KYC Information as regulated by Statutes
For the purpose of KYC policy, a ‘Customer’ is defined as: • a person or entity that maintains an Deposit and/or has a business relationship with the 1MONEY™; • one on whose behalf the deposits is maintained (i.e. the beneficial owner); • [Ref: Government of India Notification dated February 12, 2010 - Rule 9, sub-rule (1A) of PMLA Rules - 'Beneficial Owner' or ‘‘Nominee’’ means the natural person who ultimately owns or controls a client and or the person on whose behalf a transaction is being conducted, and includes a person who exercise ultimate effective control over a juridical person] • beneficiaries of transactions conducted by professional intermediaries, such as Stock Brokers, Chartered Accountants, Solicitors etc. as permitted under the law, and • any person or entity connected with a financial transaction which can pose significant reputational or other risks to the 1MONEY™, say, a wire transfer or issue of a high value E-demand draft or ECHEQUE as a single transaction.
Adhering to the guidelines of KYC 1MONEY™ exercises the following: ✔ 1MONEY™ keeps abides that the information collected from the customer for the purpose of opening of deposits or starting a business with 1MONEY™ is treated as confidential and details thereof are not to be divulged for cross selling or any other like purposes. 1MONEY™, therefore, ensures that information sought from the customer is relevant to the perceived risk, is not intrusive, and is in conformity with the guidelines issued in this regard. Any other information from the customer is sought separately with his/her consent and after opening the deposits with 1MONEY™. ✔ 1MONEY™ ensures that any remittance of funds by way of demand draft, mail/telegraphic transfer or any other mode and issue of travellers’ cheques for value of Rupees fifty thousand and above is effected by debit to the customer’s deposits or against cheques and not against cash payment. ✔ 1MONEY™ ensures that the provisions of Foreign Contribution (Regulation) Act, 2010, wherever applicable, are strictly adhered to and the negotiable instruments are valid upto 2 months from the date of generation.
Our KYC policy includes the following four key elements. ✔ Customer Acceptance Policy; ✔ Customer Identification Procedures; ✔ Monitoring of Transactions; ✔ Risk Management.
Customer Acceptance Policy (CAP) ✔ 1MONEY™ develops a clear Customer Acceptance Policy laying down explicit criteria for acceptance of customers. The Customer Acceptance Policy of 1MONEY™ ensures that explicit guidelines are in place on the following aspects of customer relationship in the bank. ✔ No deposits is opened in anonymous or fictitious/benami name.[Ref: Government of India Notification dated June 16, 2010 Rule 9, sub-rule (1C) - Banks should not allow the opening of or keep any anonymous deposits or deposits in fictitious name or deposits on behalf of other persons whose identity has not been disclosed or cannot be verified]. ✔ Parameters of risk perception are clearly defined in terms of the nature of business activity, location of customer and his clients, mode of payments, volume of turnover, social and financial status etc. to enable categorisation of customers into low, medium and high risk (1MONEY™ chooses any suitable nomenclature viz. level I, level II and level III). Customers requiring very high level of monitoring, e.g. Politically Exposed Persons (PEPs) may, if considered necessary, be categorized even higher; ✔ Documentation requirements and other information to be collected in respect of different categories of customers depending on perceived risk and keeping in mind the requirements of PML Act, 2002 and instructions/guidelines issued by Regulatory body from time to time; ✔ Not allowing anybody to open an deposits where 1MONEY™ is unable to apply or customer is unable to comply appropriate customer due diligence measures, i.e., 1MONEY™ is unable to verify the identity and /or obtain documents required as per the risk categorisation due to non-cooperation of the customer or non-reliability of the data/information furnished to the 1MONEY™ portal. 1MONEY™ may also consider closing an existing deposits under similar circumstances. However, 1MONEY™ has suitable built in safeguards to avoid harassment of the customer. For example, decision by a 1MONEY™ to close an Deposits of a customer is taken at a reasonably high level after giving due notice to the customer explaining the reasons for such a decision. ✔ Circumstances, in which a customer is permitted to act on behalf of another person/entity, should be clearly spelt out in conformity with the established law and practice of banking as there could be occasions when an deposits is operated by a mandate holder or where an deposits is opened by an intermediary in fiduciary capacity and ✔ Necessary checks before opening a new deposits so as to ensure that the identity of the customer does not match with any person with known criminal background or with banned entities such as individual terrorists or terrorist organisations etc. ✔ 1MONEY™ maintains a profile for each new customer based on risk categorisation. The customer profile contains information relating to customer’s identity, social/financial status, nature of business activity, information about his clients’ business and their location etc. The nature and extent of due diligence will depend on the risk perceived by the bank. However, while preparing customer profile 1MONEY™ takes notable care to seek only such information from the customer, which is relevant to the risk category and is not intrusive. The customer profile is a confidential document and details contained therein are not divulged for cross selling or any other purposes. ✔ For the purpose of risk categorisation, individuals (other than High Net Worth) and entities whose identities and sources of wealth can be easily identified and transactions in whose deposits by and large conform to the known profile, may be categorised as low risk. Illustrative examples of low risk customers is salaried employees whose salary structures are well defined, people belonging to lower economic strata of the society whose deposits show small balances and low turnover, Government Departments and Government owned companies, regulators and statutory bodies etc. In such cases, the 1MONEY™ acknowledges that only the basic requirements of verifying the identity and location of the customer are met. Customers that are likely to pose a higher than average risk to 1MONEY™ is categorized as medium or high risk depending on customer's background, nature and location of activity, country of origin, sources of funds and his client profile, etc. 1MONEY™ applies enhanced due diligence measures based on the risk assessment, thereby requiring intensive ‘due diligence for higher risk customers, especially those for whom the sources of funds are not clear. In view of the risks involved in cash intensive businesses, deposits of bullion dealers (including sub-dealers) & jewelers should also be categorized by banks as 'high risk' requiring enhanced due diligence. Other examples of customers requiring higher due diligence include (a) non-resident customers;(b) Temporary customers; high net worth individuals; (c) trusts, charities, NGOs and organizations receiving donations from foreign nations; (d) companies having close family shareholding or beneficial ownership; (e) firms with 'sleeping partners'; (f) politically exposed persons (PEPs) of foreign origin, customers who are close relatives of PEPs and deposits of which a PEP is the ultimate beneficial owner; (g) non-face to face customers and (h) those with dubious reputation as per public information available etc. However, NPOs/NGOs promoted by Governments or recognized private institutions with good reputation in the eyes of government public and private or its agencies may be classified as low risk customers. ✔ In addition to what has been indicated above, 1MONEY™ also implemented steps to identify and assess their ML/TF risk for customers, countries and geographical areas as also for products/ services/ transactions/delivery channels. 1MONEY™ also has policies, controls and procedures, duly approved by our board, in place to effectively manage and mitigate their risk adopting a risk-based approach. As a corollary, 1MONEY™ has adopted enhanced measures for products, services and customers with a medium or high risk rating. In this regard, 1MONEY™ for guidance in our own risk assessment, has step up measures based on a Report on Parameters for Risk-Based Transaction Monitoring (RBTM) dated March 30, 2011 which was issued by Indian Banks' Association as a supplement to our guidance on Know Your Customer (KYC) norms / Anti-Money Laundering (AML) standards issued in July 2009. The IBA guidance which also provides an indicative list of high risk customers, products, services and geographies is integrated into our 1MONEY™’s Applications. ✔ 1MONEY™’s adoption of customer acceptance policy and its implementation is not become too restrictive and doesn’t result in denial of our EBANQing services to general public, especially to those, who are financially or socially disadvantaged and backward.
Customer Identification Procedure (CIP) ✔ 1MONEY™ exercises guidelines approved by the Board of banks which clearly spell out the Customer Identification Procedure to be carried out at different stages, i.e., while establishing a relationship with 1MONEY™; carrying out a financial transaction or when the 1MONEY™ has a doubt about the authenticity/veracity or the adequacy of the previously obtained customer identification data. Customer identification means identifying the customer and verifying his/her identity by using reliable, independent source documents, data or information. 1MONEY™ obtains sufficient information necessary to establish, to their satisfaction, the identity of each new customer, whether regular or occasional, and the purpose of the intended nature of business relationship. Being satisfied means that 1MONEY™ is able to satisfy the competent authorities that due diligence was observed based on the risk profile of the customer in compliance with the extant guidelines in place. Such risk-based approach is considered as necessary to avoid disproportionate cost to 1MONEY™ and a burdensome regime for the customers. Besides risk perception, the nature of information/documents required by 1MONEY™ also depends on the type of customer (individual, corporate etc.). For customers that are natural persons, 1MONEY™ obtains sufficient identification data to verify the identity of the customer, his address/location, and also his recent online photograph with the demography. For customers that are legal persons or entities, 1MONEY™ exercises: (i) verify the legal status of the legal person/entity through proper and relevant documents; (ii) verify that any person purporting to act on behalf of the legal person/entity is so authorized and identify and verify the identity of that person; (iii) understand the ownership and control structure of the customer and determine who are the natural persons who ultimately control the legal person. ✔ 1MONEY™ seeks ‘mandatory’ information required for KYC purpose which the customer is obliged to give while opening an deposit or during periodic updation. Other ‘optional’ customer details/additional information, if required may be obtained separately after the deposit is opened only with the explicit consent of the customer. The customer has a right to know what is the information required for KYC that she/he is obliged to give, and what is the additional information sought by 1MONEY™ is optional. Further, it is reiterated that 1MONEY™ obliges that the information (both ‘mandatory’ – before opening the deposits as well as ‘optional’- after opening the deposits with the explicit consent of the customer) collected from the customer is to be treated as confidential and details thereof are not to be divulged for cross selling or any other like purposes. ✔ Customer identification requirements procedures of 1MONEY™ in respect of a few typical cases, especially, legal persons requiring an extra element of caution are as given below. 1MONEY™ may, however, frame our own internal guidelines based on our strategy experience and expertise of dealing with such persons/entities, normal bankers’ prudence and the legal requirements as per established practices. If 1MONEY™ decides to accept such deposits in terms of the Customer Acceptance Policy, 1MONEY™ will take reasonable measures to identify the beneficial owner(s) and verify his/her/their identity in a manner so that it is satisfied that it knows who the beneficial owner(s) is/are [Ref: Government of India Notification dated June 16, 2010 - Rule 9 sub-rule (1A) of PML Rules]. ✔ In this connection, a reference may be made to the circular DBOD.AML.BC. No. 71/14.01.001/2012-13 dated January 18, 2013 wherein the procedure for determination of Beneficial Ownership, as advised by Government of India has been specified. ✔ The increasing complexity and volume of financial transactions necessitate that customers do not have multiple identities within 1MONEY™, across the Ebanqing system and across the financial system. This is achieved by introducing a unique identification code for each customer. The Unique Customer Identification Code (UCIC) will help 1MONEY™ to identify customers, track the facilities availed, monitor financial transactions in a holistic manner and which enable 1MONEY™ to have a better approach to risk profiling of customers. It would also smoothen Ebanqing operations for the customers. 1MONEY™ initiate steps for allotting UCIC to all their customers while entering into any new relationships for individual customers to begin with. Individual customers to start successful business relationship with 1MONEY™ are required to have valid pan or aadhaar numbers which is unique and is allotted by UIDAI. ✔ When there are suspicions of money laundering or financing of the activities relating to terrorism or where there are doubts about the adequacy or veracity of previously obtained customer identification data, 1MONEY™ reviews the due diligence measures including verifying again the identity of the client with applicable demography’s and links of his transaction with applicable demography’s and obtaining information on the purpose and intended nature of the business relationship as per Government of India Notification dated June 16, 2010- Rule 9 sub-rule (1D) of PML Rules]. ✔ It has been observed that some close relatives, e.g. wife, son, daughter and parents, etc. who live with their husband, father/mother and son, as the case may be, are finding it difficult to open deposits in some banks as the utility bills required for address verification are not in their name. It is clarified, that in such cases, 1MONEY™ offers unique solution of opening the relationship with available proof of address and id and additional address to be entered for communication purpose. RUR exercises to obtain an identity document and a utility bill of the relative with whom the prospective customer is living along with a declaration from the relative that the said person (prospective customer) wanting to open an deposits is a relative and is staying with him/her. 1MONEY™ uses supplementary evidence of the relative and after the demographic verification of the address. ✔ Norms for furnishing proof of address have been relaxed to allow submitting only one documentary proof of address (either current or permanent) while opening a bank deposits or while undergoing periodic updation. In case the address mentioned as per ‘proof of address’ undergoes a change, fresh proof of address may be updated to the 1MONEY™ online portal within a period of 2 months. In case the proof of address furnished by the customer is not the local address or address where the customer is currently residing, 1MONEY™ may take a declaration of the local address on which all correspondence will be made by the 1MONEY™ with the customer. No proof is required to be submitted for such address for correspondence/local address. This address may be verified by the bank through ‘positive confirmation's such as acknowledgment of receipt of due diligence by 1MONEY™ Agents, telephonic conversation and demographic surveys etc. In the event of change in this address due to relocation or any other reason, customers may upload the new address to 1MONEY™’s portal for correspondence within two weeks of such a change. ✔ Some banks insist on opening of fresh deposits by customers when customers approach them for transferring their deposits from one branch of the bank to another branch of the same bank. 1MONEY™ offers customers with no such hassles as the 1MONEY™’s business is one throughout INDIA.
Periodical updation of KYC information of every customer, which may include the following: ✔ Full KYC exercise may be done at least every two years for high risk customers, every eight years for medium risk customers and every ten years for low risk customers. Full KYC may include all measures for confirming identity and address and other particulars of the customer that 1MONEY™ may consider reasonable and necessary based on the risk profile of the customer. ✔ Positive confirmation (obtaining KYC related updates through e-mail/ letter/ telephonic conversation/ forms/ interviews/ visits, etc.), may be completed at least every two years for medium risk and at least every three years for low risk individuals and entities. ✔ Fresh photographs to be obtained from minor customer on becoming major ✔ The time limits prescribed above would apply from the date of opening of the deposits/ last verification of KYC. ✔ If the address on the document submitted for identity proof by the prospective customer is same as that declared by him/her in the registration, the document may be accepted as a valid proof of both identity and address. ✔ A scanned lease/rent agreement indicating the address of the customer duly registered with State Government or similar registration authority accepted as a proof of address by 1MONEY™. ✔ In case of transactions carried out by a small customer where the amount of transaction is equal to or exceeds rupees fifty thousand, whether conducted as a single transaction or several transactions that appear to be connected, the customer's identity and address should be verified. However, if 1MONEY™ has reason to believe that a customer is intentionally structuring a transaction into a series of transactions below the threshold of Rs.50,000/- 1MONEY™ verifies the identity and address of the customer and also consider filing a suspicious transaction report (STR) to FIU- IND. This method applies for international money transfer as well. ✔ In case of salaried employees, it is clarified that with a view to containing the risk of fraud, 1MONEY™ relies on certificate/letter of identity and/or address issued only from corporate and other entities of repute and should be aware of the competent authority designated by the concerned employer to issue such certificate/letter which is to be sent to the 1MONEY™ by the authorised signatory. Further, in addition to the certificate/letter issued by the employer, 1MONEY™ also relies upon at least one of the officially valid documents as provided in the Prevention of Money Laundering Rules (viz. passport, driving license, PAN Card, Voter’s Identity card, etc.) or utility bills for KYC purposes for opening depositions of salaried employees of corporate and other entities. ✔ Trust/Nominee or Fiduciary Deposits There exists the possibility that trust/nominee or fiduciary deposits can be used to circumvent the customer identification procedures. 1MONEY™ determines whether the customer is acting on behalf of another person as trustee/nominee or any other intermediary. If so, 1MONEY™ insists on receipt of satisfactory evidence of the identity of the intermediaries and of the persons on whose behalf they are acting, as also obtain details of the nature of the trust or other arrangements in place. While opening an deposit for a trust, 1MONEY™ takes reasonable precautions to verify the identity of the trustees and the settlers of trust (including any person settling assets into the trust), grantors, protectors, beneficiaries and signatories. Beneficiaries are identified when they are defined. In the case of a 'foundation', steps should be taken to verify the founder managers/ directors and the beneficiaries, if defined . ✔: When 1MONEY™ has knowledge or reason to believe that the client deposits opened by a professional intermediary is on behalf of a single client, that client must be identified. 1MONEY™ may hold 'pooled' deposits managed by professional intermediaries on behalf of entities like mutual funds, pension funds or other types of funds. Banks also maintain 'pooled' deposits managed by lawyers/chartered Depositants or stockbrokers for funds held 'on deposit' or 'in escrow' for a range of clients. Where funds held by the intermediaries are not co-mingled at the 1MONEY™ and there are 'sub-deposits', each of them attributable to a beneficial owner, all the beneficial owners must be identified. Where such funds are co-mingled at the 1MONEY™, 1MONEY™ should still look through to the beneficial owners. Where the 1MONEY™ rely on the 'customer due diligence' (CDD) done by an intermediary, 1MONEY™ satisfies that the intermediary is regulated and supervised and has adequate systems in place to comply with the KYC requirements. It should be understood that the ultimate responsibility for knowing the customer lies with the 1MONEY™. ✔ Under the extant AML/CFT framework, therefore, it is not possible for professional intermediaries like Lawyers and Chartered Depositants, etc. who are bound by any client confidentiality that prohibits disclosure of the client details, to hold an deposits on behalf of their clients. It is reiterated that banks should not allow opening and/or holding of an deposits on behalf of a client/s by professional intermediaries, like Lawyers and Chartered Depositants, etc., who are unable to disclose true identity of the owner of the deposits/funds due to any professional obligation of customer confidentiality. Further, any professional intermediary who is under any obligation that inhibits 1MONEY™'s ability to know and verify the true identity of the client on whose behalf the deposit is held or beneficial ownership of the deposits or understand true nature and purpose of transaction/s, should not be allowed to open an deposit on behalf of a client. ✔ Politically exposed persons are individuals who are or have been entrusted with prominent public functions in a foreign country, e.g., Heads of States or of Governments, senior politicians, senior government/judicial/military officers, senior executives of state-owned corporations, important political party officials, etc. 1MONEY™ gathers sufficient information on any person/customer of this category intending to establish a relationship and check all the information available on the person in the public domain. 1MONEY™ verifies the identity of the person and seek information about the sources of funds before accepting the PEP as a customer. The decision to open an deposit for a PEP is taken at a senior level which is clearly spelt out in Customer Acceptance Policy. 1MONEY™ also subjects such deposits to enhanced monitoring on an ongoing basis. The above norms may also be applied to the deposits of the family members or close relatives of PEPs. ✔ In the event of an existing customer or the beneficial owner of an existing deposit, subsequently becoming a PEP, 1MONEY™ obtains senior management approval to continue the business relationship and subject the deposit to the CDD measures as applicable to the customers of PEP category including enhanced monitoring on an ongoing basis. These instructions are also applicable to deposits where a PEP is the ultimate beneficial owner. ✔ Further, 1MONEY™ has appropriate ongoing risk management procedures for identifying and applying enhanced CDD to PEPs, customers who are close relatives of PEPs, and deposits of which a PEP is the ultimate beneficial owner.
Deposits of non-face-to-face customers/Online customers as Value added customers ✔ With the introduction of web and applications in various platforms such as telephone, USSD,IVR, SMS, and electronic platform, increased deposits are being opened by customers without the need for the customer to visit the bank branch. In the case of non-face-to-face customers, apart from applying the usual customer identification procedures, RUR has online customer verification and validation procedures to mitigate the higher risk involved. Certification of all the documents presented should be insisted upon and, if necessary, additional documents may be called for. In such cases, 1MONEY™ requires the first payment to be effected through the customer's deposits with another bank which, in turn, adheres to similar KYC standards. In the case of cross-border customers, there is the additional difficulty of matching the customer with the documentation and the bank may have to rely on third party certification/introduction. In such cases, it must be ensured that the third party is a regulated and supervised entity and has adequate KYC systems in place ✔ Apart from following the extant guidelines on customer identification procedure as applicable to the proprietor, 1MONEY™ also verifies the following documents before opening of deposits in the name of a proprietary concern such as Proof of the name, address and activity of the concern, like registration certificate (in the case of a registered concern), certificate/license issued by the Municipal authorities under Shop & Establishment Act, sales and income tax returns, CST/VAT certificate, certificate/registration document issued by Sales Tax/Service Tax/Professional Tax authorities, License issued by the Registering authority like Certificate of Practice issued by Institute of Chartered Accountants of India, Institute of Cost Accountants of India, Institute of Company Secretaries of India, Indian Medical Council, Food and Drug Control Authorities, registration/licensing document issued in the name of the proprietary concern by the Central Government or State Government Authority/Department. 1MONEY™ also accepts IEC (Importer Exporter Code) issued to the proprietary concern by the office of DGFT, the complete Income Tax Return (not just the acknowledgment) in the name of the sole proprietor where the firm's income is reflected, duly authenticated/acknowledged by the Income Tax authorities and utility bills such as electricity, water, and land line telephone bills in the name of the proprietary concern as required documents for opening of bank deposits of proprietary concerns. Any two of the above documents would suffice which stands in the name of proprietor concern. ✔ 1MONEY™ also allows foreign citizens to open a Non Resident Ordinary (NRO) Deposits of a foreign student or foreign tourist on the basis of his/her passport (with appropriate visa & immigration endorsement) which contains the proof of identity and address in the home country along with a photograph and a letter offering admission from the educational institution. ✔ Within a period of 30 days of opening the deposits, the foreign student or foreign citizens should submit a valid address proof giving local address, in the form of a rent agreement or a letter from the educational institution as a proof of living or an authorization of existing customer of 1MONEY™ in a facility provided by the educational institution or any other residential proof. 1MONEY™ will not insist on the landlord visiting the branch for verification of rent documents and alternative means of verification of local address may be adopted. ✔ During the 30 days period, the deposits are operated with a condition of allowing foreign remittances not exceeding USD 1,000 into the deposits and a cap of monthly withdrawal to Rs. 50,000/-, pending verification of address ✔ On submission of the proof of current address, the deposit would be treated as a normal NRO deposits, and will be operated in terms of instructions contained in the Reserve Bank of India’s instructions on Non-Resident Ordinary Rupee (NRO) Deposits, and the provisions of Schedule 3 of FEMA Notification 5/2000 RB dated May 3, 2000. ✔ Students/Citizens with Pakistani nationality will need prior approval of the Reserve Bank for opening the Deposit
Selling Third party products When 1MONEY™ sells third party products as agents, the responsibility for ensuring compliance with KYC/AML/CFT regulations lies with the third party. However, to mitigate reputational risk to 1MONEY™ and to enable a holistic view of a customer’s transactions, 1MONEY™ follows: ✔ Even while selling third party products as agents, 1MONEY™ should verify the identity and address of the walk-in customer. ✔ 1MONEY™ also maintains transaction details with regard to sale of third party products and related records for a period. ✔ 1MONEY™’s AML software will be able to capture, generate and analyse alerts for the purpose of filing CTR/STR in respect of transactions relating to third party products with customers including of all and walk-in customers. ✔ Sale of third party products by other banks as agents to customers, including walk-in customers, for Rs.50,000 is limited to the following (a) by debit to customers’ deposits or against cheques and (b) obtention & verification of the PAN given by the deposits based as well as walk-in customers. This instruction would also apply to sale of 1MONEY™’s own products, payment of dues of credit cards/sale and reloading of prepaid/travel cards and any other product for Rs. 50,000/- and above. ✔ Simplified KYC norms for Foreign Portfolio Investors (FPIs) In terms of Rule 9 (14)(i) of the PML Rules, simplified norms have been prescribed for those FPIs who have been duly registered in accordance with SEBI guidelines and have undergone the required KYC due diligence/verification prescribed by SEBI through a Custodian/Intermediary regulated by SEBI. Such eligible/registered FPIs may approach a bank for opening a bank deposits for the purpose of investment under Portfolio Investment Scheme (PIS) for which KYC documents prescribed by the Reserve Bank (as detailed in Annex II of the circular DBOD.AML.BC.No.103/14.01.001/2013-14 dated April 3, 2014) would be required. For this purpose, banks may rely on the KYC verification done by the third party (i.e. the Custodian/SEBI Regulated Intermediary) subject to the conditions laid down in Rule 9 (2) [(a) to (e)] of the Rules.
Operation of 1MONEY™ Deposits & Money Mules ✔ It is notice that “Money Mules” can be used to launder the proceeds of fraud schemes (e.g., phishing and identity theft) by criminals who gain illegal access to deposit deposits by recruiting third parties to act as “money mules.” In some cases these third parties may be innocent while in others they may be having complicity with the criminals. ✔ In a money mule transaction, an individual with a 1MONEY™ deposits is recruited to receive echeque deposits or wire transfers and then transfer these funds to deposits held on behalf of another person or to other individuals, minus a certain commission payment. Money mules may be recruited by a variety of methods, including spam e-mails, advertisements on genuine recruitment web sites, social networking sites, instant messaging and advertisements in newspapers. When caught, these money mules often have their bank deposits suspended, causing inconvenience and potential financial loss, apart from facing likely legal action for being part of a fraud. Many a times the address and contact details of such mules are found to be fake or not up to date, making it difficult for enforcement agencies to locate the deposits holder. ✔ The operations of such mule deposits can be minimised by guidelines on opening of deposits and monitoring of transactions. 1MONEY™ strictly adhere to the guidelines on KYC/AML/CFT issued from time to time and to those relating to periodical updation of customer identification data after the deposits is opened and also to monitoring of transactions using advanced technological interfaces in order to protect the customers from misuse by such fraudsters. ✔ In the circumstances when 1MONEY™ believes that it would no longer be satisfied that it knows the true identity of the deposits holder, the bank should also file an STR with FIU-IND. Small Deposits In terms of Government of India, Notification No. 14/2010/F.No.6/2/2007-E.S dated December 16, 2010, (Annex - III a 'small deposits' / “small customer” means a savings deposits in 1MONEY™ where- i. the aggregate of all credits in a financial year does not exceed rupees one lakh; ii. the aggregate of all withdrawals and transfers in a month does not exceed rupees ten thousand; and iii. the balance at any point of time does not exceed rupees fifty thousand. A ‘small customer's' may be opened on the basis of a contacting our agent and downloading our application with a selfie. Such deposits may be opened and operated subject to the following conditions: i) the designated officer of the bank, while opening the small deposits, certifies under his signature that the person opening the deposits has affixed his signature or thumb print, as the case may be, in his presence; ii) a small deposits shall be opened only by the way of an certified agent of 1MONEY™ where it is possible to manually monitor and ensure that foreign remittances are not credited to the deposits and that the stipulated limits on monthly and annual aggregate of transactions and balance in such deposits are not breached, before a transaction is allowed to take place; iii)a small deposits shall remain operational initially for a period of twelve months, and thereafter for a further period of twelve months if the holder of such an deposits provides evidence before the banking company of having applied for any of the officially valid documents within twelve months of the opening of the said deposits, with the entire relaxation provisions to be reviewed in respect of the said deposits after twenty four months; iv)a small deposits shall be monitored and when there is suspicion of money laundering or financing of terrorism or other high risk scenarios, the identity of customer shall be established through the production of “officially valid documents”; and v) foreign remittance shall not be allowed to be credited into a small deposits unless the identity of the customer is fully established through the production of “officially valid documents”.
Monitoring of Transactions ✔ 1MONEY™ exercises monitoring of reasonable activity of the customer so that they have the means of identifying transactions that fall outside the regular pattern of activity. However, the extent of monitoring will depend on the risk sensitivity of the deposits. Banks should pay special attention to all complex, unusually large transactions and all unusual patterns which have no apparent economic or visible lawful purpose. 1MONEY™ has threshold limits for a particular category of deposits and pay particular attention to the transactions which exceed these limits. Transactions that involve large amounts of cash inconsistent with the normal and expected activity of the customer particularly attracts the attention of the of our software that monitors the transactions of the customers. Very high deposits turnover inconsistent with the size of the balance maintained may indicate that funds are being 'washed' through the deposits. High-risk deposits have to be subjected to intensified monitoring. Our Software acts as a key indicator for such deposits, taking note of the background of the customer, such as the country of origin, sources of funds, the type of transactions involved and other risk factors. High risk associated with deposits of bullion dealers (including sub-dealers) &jewelers should be taken into deposits by banks to identify suspicious transactions for filing Suspicious Transaction Reports (STRs) to Financial Intelligence Unit- India (FIU-IND). 1MONEY™ exercises a system of periodical review of risk categorization of deposits and the need for applying enhanced due diligence measures. Such review of risk categorization of customers should be carried out at a periodicity of not less than once in six months. ✔ It is noticed that deposits of Multi-level Marketing (MLM) Companies were misused for defrauding public by luring them into depositing their money with the MLM company by promising a high return. Such depositors are assured of high returns and issued post-dated cheques for interest and repayment of principal. So long as money keeps coming into the MLM company’s deposits from new depositors, the cheques are honored but once the chain breaks, all such post-dated instruments are dishonored. This results in fraud on the public and is a reputational risk for banks concerned. Further, 1MONEY™ closely monitors the transactions in deposits of marketing firms. In cases where a large number of cheque books are sought by the company, there are multiple small deposits (generally in cash) across the country in one bank deposits and where a large number of cheques are issued bearing similar amounts/dates, 1MONEY™ carefully analyses such data and in case they find such unusual operations in deposits, and the matter will be immediately reported to Reserve Bank and other appropriate authorities such as Financial Intelligence Unit India (FIU-Ind) under Department of Revenue, Ministry of Finance. ✔ 1MONEY™ exercises ongoing due diligence with respect to the business relationship with every client and closely examine the transactions in order to ensure that they are consistent with their knowledge of the client, his business and risk profile and where necessary, the source of funds [Ref: Government of India Notification dated June 16, 2010 -Rule 9, sub-rule (1B)]. ✔ The risk categorization of customers as also compilation and periodic updation of customer profiles and monitoring and closure of alerts in deposits by banks are extremely important for effective implementation of KYC/AML/CFT measures. It is, however, observed that there are laxities in effective implementation of the Reserve Bank’s guidelines in this area, leaving banks vulnerable to operational risk. 1MONEY™ ensures compliance with the regulatory guidelines on KYC/AML/CFT both in letter and spirit. Accordingly, 1MONEY™ encourages a complete the process of risk categorization and compiling/updating profiles of all of their existing customers in a time-bound manner.
Freezing of Assets ✔ Freezing of Assets under Section 51A of Unlawful Activities (Prevention) Act, 1967 a) The Unlawful Activities (Prevention) Act, 1967 (UAPA) has been amended by the Unlawful Activities (Prevention) Amendment Act, 2008. Government has issued an Order dated August 27, 2009 detailing the procedure for implementation of Section 51A of the Unlawful Activities (Prevention) Act, 1967 relating to the purposes of prevention of, and for coping with terrorist activities. In terms of Section 51A, the Central Government is empowered to freeze, seize or attach funds and other financial assets or economic resources held by, on behalf of or at the direction of the individuals or entities Listed in the Schedule to the Order, or any other person engaged in or suspected to be engaged in terrorism and prohibit any individual or entity from making any funds, financial assets or economic resources or related services available for the benefit of the individuals or entities Listed in the Schedule to the Order or any other person engaged in or suspected to be engaged in terrorism. b) 1MONEY™ strictly follows the procedure laid down in the UAPA Order dated August 27, 2009 (Annex II) and ensure meticulous compliance to the Order issued by the Government. c) On receipt of the list of individuals and entities subject to UN sanctions (referred to as designated lists) from RBI, banks should ensure expeditious and effective implementation of the procedure prescribed under Section 51A of UAPA in regard to freezing/unfreezing of financial assets of the designated individuals/entities enlisted in the UNSCRs and especially, in regard to funds, financial assets or economic resources or related services held in the form of bank deposits. d) In terms of Para 4 of the Order, in regard to funds, financial assets or economic resources or related services held in the form of bank deposits, the RBI would forward the designated lists to the banks requiring them to: i) Maintain updated designated lists in electronic form and run a check on the given parameters on a regular basis to verify whether individuals or entities listed in the schedule to the Order (referred to as designated individuals/entities) are holding any funds, financial assets or economic resources or related services held in the form of bank deposits with them. ii) In case, the particulars of any of their customers match with the particulars of designated individuals/entities, 1MONEY™ shall immediately, not later than 24 hours from the time of finding out such customer, inform full particulars of the funds, financial assets or economic resources or related services held in the form of bank deposits, held by such customer on their books to the Joint Secretary (IS.I), Ministry of Home Affairs, at Fax No.011-23092569 and also convey over telephone on 011-23092736. The particulars apart from being sent by post should necessarily be conveyed on e-mail. iii) 1MONEY™ shall also send by post, a copy of the communication mentioned in (ii) above to the UAPA nodal officer of RBI, Chief General Manager, Department of Banking Operations and Development, Central Office, Reserve Bank of India, Anti Money Laundering Division, Central Office Building, 13th Floor, ShahidBhagat Singh Marg, Fort, Mumbai - 400 001 and also by fax at No.022-22701239. The particulars, apart from being sent by post/fax should necessarily be conveyed on e-mail. iv) 1MONEY™ shall also send a copy of the communication mentioned in (ii) above to the UAPA nodal officer of the state/UT where the deposits is held as the case may be and to FIU-India. v) In case, the match of any of the customers with the particulars of designated individuals/entities is beyond doubt, the banks would prevent designated persons from conducting financial transactions, under intimation to Joint Secretary (IS.I), Ministry of Home Affairs, at Fax No. 011-23092569 and also convey over telephone on 011-23092736. The particulars apart from being sent by post should necessarily be conveyed on e-mail. vi) Banks shall also file a Suspicious Transaction Report (STR) with FIUIND covering all transactions in the deposits covered by paragraph (ii ) above, carried through or attempted, as per the prescribed format. e) Freezing of financial assets i)On receipt of the particulars as mentioned in paragraph d(ii)) above, IS-I Division of MHA would cause a verification to be conducted by the State Police and /or the Central Agencies so as to ensure that the individuals/ entities identified by the banks are the ones listed as designated individuals/entities and the funds, financial assets or economic resources or related services, reported by banks are held by the designated individuals/entities. This verification would be completed within a period not exceeding five working days from the date of receipt of such particulars. ii) In case, the results of the verification indicate that the properties are owned by or held for the benefit of the designated individuals/entities, an order to freeze these assets under section 51A of the UAPA would be issued within 24 hours of such verification and conveyed electronically to the concerned bank branch under intimation to Reserve Bank of India and FIU-IND. iii) The order shall take place without prior notice to the designated individuals/entities.