Combating Money LaunderingExperience in India

Prepared byA.K. Sahoo, Reserve Bank of India

Assisted by Kritika & Anuroop

Directly or Directly or indirectly indirectly indulge, involve indulge, involve or assistor assist

• Process or Activity Process or Activity connected with ‘proceeds connected with ‘proceeds of crime’ of crime’

• including concealment, including concealment, possession, acquisition or possession, acquisition or use and projecting or use and projecting or claimingclaiming

Projecting proceeds Projecting proceeds of crime as of crime as untainted propertyuntainted property

Money Laundering

Accounts for 47% of white collar crimes in India

Framework for Combating Money Laundering

Role of Banks & Financial InstitutionsDirectors: Not more than 1 family member/ associate (partner, employee, director) on Board5% or more shares: Integrity, reputation, track record in financial matters & compliance with tax laws30% or more shares: Source & stability of funds, business record

Customer Acceptance PolicyCustomer Identification ProcedureRisk classification of accountsLow Risk: Identity and Source of Income easily identified, salaried, pensioners, low incomeHigh Risk: Cash intensive business, politically exposed persons of foreign origin

Cash transactions of value more than INR 1 Million or equivalent in foreign currencyIndividual or integrally connected Receipts by non-profit organisations Use of forged/ counterfeit currency notes Any Suspicious transaction in cash or not- Report to Financial Intelligence Unit

All KYC documentsSuspicious TransactionsFor 5 years from date of transactionSpecial attention to all complex, unusual large transactions and all unusual patterns of transactions, which have no apparent economic or visible lawful purposeNature, Amount, Date, Parties, Currency denomination

Performance of Financial Intelligence Unit

Source: Annual Report 2013-14, FIU-India, Ministry of Finance, Government of India

Case StudiesImport Remittances- Chinubhai Patel & Co. Scam

Immovable Property Deals

Hawala transactions

Satyam Corporate Accounting Fraud