Policy on Anti- Money Laundering


Money Laundering: An activity by which illegal funds and assets are converted into legitimate funds and assets by concealing the source of such funds, thereby promoting terrorist activities:

benefit_bullet Introduction

The Rules and Regulations framed out under the Anti-Money Laundering standard in order to prevent entry of entry of illegal money into the financial system and to combat Financing of Terrorism is called the Prevention of Money Laundering Act, 2002 (PMLA 2002). It is one of the legal frame-work put in place to combat Money Laundering (ML) and Terrorist Financing (TF) activities and came into force with effect from 1st of July 2005. Pursuant to amendments made to the PMLA and Rules made thereunder, updated guidelines in the context of recommendations made by Financial Action Task force (FATF) on Anti-Money Laundering standards should be taken into consideration as and when required. Global measures taken to combat drug trafficking, terrorism and other organized and serious crimes have all emphasized the need for financial institutions, including securities market intermediaries, to establish internal procedures that effectively serve to prevent and impede Money Laundering (ML) and Terrorist Financing (TF). The PMLA 2002 is in line with these measures and mandates that all intermediaries ensure the fulfilment of the aforementioned obligations.

The PMLA 2002 imposes obligations on all the financial market intermediaries to verify the identity of the client, maintain records and furnish information to FIU-IND.

In view of the above a procedure has been framed out as mentioned herebelow, which is binding on all the employees of the organisation. The procedure outlines the steps that should be implemented in order to discourage and identify any Money Laundering (ML) and Terrorist Financing (TF) activities. The relevance and usefulness of these procedures will be kept under review and it may be necessary to amend the same from time to time.

benefit_bullet Objective

Money Laundering has become one of the major concerns for the financial community the world over. It is being done through any transactions or a series of transactions that seek to conceal or disguise the nature or source of proceeds derived from illegal activities.

The objective of this document/policy is to have in place adequate policies, practices and procedures that promote high ethical and professional standards and prevent the Company from being used intentionally or unintentionally by criminal elements. At the same time it may also be ensured that the clients are not unnecessarily harassed or put to any difficulty.

A sound KYC not only contributes to the intermediary’s overall safety and soundness, they also protect the integrity of the financial system by reducing the likelihood of an intermediaries becoming vehicles for Money Laundering (ML), Terrorist Financing (TF) and other unlawful activities.

benefit_bullet Applicability

The directive describes how to maintain the records of transactions and the criteria for terming any particular transaction to be suspicious under the Prevention of Money Laundering Act, 2002. It also describes various steps to be ensured strictly while processing the instructions.

As per the provisions of the PMLA, all intermediaries associated with the finance industry as well as the securities market and registered under Section 12 of the SEBI Act, shall have to maintain a record of all the transactions; the nature and value of which has been prescribed as follows:

It may, however, be clarified that for the purpose of suspicious transactions report, apart from ‘transactions integrally connected’, ‘transactions remotely connected or related’ shall also be considered.

Though the directives lay down the minimum requirement, it is emphasized that we may, according to our requirements, ask for additional details and/or documents from the client at any time, so as to comply with the aforementioned requirement.

We at PRSSB Ltd has resolved, as part of our internal policy, to take adequate measures to prevent money laundering. Hence, it is to be ensured that the above directive is implemented and adhered to strictly by all concerned in all means. At the same time it is also to be ensured that the details of the clients viz; information relating to the account, transaction undertaken, etc., which are very vital and sensitive in nature should be handled in a confidential manner and the same should be provided only to the relevant authorities as required under the Act, Rules and Regulations of Anti Money Laundering or SEBI or under the Law.

benefit_bullet Implementation

It may be noted by all that Mr. Jigen P. Sharedalal is the Designated Director. Also Mr. Pragnesh D. Shah and Mr. Chintan J. Patel have been appointed as the Principal Officer for Trading and Depository respectively under the aforementioned act and shall be responsible for the compliance of the provisions of the PMLA and AML guidelines. The details of the Principal Officer, as required under the PMLA 2002, has been intimated to the Financial Intelligence Unit – India (FIU-IND) and any changes in the same shall also be intimated as and when required. Alerts provided by the exchanges and depository are to be checked and verified on daily basis and the same are to be responded on timely manner on various portals of the exchanges and depository. If necessary, appropriate actions are to be taken for the said alerts.

The main aspect of PMLA is the Customer Due Diligence (CDD) process which includes the following:

Registering a client for opening of their Demat account or a trading account is the primary stage when the client starts their association with us. This is a very crucial and an important stage of our association with a client. If the intention of the client is judged in the beginning itself, then preventive steps can be taken at the preliminary stage, thereby preventing heavy damage to the whole system. However, at certain times, it is very difficult to judge the intentions of a person. Therefore, it is necessary to identify the client by collecting informations and verifying them through various reliant sources to make sure the authenticity of the client and that the client will be the ultimate beneficial owner of the securities that he/she would be transacting in through us.

The process adopted for doing the above is called ‘Know Your Client’ (KYC). It helps us in preventing ourselves to be used, intentionally or unintentionally by criminal elements for money laundering activities.

Keeping in line with the requirement of the above mentioned policy, as per the requirement of SEBI intimated through their circular ref. no. ISD/CIR/RR/AML/1/06, dated 18th January, 2006, CIR/ISD/AML/3/2010, dated 31st December, 2010 and various other circulars and guidelines issued from time to time, we have framed out a procedure as laid down here below;

A] Customer Acceptance Policy (CAP)

B] Customer Identification Procedure (CIP)

C] Risk Management (RM)

D] Monitoring of Clients’ transactions

E] Record Keeping

  1. All records are to be maintained and kept in compliance to the SEBI Act, 1992, Rules and Regulations made there-under, PML Act, 2002 as well as other relevant legislation, Rules, Regulations, Exchange Bye-laws and circulars, etc. being issued by the relevant authorities.
  2. Records maintained should be sufficient enough to permit the reconstruction of any individual transaction, as and when necessary.
  3. For such reconstruction, the following information should be retained for the accounts of the clients in order to maintain a satisfactory audit trail;
    1. Beneficial Owner of the account
    2. Volume of funds and securities flowing through the account and
    3. For selected transactions;
      1. The origin of the funds and securities
      2. The form in which the funds were offered or withdrawn, e.g. cash, cheque, etc.
      3. The identity of the person undertaking the transaction
      4. The destination of the funds
      5. The form of instruction and authority.

F] Suspicious Transaction Identification and Reporting (STR)

Any transaction or a series of transactions that were done without having any economic rationale or bona fide purpose behind it or in an unusual or unjustified circumstance is said to be a Suspicious Transaction.

A list of few circumstances which may be in the nature of suspicious transactions is given below.

  1. Clients whose identity verification seems difficult or client appears not to co-operate.
  2. Asset management services for clients where the source of the funds is not clear or not in keeping with clients apparent standing /business activity.
  3. Clients in high-risk jurisdictions or clients introduced by banks or affiliates or other clients based in high risk jurisdictions.
  4. Large number of accounts having a common account holder/operator, introducer or authorised signatory with no rationale.
  5. Non-face to face client.
  6. Sudden activity in a Dormant account.
  7. Substantial increase in business turnover/volume without any apparent cause or reason.
  8. The transaction undertaken is inconsistent with the client’s income range/financial status/risk profile.
  9. Large volume transaction in various ‘Z’ group and/or ‘T’ group stocks.
  10. Off-market transfer to apparently unrelated third party account or multiple accounts.
  11. Off-market transfers in large quantity.
  12. Unusual transactions by Clients of Special Category (CSC) and Politically Exposed Persons (PEPs).
  13. Source of fund is unclear or details of the same are not made available.
  14. Fund transferred from multiple/various accounts for each transaction.
  15. Any activity in the account for which a satisfactory explanation is not received.

At times, though it may not seem to be suspicious in nature, transactions may have been undertaken to arouse some suspicion and thereby divert the attention from the actual deviant activity. Under such circumstance, transactions surrounding such above mentioned transaction should also be verified thoroughly. Sometimes, people with malicious intention would attempt to undertake a transaction and would abort it midway due to any reasons. Such failed attempts should also be verified and further details, if required, should be asked for from the concerned clients.

If suspicious transactions are observed, and after its subsequent verification, if any untoward matter has been unearthed from the verification, such activity should immediately be brought to the notice of the Principle Officer, who in turn will take up the matter suitably and inform the appropriate authority i.e. the Financial Intelligence Unit – India.

It is very important that suspicious transaction, if any, is emanating at our end, the same should be dealt with seriously and suitable action taken as per the requirement of PMLA 2002. Besides, though it is understandably difficult and beyond ones capacity, step should be taken to ensure that such transaction does not recur at out end.

tick Other directives/measures of PMLA and AML guidelines to be taken in consideration for preventing Money Laundering (ML) and Terrorist Financing (TF):

1] List of Designated Individuals & Entities

An updated list of individuals and entities which are subject to various sanction measures such as freezing of assets/accounts, denial of financial services etc., as approved by the Security Council Committee established pursuant to various United Nations' Security Council Resolutions (UNSCRs) can be accessed at its website at http://www.un.org/sc/committees/1267/consolist.shtml. Our employees ensure that accounts are not opened in the name of anyone whose name appears in said list. For that purpose the Company has started process for installation of software called “Analyser and Control – PMLA (SOS)” in the month of July 2019 to get alerts after filtering above mentioned lists provided by various authorities. It continuously scans all existing accounts to ensure that no account is held by or linked to any of the entities or individuals included in the list. Full details of accounts bearing resemblance with any of the individuals/entities in the list shall immediately be intimated to SEBI and FIU-IND.

2] Hiring of Employees

We have adequate screening procedures in place to ensure high standards when hiring employees. To identify the key positions within our organization structures regard to the risk of money laundering and terrorist financing and to ensure the employees taking up such key positions are suitable and competent to perform their duties.

3] Employees’ Training

We have an ongoing employee training programme so that the members of the staff are adequately trained in AML and CFT procedures. Training requirements have specific focuses for frontline staff, back office staff, compliance staff, risk management staff and staff dealing with new clients.

The above mentioned points are preliminary guideline for the policy. The relevance and usefulness of these guidelines will be reviewed and amendments made from time to time, as per the circulars issued by SEBI and FIU-India, in order to further strengthen the system.