AML Policy
Know Your Customer (KYC) Norms /Anti-Money Laundering (AML) Standards / Combating of Financing of Terrorism (CFT) /Obligation of banks under Prevention of Money Laundering Act (PMLA), 2002
Transact Bridge is fully committed to comply globally with all applicable laws
designed
to combat money laundering and any activity which facilitates the funding of terrorist or criminal
activities. Transact Bridge would meet the extant regulatory requirements and the Framework would be
amended from time to time as may be required by the Authority and Compliance with Financial Action
Task Force requirements.
The key objectives of this document are
1. To lay down the detailed AML Framework of Transact Bridge.
2. To ensure that none of its products are vulnerable to Money Laundering and also to ensure that
transact bridge is not used as a conduit for Money laundering.
3. To ensure compliance with the AML laws and regulations in force from time to time.
4. To assist law enforcement agencies in their effort to investigate and track money
launderers.
Money Laundering – Definition Money Laundering is moving illegally acquired cash through
financial systems so that it appears to be legally acquired.
There are three common stages of money laundering as detailed below which are resorted to by the
launderers and institutions that may unwittingly be exposed to a potential criminal activity while
undertaking normal business transactions:
1. Placement - The physical disposal of cash proceeds derived from illegal activity;
2. Layering - Separating illicit proceeds from their source by creating complex layers of
financial transactions designed to disguise the source of money, subvert the audit trail and provide
anonymity; and
3. Integration - Creating the impression of apparent legitimacy to criminally derived
wealth.
If the layering process has succeeded, integration schemes place the laundered proceeds back into
the economy in such a way that they re-enter the financial system appearing to be normal business
funds.
Section 3 of PMLA, describes the offence of Money Laundering. Section 3 reads as under:
“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.”
Money Laundering Risks
The Company is aware that it is exposed to several risks if an appropriate AML framework is not
established, which are detailed as under
1. Reputation Risk - Risk of loss due to severe impact on Company’s business. This requires
maintaining the confidence of authority, customers, creditors and the general marketplace.
2. Compliance Risk - Risk of loss due to failure of compliance with key Regulations governing
the
company’s operations.
3. Operations Risk - Risk of loss resulting from inadequate or failed internal processes,
people and
systems, or from external events.
4. Legal Risk - Risk of loss due to any of the above risks or combination thereof resulting
in the
failure to comply with Law and having a negative legal impact on the Company. The specific types of
negative legal impacts could arise by way of fines, confiscation of illegal proceeds, and
suspension/termination of licences by the regulators, criminal liability, etc.
5. Financial Risk - Risk of loss due to any of the above risks or combination thereof
resulting in
negative financial impact on the Company.
AML/CFT Governance Framework structure
As required by government guidelines, company’s AML Framework is broadly divided into the
following main components:
1. AML/KYC Standards;
2. Appointment of Designated Director / Principal Compliance Officer;
3. Recruitment and training of employees/agents;
4. Internal Control/Audit;
AML/KYC Standards
Basic Due Diligence [Know Your Customer (KYC)]
Keeping in view the specific requirements of the guidelines issued by RBI and other
regulatory bodies and considering the potential threat of usage of financial services by a money
launderer, the company shall make reasonable efforts to determine the true identity of all Merchants
by doing proper Merchant Due Diligence (MDD). Effective procedures should be put in place to obtain
requisite details for proper identification of new customers.
1. Agents / Financial Consultant’s (FCs) shall be required to provide information to indicate any
behavioural aspects of a Merchant that are found to be suspicious at the time of their interaction.
2. Special attention will be given to all complex, unusually large transactions and all unusual
patterns which have no apparent economic or visible lawful purpose.
3. Transact Bridge will not enter into a contract with a Merchant whose identity matches with any
person with known criminal background or with banned entities and those reported to have links with
terrorists or terrorist organisations. Merchant’s name screening will be done daily against the
negative list. In case any matching records are identified, it will be reported to the relevant
authority.
4. In case of receipt of order to freeze / unfreeze account / hold merchant fund is received under
section 51A of the UAPA (The Unlawful Activities (Prevention) Act 1967), it will be implemented
without prior notice to the designated individuals / entities.
5. Measures will be taken to identify beneficial ownership in case of non-individual customers.
Procedure for determining beneficial owner
(a) Where the client is a company, the beneficial owner is the natural person(s), who,
whether acting alone or together, or through one or more juridical person, has a controlling
ownership interest or who exercises control through other means.
Explanation.- For the purpose of this subclause- "Controlling ownership interest" means ownership of
or entitlement to more than twenty-five percent of shares or capital or profits of the company;
"Control" shall include the right to appoint majority of the directors or to control the management
or policy decisions including by virtue of their shareholding or management rights or shareholders
agreements or voting agreements;
(b) Where the client is a partnership firm, the beneficial owner is the natural person(s), who,
whether acting alone or together, or through one or more juridical person, has ownership
of/entitlement to more than fifteen percent of capital or profits of the partnership;
(c) Where the client is an unincorporated association or body of individuals, the beneficial owner
is
the natural person(s), who, whether acting alone or together, or through one or more juridical
person, has ownership of or entitlement to more than fifteen percent of the property or capital or
profits of such association or body of individuals;
(d) Where no natural person is identified under (a) or (b) or (c) above, the beneficial owner is the
relevant natural person who holds the position of senior managing official;
(e) Where the client is a trust, the identification of beneficial owner(s) shall include
identification of the author of the trust, the trustee, the beneficiaries with fifteen percent or
more interest in the trust and any other natural person exercising ultimate effective control over
the trust through a chain of control or ownership; and
(f) Where the client or the owner of the controlling interest is a company listed on a stock
exchange, or is a subsidiary of such a company, it is not necessary to identify and verify the
identity of any shareholder or beneficial owner of such companies.
When should KYC be done?
1. New Customers: a) In case of new contracts, KYC / CDD should be done before entering into
any
contract with a new customer.
2. Ongoing basis: KYC should also be carried out at the claim payout stage and at times when
additional top up remittances are inconsistent with the customer known profile. Any change which is
inconsistent with the normal and expected activity of the customer, further KYC processes and / or
action as considered necessary.
Risk Profile of the Customer
As financial transactions conducted by the customers are of a very high magnitude.
Regulations require the Transact Bridge to monitor all transactions there under for any suspected
incident of money laundering. However, considering the spirit as well as the requirements under the
regulations, the monitoring efforts are directed more towards the customers and transactions with
higher risk of money laundering, being the Risked Based Approach (RBA) for monitoring and controls.
Adopting a RBA implies the adoption of a risk management process for dealing with Money Laundering
(ML) / Terrorist Financing (TF), keeping in mind the magnitude of risk involved.
A risk analysis would be performed to determine where the ML/TF risks are the greatest based on
customers, products and services, including delivery channels, and geographical locations. They can
change over time, depending on how circumstances develop, and how threats evolve, and our controls
would also change accordingly. This process thus encompasses recognizing the existence of the
risk(s), undertaking an assessment of the risk(s) and developing strategies to manage and mitigate
the identified ML risks.
Enhanced due diligence
Accordingly, customer’s source of funds, his estimated net worth etc., shall be
appropriately documented and Transact Bridge shall obtain income proofs and details of sources of
funds for all policies as specified by the Company from time to time.
However, the Transact Bridge will have power to prescribe rules / limits etc. for any particular
payment mode, or to disallow any payment mode(s) for any one or more channel.
Prohibition from “Tipping off”
Employees (permanent and temporary) are prohibited (should maintain strict confidentiality)
from disclosing the fact that a Suspicious Transactions Report or related information of a Customer/
prospect is being reported or provided to the LEA.
eRecord Keeping
Transact Bridge will maintain the records (either in electronic or in paper form) of types
of transactions mentioned under Rules 3 and 4 of PMLA Rules 2005 and the copies of the Suspicious
Transactions reports submitted to LEA’s as well as those relating to the verification of identity of
customers for a period of 5 years in order to enable Transact Bridge to comply swiftly with
information requests from the competent authorities. Such records shall be sufficient to permit
reconstruction of transactions if necessary, as an evidence for prosecution of criminal activity.
Transact Bridge will retain the records of those contracts with the Merchants, Remitted funds for a
period of at least 5 years after that settlement. Records pertaining to all other transactions, (for
which the Company is obliged to maintain records under other applicable Legislations / Regulations /
Rules) the Company will retain records as provided in the said Legislations / Regulations / Rules
but not less than 5 years from the date of end of the business relationship with the Merchant.
The Designated Director/ Compliance Officer and staff assisting in execution of AML guidelines
should have timely access to Merchant identification data, other KYC information and records.
The Designated Director/Compliance Officer shall
1. Implementation of the AML Program effectively, including monitoring compliance by the
company’s insurance agents with their obligations under the program.
2. Ensure that employees and agents of the Transact Bridge have appropriate resources and are well
trained to address questions regarding the application of the program in light of specific facts.
3. Be responsible for regulatory reporting, as prescribed under the government of India guidelines,
Suspicious Transactions.
Internal Control/Audit
Transact Bridge internal audit / inspection departments shall verify on a regular basis,
compliance with policies, procedures and controls relating to money laundering activities
Review of AML Framework
The AML framework shall be reviewed at least annually and changes effected based on
experience and regulatory changes shall be incorporated in the same.