one of the following :Electoral Photo identity card, Bank/POSB PB, Current electricity bill/telephone bill, salary slip of reputed employer with current address and Aadhar card.

Additional requirement

Copy of source of funds and physical verification of address before opening of account.

FAQsMinors - If account/certificate holder is minor, norms are

applicable to guardiansJoint Holders- In case of joint holders , norms are applicable to

all joint account/certificate holdersKYC 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.

1.8.13

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

1.8.14

Record keeping : Documents

1.8.15

Post Office POSB Accounts Certificates

HO KYC documents (including those received from EDBOs or SOs )should be attached with Account Opening Forms and kept in guard files.

KYC documents (including received from EDBOs) should be attached with Purchase Application Forms and kept in guard files.

SO For SB/TD/PPF KYC documents should be retained in the SO in a guard file in the custody of SPM and for RD/MIS/SCSS kept in guard files a/w SB-3

KYC documents should be attached with Purchase Application Forms and kept in guard files.

BO KYC Documents should be attached with account opening form and sent to Account Office.

KYC Documents should be attached with Purchase Application form and sent to Account Office.

Record keeping : Documents

1.8.16

Post Office POSB Accounts and Certificates Attestation

HO Photo should be pasted with Account Opening form/purchase application form.In case of SCSS account one photo to be pasted in the Pass book.

APM to Attest photograph from ID proof.

SO Photo should be pasted in the SS Book in case of SB/TD/PPF accounts and on SB-3 in case of RD/MIS /SCSS accounts and on purchase application form in case of certificates.In case of SCSS account one photo to be pasted in the Pass book

SPM to Attest photograph from ID proof.

BO One photo should be pasted in SS Book and other to be sent to AO a/w SB-3 or purchase application form.

BPM to Attest photograph from ID proof.

Record keeping : Preservation

1.8.17

Record relating to closure of account i.e. SB- 3, SB-7 (a) and KYC documents to be preserved by SBCO

5 years from the date of closure of account

All Purchase Applications along with KYC documents 5 years after discharge.

Note 1 - At the time of closure of account, account opening form along with KYC documents should be attached with closure voucher and transferred to SBCO

Note 2 – All Pos while sealing the daily vouchers will segregate the closed vouchers & seal them separately a/w account opening form and KYC documents.Note 3 – These closed vouchers a/w LOT & other vouchers will be sent to HO.Note 4 – Ho will seal all closed voucher bundles of SOs and hand over to SBCO.

Reporting of transactionsCategory (Cash Transaction) Method of monitoring

All cash transactions exceeding 10,00,000/-Prepare list & send to :

•Head of Division on 3rd of following month.•Head of the Division to Circle by 5th •Head of the Circle to Principal officer at Directorate by 8th

All cash transactions in series which are less than 10,00,000/- at a time but are integrated & total exceeds 10,00,000/- in a month

Category (Suspected Transaction) Method of monitoring

Cash is accepted & Forged or counterfeit currency notes used or forgery of Security or documents

Prepare list & send to :•Head of Division on the same day.•Head of the Division to Circle by same day of receipt from PO •Head of the Circle to Principal officer at Directorate by same day of receipt from Head of the Division.

Any attempted transaction of Forged or counterfeit currency notes used or forgery of Security or documents

Suspected transaction1.8.18

Definition of Suspicious transactionA 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

(iv) give rise to a reasonable ground of suspicion that involve financing of the activities relating to terrorism;

(iv) 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.

1.8.19

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.

1.8.20