ISJ SECURITIES PVT.LTD.
EXTRACTSFROM POLICY
ON
ANTIMONEYLAUNDERING
January, 2016
DateOfLastReviewandUpdate :January, 2016
1. INTRODUCTION
1.MoneyLaunderingmaybedefinedascleansingofdirtymoneyobtained fromlegitimateor illegitimateactivitiesincludingdrugtrafficking,terrorism,organizedcrime,fraudandmany othercrimeswiththeobjectiveofhidingitssourceandrendering itinlegallyusableform. It isanyactorattemptedacttoconcealordisguisetheidentityofillegallyobtained proceeds sothat they appear to have originated from legitimate sources. Theprocess ofmoney launderinginvolvescreating aweboffinancialtransactionssoastohidethe originofand truenature orthese funds.
2. Successfulmoneylaunderingactivityspawningyetmorecrimeexistsatascalethat canand does have adistorting and disruptive effectoneconomies, marketplaces, the integrity of jurisdictions,marketforces,democraciesetc. It isin shortacancer,existingforonepurpose only,tomakecrimeandillegalactivityworthwhile.
3. ThegeneralassemblyofUnitedStatesadopted thepoliticaldeclarationandglobalprogram ofaction in1990initsworldwidedriveagainstmoney launderingandalsoenjoinedupon member states to adoptlegislation and program against laundering on anational level. India enacted the prevention ofMoneyLaundering Act,2002.(Hereinafter referred toas
‘Act’). Theprevention ofMoney Laundering Act 2002has come intoeffectfrom1st July
2005. NecessaryNotification/Rulesunder thesaidActhavebeen publishedintheGazette ofIndia on 1st July2005 bythe Department ofRevenue, Ministry ofFinance ,and Government of India.
4. SecuritiesandExchangeBoardofIndia(hereinafterreferred toasSEBI)VideitsCircularRef NO.:ISD/CIR/RR/AML/1/06 dated January 18,2006 laid down broad guidelines on Anti MoneyLaundering Standards. Asper the Circular, allthe intermediaries registered with SEBIundersection12oftheSEBIActwereadvisedtoensurethataproper policyframework
onanti‐money laundering measures wasputinplace. Thiswasessentially inconformity
withthe prevention ofMoneyLaunderingAct,2002andthe rulesframed there under by
SEBI.
5. ISJ Securities PvtLtdbeingonesuchintermediary hadinaccordance with theabove,intheBoardMeeting Heldon10th August,2006adoptedapolicyframework on anti‐moneylaunderingmeasures.
6. InthelightofCircularsissuedbyNationalStockExchangeofIndiaLtd(hereinafterreferred to as“NSE”)and Circulars issued byBombayStockExchange Ltd.Andcircularissued by CentralDepositaryServicesLtdcontinuationtothenewcircularofSecuritiesandExchange BoardofIndiaSEBICircularNo.ISD/AML/CIR‐1/2009datedSeptember 01,2009hasissued
additionalrequirements tobefulfilledandclarificationswithregardtoexistingrequirements
mentioned intheMaster CircularonAntiMoneyLaundering(AML)issuedvideSEBIcircular no.ISD/AML/CIR‐1/2008DatedDecember19,2008.
8.Preventionof MoneyLaunderingAct2002
Tocombatmoney‐launderingactivities,theGovernment ofIndiaenacted theprevention
ofMoney Laundering Act,2002(hereinafterreferred to asthe “Act”)onJanuary 17,
2003.
ThebasicobjectiveoftheActisthree fold,viz.:
ToPrevent,combatandcontrolmoney laundering.
Toconfiscateandseizetheproperty obtained fromthelaundering money.
Todealwithanyotherissueconnected withmoneylaunderinginIndia.
2. OURPREVENTIONOFMONEYLAUNDERINGPOLICY.
1. Thepurpose ofthis policy isto set outthe prevention ofmoney laundering commitments and obligations forISJ Securities PvtLtd.This policyisbased onthe provision ofthe “preventionofMoneyLaunderingAct,
2002andcircularissuedbySEBIandexchangesthereof”.
2. This internal policy sets out and establishes governing principles, broad guidelinesandstandards tobeadopted bythe Companies inorder toprotect theCompaniesfrombeingusedby anypersontolaundermoney.
3. Policyobjectives
Toprotect theCompanyfrombeingusedformoneylaundering
To follow thorough “Know Your Customer” (KYC) policies and procedures intheday‐to–daybusiness.
Totake appropriate action, once suspicious activities isdetected, and
makereporttodesignatedauthoritiesinaccordance withapplicablelaw
/laiddownprocedures.
4.Tocomplywithapplicable lawsaswellasnorms adopted internationallywith reference toMoneyLaundering.
3. THEMONEYLAUNDERINGPROCESS.
3.1)Moneycanbeobtainedillegallyfromvariouscriminalactivitieslikedrugtrafficking, terrorism,organized crimeandfraud. As criminalsattempttoconcealthe true origin andownership oftheproceeds oftheircriminalactivitiesandprovidealegitimatecover fortheirsourceofincometheyusuallyfollowthree stages:
1.Placement–Thisiswherethecriminalproceeds arefirst‐injectedintothesystem. It is alsothe stage where those whoare educated, briefed and alert tothe process of
money laundering,havethe best chance ofdetectingwhatishappeningandarethus bestabletothwartanddisrupttheprocessattheoutset.
Atthis stage, veryoften larger amounts ofmoney are divided and distributedinto smalleramounts toavoidsuspicionandthen paidintoaseriesofbankaccounts,arose topurchase securities,orlifepoliciesorother assets, sometimesmanykindsofassets, alltoachievetheprimepurpose ofbeingabletoinjectthetainted moneyorvalueinto the legitimate mainstreamfinancial/businesssystem. Eg.Acriminalhavinghugecrime proceeds inform of cash, can deposit this cash inbank accounts maintained with differencebanks,inthenameof his relatives,friendsandassociates, insmall amounts.
2.Layering –After the injection has taken place and the taintedmoney orvaluehas enteredand become mixedup inthe main mass ofmoney orvalue inthe financial system, itisspunarounddifferentaccounts, differentname,differentownerships, plus differentinstruments andinvestments. Allthese movementsaredesigned todisguise theoriginsofthemoneyorvalueandthusconfuse those whomightbeattempting to trace the money orvaluebacktothe root, criminalsource. Facilitatedbythe birthof electronic funds transfer technology the fastmovementsoffunds through multiple jurisdiction often with different laws, creates major problems for investigators of identification,accessandultimatelyachievingsuccessfulprosecutions.
3.Integration‐Placingthelaunderedproceeds backintotheeconomyinsuchawaythat theyre‐enter thefinancialsystemasapparentlylegitimate funds. Integrationmeansthe reinvestment ofthose fundsinanapparentlylegitimate businesssothatnosuspicionof
itsoriginremainsandtogivetheappearance of legitimizingtheproceeds.
3.2)Section3oftheprevention ofMoneyLaunderingAct,2002definestheoffencesor laundering.Interms,ofthissectionwhosoever directlyorindirectlyattempts toindulge orknowingly assists orknowinglyisaparty orisactuallyinvolvedinanyprocess or activityconnected withthe proceeds ofcrimeand projecting itasuntaintedproperty shallbeguiltyof anoffenceofmoneylaundering.
3.3)Thetermsproceeds ofcrimehavebeendefinedundersection2(u)oftheActviz:
“Anyproperty derived orobtained,directlyorindirectly,byanyperson asaresultof criminalactivityrelatingtoascheduledoffenceorthevalueof anysuchproperty.”
Thesaidsectionbroadlystates that ifaperson isinvolvedintheprocess ofprojecting proceeds ofcrimeasuntainted propertythenheshallbeguiltyofmoneylaundering,for indulginginthesaidprocessofthefollowingthree elements/activitiesshallplayavery important role:
Possessionorownershipof theproceeds ofcrimeorproperty acquiredfromproceeds of crime,whichisbeingreflectedasuntainted property.
Transactionsrelatingtoproceeds of crimelikeconvertingitsform
3.4)Concealment ofthe originaltransaction and/or creating ghost transactionsfrom concealingactualtransactions.
E.g.possessing BenamiProperty, Unexplained cash credits, unexplained expenditure, bogusorfictitiousaccounts,unexplainedinvestments.
4.APPLICABILITY
4.1)Theprevention ofMoneyLaunderingPolicyappliestoISJ Securities PvtLtd.
Intermsof rulesframedundertheAct,interalia,everyintermediary shall
1.Maintainarecordofalltransactions,thenature andvalueof whichmaybeprescribed, whether such transactions comprise ofsingle transaction or a series oftransactions integrally connected to each other, and where such series oftransaction take place withinamonth;
2.Furnishinformation oftransactionsreferred toinClause (a)tothe Directorwithin suchtimeasmaybeprescribed;
3.Verifyandmaintain therecords oftheidentityofallitsClients,insuchamanner as maybeprescribed
Asperprovisionofsection2 (n)of theActterm“intermediary” means:
“AStock– broker, sub‐broker, share transfer agent, banker toanissue,trusteetoa trustdeed, registrarto an issue, merchant banker, underwriter, portfolio manager,
investment adviser and anyother intermediary associated withsecurities marketand registered under section12oftheSecuritiesandExchangeBoardofIndiaAct1992(15 of 1992);
5identityandcurrent addressoraddresses includingpermanent addressoraddresses of the client,the nature ofbusiness ofthe client and hisfinancial status; provided that where itisnot possible toverifythe identity ofthe client at the time ofopening an account orexecuting anytransaction,the banking company, financial institution and intermediary, as the case may be, shall verify the identity of the client within a reasonable time afterthe account has been opened or the transaction has been executed.
UnderthesecircumstancestheAct,appliestoISJ Securities PvtLtd
4.2)SuspiciousTransactions
Suspicioustransactionsinvolvefundsderivedfromillegalactivitiesorisintendedor conducted inorder to hide ordisguise funds orassets derived from illegalactivities (including,withoutlimitation,theownership,nature, source,location, orcontrolofsuch fundsorassets) aspart ofaplantoviolateorevade anylaworregulation ortoavoid anytransaction reportingrequirementunderthelaw; Thetransactionhasnobusinessor apparentlawful purpose or isnot the sort inwhich the particular customerwould normallybeexpected toengage, and the financialinstitutionknowsofnoreasonable explanation for the transaction after examining the available facts, including the backgroundandpossiblepurpose ofthetransaction
4.3)Criteriainrelationtodefining
Itisdifficulttodefineexactlywhatconstitutessuspicioustransaction andassuchgiven belowisalistofcircumstanceswhere transactionsmaybeconsidered tobesuspicious innature. Thislistisonlyinclusiveandnotexhaustive. Whetheraparticulartransaction isactuallysuspiciousornotwilldepend onthe background, detailofthe transactions andotherfactsandcircumstances.
1.Complex /unusually large transactions / patternswhich appear to have no economicpurpose.
2. Clienthaving suspiciousbackgroundorlinks withknowncriminals
3. Clientswhoseidentityverificationseemsdifficult.
ForExample:
i.Falseidentificationdocuments
ii.Identificationdocumentswhichcouldnotbeverifiedwithinreasonable time iii. Non facetofaceclient
iv.Doubtovertherealbeneficiaryortheaccount
v.Account opened with names very close to other established business entities
4. Clientappears nottoco‐operate.
5. Useof differentaccountsby Clientalternatively.
6. Suddenactivityindormantaccounts
7. Multipleaccount
i.Largenumber of accounthaving a common account holder, authorized signatorywithnorationale
ii.Unexplainedtransfers between multipleaccountswithnorationale
8. Assetmanagement servicesforclientswherethesourcesoffundsisnotclearornot inkeepingwiththeclients’apparent standing/businessactivity
9. Substantialincreaseinbusinesswithout apparentcause(Unusualactivitycompared topasttransactions)
10.Activitymateriallyinconsistent withwhatwouldbeexpected fromdeclaredbusiness
11.Inconsistencywithclientapparent financialstanding
12.Anyaccountusedforcirculartrading
13.UnusualtransactionsbyClientofspecialCategory(CSCs)andbusiness undertaken byshellcorporations,offshorebanks/financialservices,businessesreported tobein thenature ofexport‐importofsmallitems
14.A transaction which givesrise to a reasonable ground of suspicion that it may
involvetheproceeds of crime.
15.Atransactionwhichappears tobeacaseofinsidertrading
16.Transactionsreflectlikelymarketmanipulations
17.Suspiciousoffmarkettransactions
18.Valueor transaction just under the reporting threshold amount inan apparent attempttoavoidreporting
19.Inconsistencyinthepayment pattern by theclient
20.Tradingactivity in accountofhighriskclientsbasedontheirprofile,businesspattern andindustrysegment
21.Accountbased as‘passedthrough’.Wherenotransfer ofownership ofsecuritiesor trading isoccurred inthe account and the account isbeing used onlyforfunds transfers /layeringpurposes.
22. Largedeals atpricesawayfromthemarket
23.Suspiciousoffmarkettransactions
24.Purchase made inone client’s accountand later on transferred to athird party throughoffmarkettransactionsthroughDPAccounts;
25.Multipletransactionsofvaluejustbelowthethreshold limitspecifiedinPMLAsoas toavoidpossiblereporting;
5.PolicyofISJ Securities PvtLtd
5.1ISJ Securities PvtLtdhas resolved that itwould, as an internal policy,take adequate measures topreventmoneylaunderingandshallputinplaceframe–worktoreport cash andsuspicioustransactiontoFIUasperguidelinesofPMLArules2002
5.2 TheMoneyLaunderingPolicyshouldbereviewedandupdated atleastonceinayear.
6Implementationofthis policy
6.1Mr.Prakash Shukla,willbethePrincipal Officerwhowillberesponsible for
Complianceof theprovisionof thePMLAandAMLGuidelines
Act as central reference pointand playan active role inidentification assessmentof potentiallysuspicioustransaction
Itslegalobligationtoreportsuspicioustransactionstotheconcerned authorities
6.2Themainaspectof thispolicyistheCustomerDue Diligenceprocesswhichmeans:
Obtained sufficient information aboutto the client inorder to identify who isthe actual beneficialownerofthesecuritiesoronwhosebehalftransactionisconducted.
Verifythe customer’s identity using reliable, independent sources document, data or information.
Conduct on‐going due diligence and scrutiny ofthe account /client to ensure that the
transaction conducted are consistent with the client’s background/financial status, its activitiesandriskprofile.
6.3Thecustomer Due Diligenceprocess includesthree specificparameters:
PolicyforAcceptanceofclient
Clientidentificationprocedure
SuspiciousTransactionsIdentificationreporting
7.CustomerAcceptance Policy
7.1
Eachclientshouldbemetinperson:Acceptclientwhomweareabletomeet personally.
Eithertheclientshouldvisittheoffice/branch orconcerned officialmayvisit theclientathis residence/officeaddress togetthenecessary documents filledinandsigned. Preferably acceptclientwholivewithinthejurisdictionofthe branch. Asfaraspossible,ensure that thenewclientisintroduced byanexistingclient.
Accepts client on whom we are able to apply appropriate KYC procedures: Obtain completeinformationfromthe client.Itshouldbeensured that the initialformstaken by the client are filled incompletely. All photocopies submittedbythe client are checked against originaldocumentswithout any exception. Ensure that the ‘Know Your Client’ guidelines are followed withoutanyexception. Allsupporting documentsasspecified by SecuritiesandExchange Boardof India(SEBI)andExchangeareobtained andverified
Donotacceptclientswithidentity matchingpersonsknowntohavecriminalbackground: Check whether the client’s identify matches with any person having known criminal background orisnot banned inanyother manner, whether intermsorcriminalorcivil proceedings by anyenforcement/regulatoryagencyworldwide
Be carefulwhileacceptingclientsorspecialcategory:Weshouldbecareful whileaccepting clientsofspecialcategorylikeNRIs,HNIs,Trust,Charities,NGOs,PoliticallyExposedPersons (PEP) persons of foreign origin, companies having closed share holding/ownership, companies dealinginforeigncurrency,shellcompanies,overseas entities,clientinhighrisk countries, nonfacetofaceclients,clientswithdubiousbackgroundasperpublic information available. Current/Former Head of State, Current/Former senior high profile Politician, Companiesofferingforeignexchange, etc.)orclientsfromhigh–riskcountries )likeLibya, Pakistan,Afghanistan, etc.)orclientsbelonging tocountrieswherecorruption/fraudslevelis high(likeNigeria, Burma,etc). Scrutinizeminutely the records /document pertaining to clientsbelongingtoaforesaidcategory
Donotacceptclientregistrationformswhichare suspectedtobefictitious:Ensurethatno accountisbeingopened inafictitious/benaminameoronananonymous basis.
Do not compromise on submission of mandatory information /documents: Client’s accountshouldbeopened onlyonreceiptofmandatory informationalongwithauthentic supportingdocuments asperthe regulatory guidelines. Donot open the accounts where theclientrefuses toprovideinformation/documentsandweshouldhavesufficientreason torejecttheclienttowardsthisreluctance.
CheckforCriminalBackground andBanned:ThenameoftheclientandorPANNumber shouldbecheckedforCriminalBackgroundorisbanned inanyother manner, Whether in termsof CriminalorCivilProceedingsbyanyenforcement agencyworldwide.
,TSS smallOfficeSoftware watch list and SEBI debarred
entitieslist maybeusedtocheckthebackgroundofpotentialclients
7.2CustomerIdentificationProcedure(FORNEW CLIENTS)
Objective:Tohaveamechanism inplacetoestablish identifyoftheclientalongwithfirmproofof addresstopreventopeningofanyaccountwhichisfictitious/benami/anonymous innature.
7.2.1Documentswhichcanbereliedupon:
Pancard: PANcardismandatory andismostreliabledocument asonly onecardisissued
toanindividualandwecanindependentlycheckitsgenuineness throughITwebsite.
INDETITYProof: PANCarditselfcanserveasproofofidentity. However,incasePANcard
carriesanoldphotograph oftheholder,whichdoesnotmatchcurrent facialfeatures ofthe client,weshouldtakeother identityproofinformofVoter’sIdentitycard,Passport, Ration CardoranyGovernment/PSU/Bankissuedphotoidentitycard.
ADDRESSProof: Forvalidaddress proofwecanrelyonVoter’sidentityCard,Passport,Bank
Statement, RationCardandlatestElectricity/telephonebillinthenameoftheclient.
7.2.2. Documentstobeobtained aspartofcustomeridentificationprocedure fornewclients:
a.Incaseofindividuals,onecopyof thefollowingdocuments havetobeobtained:
AsPANismandatory, verifyitsgenuineness withITwebsiteandcrossverifythePAN cardcopywiththe original.[please put“verified withoriginal”stamp asproofor verification]
Other proofs for identity are Voter’s Identity card, passport, Ration Cardor any Government/PSU/Bank issued photo identity card or any other document prescribedby theregulatoryauthorities.
AddressproofintheformofVoter’sidentitycard,Passport,BankStatement, Ration card and latest Electricity /telephone billinthe name ofthe client oranyother documentprescribedbytheregulatoryauthorities.
b.Incaseof corporate, onecertifiedcopyofthefollowingdocuments mustbeobtained:
Copyof theRegistration/IncorporationCertificate
Copyof theMemorandum Articlesof theAssociation
Copyof thePANcardandtheDirectorIndex no.(DIN)
Copyof thelatestauditedAnnualStatements ofthecorporateclient
Latestnetworthcertificate
LatestIncomeTaxreturn filed.
c.Incaseofpartnership firmonecertifiedcopyof thefollowingmustbeobtained:
Registrationcertificate
Partnership Deed
PANcardofpartners
Authorizationletterforthepersonauthorized toopenandoperatetheaccount
Proofofidentityandaddressof theauthorized person.
Annualstatement/returnsofthepartnership firm
d.IncaseofaTrust,onecertifiedcopyofthefollowingmustbeobtained:
RegistrationCertificate
TrustDeed
Pancard
Authorizationletterfortheentityauthorized toactontheirbehalf
Officiallyvalid documents likePANcard,voterId,Passport,etcperson(s)authorized totransactonbehalfof theTrust.
e.Incaseofunincorporatedassociationorabodyofindividuals,onecertifiedcopyofthe followingmustbeobtained:
Resolutionofthemanagingbodyofsuchassociationorbodyofindividuals
POAinfavourofpersonauthorizedtotransact
OfficiallyvaliddocumentslikePANcard,voterId, passport, etcoftheperson (s)
authorizedtotransact
Anydocument required toestablishthelegalexistenceofsuchanassociationor bodyofindividuals.
f.Incase ofanNRIaccount–Repatriable /non‐repatriable, the following documentsare required:
Copyof thePISpermissionissuedbythebank
Copyof thepassport
Copyof PANcard
Proofof overseasaddressandIndianaddress
Copyof thebankstatement
Copyof thedematstatement
Ifthe account ishandled through amandateholder, copyofthe validPOA/
mandate
8. RiskProfilingoftheclient
8.1Weshould accept the clientsbased onthe riskthey are likelytopose. Theaimisto identify clientswhoare likelytopose ahigher than average riskofmoney laundering or terroristfinancing. Forthispurpose, weneedtoclassifytheclientsaslowrisk, mediumrisk and highriskclients. Byclassifyingthe clients, we willbe inabetter position to apply appropriatecustomerdue diligenceprocess. Thatis,forhighriskclientwehavetoapply higherdegree ofduediligence. Thefactorsofriskperception depend onclient’slocation, nature of businessactivity,turnover, nature of transaction,manner ofpaymentetc.
8.2Inorder toachievethisobjective,allclientofthebranchshouldbeclassifiedinthe followingcategory:
CategoryA– LowRisk
CategoryB–MediumRisk
CategoryC–HighRisk
CategoryD‐Clientsof SpecialCategory (CSC)
8.2.1CategoryAclientare those pose lowornilrisk.. Theseare the clientswho makepaymentontimeandtakedeliveryof shares.
8.2.2Category B clients are those who are intra‐day clients or speculative clients.
Thesearetheclientswhomaintainrunningaccount
8.2.3CategoryCclientsare those who have defaulted inthe past,have suspicious background,donothaveanyfinancialstatus,etc.
8.2.4ThefollowingClientswill beclassifiedasCategoryD–ClientsofSpecialCategory
•Non‐resident Clients
•Highnet‐worthClients,these individualsdefinedashavinginvestablefinance in
excessofRs.10Crores.
•Trust, Charities, Non‐Governmental Organizations (NGOs)and organizations receiving donations;
•Companieshavingclosefamilyshareholdingsorbeneficialownership;
•Politically ExposedPersons (PEP)Politicallyexposed persons are individualswho are orhave been entrustedwithprominent publicfunctions inaforeign country, e.g., Heads of States or of Governments, senior politicians, senior government/judicial/military officers, senior executives of state‐owned
corporations, important politicalpartyofficialsetc.
•Companiesofferingforeignexchangeofferings
•Clientsinhigh riskcountrieswhereexistence/effectivenessofmoneylaundering controls issuspect, where there isunusual banking secrecy, countries active in narcoticsproduction,countrieswherecorruption(asperTransparencyInternational Corruption Perception Index) is highly prevalent, countries against which government sanctions are applied, countries reputed to be anyofthe following Havens/sponsorsofinternational terrorism, offshore
•financialcenters, taxhavens,countrieswherefraudishighlyprevalent;
•NonfacetofaceClients;
•Clientswithdubiousreputation asperpublicinformationavailableandaslistedin
•Clientswhosenameappears intheUNSCRList;
•Firmswithsleepingpartners; and
•Unlistedcompaniesandunregistered firms.
8.3Wehavetobecarefulwhilemonitoringthetransactionsof BandCcategoryclients.
8.4Apartfromthisweneedtoexerciseextracautionwhilemonitoringthetransactions ofNIR/NRE/PIOandforeignclients,especiallywhenthe paymentisbeingmade in foreigncurrency.
8.5Anychangein theriskprofileoftheclient/mandateholder,hastobeascertained by theconcerned branchofficials, andreported totheBusinessHeadimmediately.
9.SuspiciousTransactions
Allarerequested toanalyzeandfurnishdetailsofsuspicioustransactions,whetherornotmade in cash.Itshouldbeensured thatthere isnounduedelayinanalysisandarrivingataconclusion.
9.1 WhatisaSuspiciousTransaction:Suspicioustransactionmeans atransactionwhether ornot madeincash,whichtoapersonactingingoodfaith‐
Givesrisetoareasonablegroundofsuspicionthatitmayinvolvetheproceeds orcrime;or
Appearstobemadeincircumstanceofunusualorunjustifiedcomplexity;or
Appearstohavenoeconomicrationaleorbonafidepurpose
Reasonsforsuspicious:
Identityof client
Falseidentificationdocuments
Identificationdocuments whichcouldnotbeverifiedwithinreasonable time
Non‐facetofaceclient
Client inhigh‐riskjurisdiction
Doubtovertherealbeneficiaryortheaccount
Accountsopened withnamesvery closetootherestablished businessentities
Receiptbackof well‐comekitundelivered attheaddressgivenbytheclient.
Havingknowncriminalbackground
Isnotbanned inanyother manner, whetherinterms ofCriminalorcivilproceedings by anyenforcement agencyworldwide
Theidentityofclientsforbannedandcriminalbackgroundmaycheckedin and SEBI debarred entities List and/ or in TSS SmallOffice
Software.
SuspiciousBackground
Suspiciousbackgroundorlinkswithcriminals
MultipleAccounts
Largenumber ofaccounts havingacommon parameters suchascommon partners
/directors/promoters /address /emailaddress /telephonenumbers introducer or authorizedsignatory
Unexplainedtransfers between suchmultipleaccounts.
Activity InAccounts
Unusualactivitycompared topasttransactions
Use ofdifferentaccountsbyclientsalternatively
Suddenactivityindormantaccounts
Activityinconsistentwithwhatwouldbeexpected fromdeclaredbusinesss
Accountusedforcirculartrading
NatureOfTransactions
Unusualorunjustifiedcomplexity
Noeconomicrationaleorbonafiedpurpose
Sourceoffundsaredoubtful
Appearstobecaseof insidertrading
Purchase madeonownaccount transferredtoathirdpartythrough anoffmarket transactionsthroughDPaccount
Transactionsreflectlikelymarketmanipulations
Suspiciousoffmarkettransactions
Valueof Transactions
oValuejustunder thereportingthresholdamount inanapparent attempttoavoid reporting
oLargesumsbeingtransferred fromoverseasformakingpayments
oInconsistent withtheclientsapparentfinancialstanding
oInconsistencyinthepaymentpattern byclient.
oBlockdealwhichisnotatmarketpriceorpricesappear tobeartificiallyinflated/
deflated.
9.2 Whattoreport
Thenature oftransactions
Theamount of thetransactionandthecurrencyinwhichit wasdenominated
TheDateonwhichthetransactionwasconducted; and
Thepartiestothetransaction
Thereasonforsuspicion
Utmostconfidentialityshould bemaintained inrespectof reported transactions
ISJ Securities PvtLtdwillnotputanyrestrictiononoperationsinthe accounts where STRhasbeen made.
Theofficers,Directorsandemployees ofISJ Securities PvtLtdareprohibitedfromdisclosingthe fact thatSTRhasfiled.
Procedures forReporting
1. ThealterswillbesenttoSeniorofficer
2. The Senior Officerwillanalyzethealterandiffoundgenuine thenforwardsthesameto
PrincipalOfficer
3. Theprincipalofficeragainanalyzeandfurtherreports toFIU.
10RecordKeeping
All record keeping requirements contained inthe SEBI Act,1992, Rulesand Regulations made there‐under, PMLAaswellasother relevant legislation,Rules,Regulations,Exchange Bye‐lawsandCircularsshouldbekeptasprescribed.
ISJ Securities PvtLtdwill ensure thatallclientandtransaction recordsandinformationareavailable ona timelybasistothecompetent investigatingauthorities.Whererequired bytheinvestigating authority,they should retain certain records, e.g. client identification, accountfiles,and businesscorrespondence, forperiodswhichmayexceedthose required under theSEBIAct,
Rulesand Regulations framed there‐under PMLA, other relevant legislations, Rules and
RegulationsorExchangebye‐lawsorcirculars.
Continuouslymonitorthefollowing recordof transactions
oAllcashtransactionsof thevalueofmorethanrupeestenlakhoritsequivalent in foreigncurrency;
oAllseriesof cashtransactions integrallyconnected toeachotherwhichhavebeen valuedbelowRupeestenlakh oritsequivalentinforeigncurrencywheresuchseries oftransactionshavetakenplacewithinamonthandtheaggregate valueofsuch transactionsexceedsrupeestenlakh;
oAllcashtransactionswhereforgedorcounterfeit currencynotes
oAllsuspicioustransactionswhether ornotmadeincashandbywayof asmentioned intheRules.
11Informationtobemaintained
ISJ Securities PvtLtdwill maintain andpreserve thefollowinginformationinrespectoftransactionsreferred to inRule3ofPMLRules:
I.Thenature ofthetransactions;
II.Theamount ofthetransactionandthecurrencyinwhichitisdenominated; III.Thedateonwhichthetransaction wasconducted
IV.Thepartiestothetransaction.
12RetentionofRecords
Allphysicalrecords willbescanned andstored electronicallyforquickretrievalofdata asand whenrequested bythecompetent authorities andwillmaintainfortenyears
Therecordsofidentityofclientswillbemaintainedfortenyears.
Allnecessary records ontransactions, both domestic and international, willbemaintained at leastforthe minimum period prescribed under the relevant Actand Rules(PMLAand rules framedthereunderaswellSEBIAct)andother legislations,Regulationsorexchangebye‐lawsor
circulars.
Recordsonclientidentification(e.g.copiesorrecords ofofficialidentification documents like passports, identity cards, driving licenses or similardocuments),accountfilesand business correspondence will alsobekeptforthesameperiod.
Insituations where the records relate to on‐going investigations ortransactionswhichhave
beenthesubjectofasuspicioustransaction reporting,willberetained untilitisconfirmedthat thecasehasbeenclosed.
13ListofDesignatedindividuals/Entities
Anupdatedlistofindividualsandentitieswhicharesubject tovarioussanction measures suchas freezingofassets/accounts, denial offinancial services etc., asapproved bythe Security Council Committee establishedpursuant tovariousUnitedNations'SecurityCouncilResolutions(UNSCRs) should be accessed at its website at Securities PvtLtd.Will ensure that accounts arenotopened inthenameofand onewhosenameappears in saidlist.ISJ Securities PvtLtd shallcontinuouslyscanallexistingaccountstoensure thatnoaccountisheldbyor linked to any ofthe entities or individuals included inthe list. Fulldetails ofaccounts bearing resemblance withanyoftheindividuals/entitiesinthelistshouldimmediatelybeintimated toSEBI
andFIU‐IND.
14 Procedureforfreezingoffunds,financialassetsoreconomicresourcesorrelatedservices
TheGovernment is empowered toprohibitanyindividualorentityfrommakinganyfunds,financial assets or economic resources or related services available for the benefitofthe individuals or entities listed inthe Schedule to the Order oranyother person engaged inorsuspected to be engaged in terrorism. The obligations will followed by ISJ Securities PvtLtd to ensure the effective and
expeditious implementationofsaidOrderhasbeen issuedvideSEBICircularref.no:ISD/AML/CIR‐
2/2009dated
October23,2009,will becompliedwithcarefully.
Procedure tobefollowedwithSEBIDebarredentities
1. DownloadthelistfromSEBIsite
2. MatchthePANNumberswithexistingclientPANNumbers
3. IfthePANNumberismatched thentheaccountshouldbefreezed.
15.Employees’Hiring/Employee’sTraining/InvestorEducation
15.1HiringofEmployees
Employeesarehiredbasedontherecommendation andreference ofexistingemployees.NoWalk inemployeesarepreferred.
AllEmployee’sKYCdocuments arekeptonrecord
15.2Employees’Training
ISJ Securities PvtLtdwilltraintheirstaffonMoneylaunderingpolicy.A PPTwillbeemailedtoallstaffWhenever there isreviewofMoneyLaunderingpolicyacopywillbemailedtoallStaff.
15.3InvestorsEducation
ISJ Securities PvtLtdwilltrainallBranchStaffonMoneyLaundering andinstructthem toeducate investors onMoneyLaundering.Acopyof thePolicyandPPTSarekeptonthewebsiteforInvestorEducation.
16. DesignatedPrincipalOfficer
Incaseofanyfurther information /clarificationisrequired inthisregard,the“PrincipalOfficer’may becontacted.
Mr.Prakash Shukla
ISJ Securities PvtLtd
401-D, Natwar Chambers, 94, Nagindas Master Road, Fort, Mumbai 400001