KALPATARU MULTIPLIERS LTD., BHOPAL. POLICIES AND PROCEDURE FOR PREVENTION OF MONEY
LAUNDERING (Issued as per the requirements of the PMLA Act 2002)
It is the policy of the Company to prohibit and actively prevent money laundering
and any activity that facilitates money laundering or the funding of terrorist or
criminal activities. Money laundering is generally defined as engaging in acts designed
to conceal or disguise the true origins of criminally derived proceeds so that the
unlawful proceeds appear to have derived from legitimate origins or constitute legitimate
Officer Designation and Duties
The Principal Officer will also ensure that proper AML records are kept. When warranted,
the Principal Officer will ensure filing of necessary reports with the Financial
Intelligence Unit (FIU – IND). The duties of the Principal Officer will include
monitoring the Company’s compliance with AML obligations and overseeing communication
and training for employees.
The Company has designated Shri Amitabh Manya Jain, Managing Director as the Principal
Officer and Designated Director for its Anti-Money Laundering Program, with full
responsibility for the Company’s AML program. Shri Amitabh Manya Jain is DCE from
the SATI Vidisha (MP), and is qualified by more than 23 Years experience, knowledge
and training. The Company has provided the FIU with contact information for the
Principal Officer and Designated Director, including name, title, mailing address,
e-mail address, telephone number and facsimile number. The Company will promptly
notify FIU of any change to this information.
Customer Identification and Acceptance
At the time of opening an account of the constituent or executing any transaction
with it, the Company will verify and maintain the record of identity and current
address or addresses including permanent address or addresses of the client, the
nature of business of the client and his financial details.
The copy of following documents will be taken as proof of identity and current address
or addresses including permanent address or addresses of the client, the nature
of business of the client and his financial detail:
All PAN Cards received will be verified from the Income Tax / UTITSL / NSDL website
before the account is opened. The Company will maintain records of all identification
information for five years after the account has been closed.
If a potential or existing customer either refuses to provide the information described
above when requested, or appears to have intentionally provided misleading information,
our Company will not open the new account.
Customer due diligence process (CDD)
The main aspect of this policy is the customer due diligence process which means
Obtaining sufficient information about to the client in order to identify who is
the actual beneficial owner of the securities or on whose behalf transactionsis
Verify the customer’s identity using reliable, independent source document,data
We may rely on a third party for the purpose of (a) identification and verification
of the identity of a client and (b) determination of whether the client is acting
on behalf of a beneficial owner, identification of the beneficial owner and verification
of the identity of the beneficial owner . such third party shall be regulted,supervised
or monitored for and have measures in place for compliance with CDD and record-keeping
requirements in line with the obligations under the PML act such reliance shall
be subject to the PML rules and shall be in accordance with the regulations an circulars/
guidelines issued by SEBI from time to time.
We will periodically update atleast once in a year all documents, data or information
of all clients and beneficial owners collected under the CDD process.
Conduct on going due diligence and scrutiny of the account/ client to ensure that
the transactions conducted are consistent with the client ,s background / financial
status , its activities and risk profile.
The customer due diligence process include three specific parameters
- Policy for acceptaince of client’s
- Client identification procedure
- Suspicious transaction identification & reporting
The information provided by the client should be checked though independent source
circulated by the government of India and SEBI from time like various united nation
security council resolutions these can be accessed at http://www.un.org/sc/committes/1267/aq_sanctions_list.shtml
We must exercise additional due diligence in case of the client
of special category which include but not limited to
- Non resident client
- High networth client ( i.e the client having Networth exceeding 100 Lakhs and doing
the intra day trading volume of more than 5 crore and daily delivery volume more
than Rs. 25 lakhs)
- Trust charities , NGOs and organization receiving donations
- Companies having close family shareholdings or beneficial ownership
- Politically exposed persons (PEP) of foreign origin
- Current / former head of state , current or former senior high profile politicians
and connected person ( immediate family, close advisors and companies in which such
individuals having interest or significant influence )
- Companies offering foreign exchange offering
- Client in high risk countries ( where existence / effectiveness of money laundering
controls is suspect, where there is unusual banking secrecy countries active in
narcotics production countries where corruption ( as per transparency international
corruption perception index ) is highly prevalent countries against which government
sanctions applied , countries reputed to be any of the following – havens/ sponsor
of international terrorism , offshore financial.centers tax havens, countries where
fraud is highly prevalent .
- Non face to face clients
- Client with dubious reputation as per public information available etc.
- Such other person who as per our independent judgment may be classified as CSC.
Policy for acceptance of client
The following safeguards are to be followed while accepting
- No. account is opened in a fictitious / be name or an anonymous basis
- 2- to ensure that we must insist the client to fill up the necessary details in
the KYC form in our presence and obtained all the necessary documentary evidence
in support of the information filled in KYC .
- 3- we must verify all the documents submitted in support of information filled in
kyc form with the original and in- person verification should be done by own staff.
- Moreover new client should either be introduced by an existing customer or by the
senior official of company in case we have any doubt that in- complete / fictitious
/ information is submitted by the client we must ask for such additional information
so as to satisfy ourselves about the genuineness of the client and the information
of the client befor accepting his registration.
Maintenance of records
The Company will maintain records of cash and suspicious transactions as prescribed
by the PMLA and Rules notified there under.
Suspicious transaction means a transaction whether or not made
in cash which, to a person acting in good faith
- gives rise to a reasonable ground of suspicion that it may involve the proceeds
of crime; or
- appears to be made in circumstances of unusual or unjustified complexity; or
- appears to have no economic rationale or bonafide purpose; or
- gives rise to a reasonable ground of suspicion that it may involve financing of
the activities relating to terrorism
The Principal Officer will be responsible for the maintenance
of following records
The records shall contain the following information
- all cash transactions of the value of more than rupees ten lakhs or its equivalent
in foreign currency;
- all series of cash transactions integrally connected to each other which have been
valued below rupees ten lakhs or its equivalent in foreign currency where such series
of transactions have taken place within a month;
- all cash transactions where forged or counterfeit currency notes or bank notes have
been used as genuine and where any forgery of a valuable security has taken place;
- all suspicious transactions whether or not made in cash and including, inter-alia,
credits or debits into from any non monetary account such as demat account, security
account maintained by the registered intermediary.
- the nature of the transactions;
- the amount of the transaction and the currency in which it was denominated;
- the date on which the transaction was conducted; and
- the parties to the transaction.
The records will be updated on daily basis, and in any case not later than 5 working
Monitoring Accounts For Suspicious Activity
The Company will monitor through the automated means of Back Office Software for
unusual size, volume, pattern or type of transactions. For non automated monitoring
the Company will have a set of parameters based on which the activities are to be
marked as Red Flags and reported to the Principal Officer.
The Company based on the following principles will mark the
transactions as Red Flag
- The customer exhibits unusual concern about the Company's compliance with government
reporting requirements and the Company's AML policies (particularly concerning his
or her identity, type of business and assets), or is reluctant or refuses to reveal
any information concerning business activities, or furnishes unusual or suspicious
identification or business documents.
- The customer wishes to engage in transactions that lack business sense or apparent
investment strategy, or are inconsistent with the customer's stated business or
- Upon request, the customer refuses to identify or fails to indicate any legitimate
source for his or her funds and other assets.
- The customer (or a person publicly associated with the customer) has a questionable
background or is the subject of news reports indicating possible criminal, civil,
or regulatory violations.
- The customer exhibits a lack of concern regarding risks, commissions, or other transaction
- The customer appears to be acting as an agent for an undisclosed principal, but
declines or is reluctant, without legitimate commercial reasons, to provide information
or is otherwise evasive regarding that person or entity.
- The customer has difficulty in describing the nature of his or her business or lacks
general knowledge of his or her industry.
- The customer attempts to make frequent or large deposits of currency, insists on
dealing only in cash, or asks for exemptions from the Company's policies relating
to the deposit of cash.
- The customer engages in transactions involving cash or cash equivalents or other
monetary instruments that appear to be structured to avoid the Rs.10,00,000 government
reporting requirements, especially if the cash or monetary instruments are in an
amount just below reporting or recording thresholds.
- For no apparent reason, the customer insists for multiple accounts under a single
name or multiple names, with a large number of inter-account or third-party transfers.
- The customer engages in excessive journal entries between unrelated accounts without
any apparent business purpose.
- The customer requests that a transaction be processed to avoid the Company 's normal
- The customer, for no apparent reason or in conjunction with other red flags, engages
in transactions involving certain types of securities, such as Z group and T group
stocks, which although legitimate, have been used in connection with fraudulent
schemes and money laundering activity. (Such transactions may warrant further due
diligence to ensure the legitimacy of the customer's activity.)
- The customer's account shows an unexplained high level of account activity
- The customer maintains multiple accounts, or maintains accounts in the names of
family members or corporate entities, for no apparent purpose.
- The customer's account has inflows of funds or other assets well beyond the known
income or resources of the customer.
- The information provided by the customer that identifies a legitimate source for
funds is false, misleading, or substantially incorrect.
When an employee of the Company detects any red flag he or she will escalate the
same to the Principal Officer for further investigation.
Broad categories of reason for suspicion and examples of suspicious
transactions for an intermediary are indicated as under
- Identity of Client
- False identification documents
- Identification documents which could not be verified within reasonable time
- Non-face to face client
- Doubt over the real beneficiary of the account
- Accounts opened with names very close to other established business entities
transactions for an intermediary are indicated as under
- Suspicious Background
- Suspicious background or links with known criminals
- Multiple Accounts
- Large number of accounts having a common account holder, introducer or authorized
signatory with no rationale
- Unexplained transfers between multiple accounts with no rationale
- Activity in Accounts
- Unusual activity compared to past transactions
- Use of different accounts by client alternatively
- Sudden activity in dormant accounts
- Activity inconsistent with what would be expected from declared business
- Account used for circular trading
- Nature of Transactions
- Unusual or unjustified complexity
- No economic rationale or bonafide purpose
- Source of funds are doubtful
- Appears to be case of insider trading
- Investment proceeds transferred to a third party
- Transactions reflect likely market manipulations
- Suspicious off market transactions
- Value just under the reporting threshold amount in an apparent attempt to avoid
- Large sums being transferred from overseas for making payments
- Inconsistent with the clients apparent financial standing
- Inconsistent with the clients apparent financial standing
- Block deal which is not at market price or prices appear to be artificially inflated/deflated
Reporting to FIU IND
The Company will report the Cash and Suspicious Transaction report to the Director,
FIU-IND, New Delhi.
We will not notify any person involved in the transaction that the transaction has
been reported, except as permitted by the PMLA Act and Rules thereof.
We will not base our decision on whether to file a Suspicious Transactions Report
solely on whether the transaction falls above a set threshold. We will file a STR
and notify law enforcement of all transactions that raise an identifiable suspicion
of criminal, terrorist, or corrupt activities.
For Cash Transaction Reporting (CTR), all dealing in Cash that requiring reporting
to the FIU IND will be done within 15 days of the succeeding month, in the Cash
Transaction Report format electronically.
For Suspicious Transactions Reporting (STR) all the transactions requiring reporting
will be done to the FIU IND within 7 working days of the establishment of suspicion
at the level of Principal Officer.
This will be in cases where we know, suspect, or have reason
- the transaction involves funds derived from illegal activity or is intended or conducted
in order to hide or disguise funds or assets derived from illegal activity as part
of a plan to violate or evade any the transaction reporting requirement
- the transaction is designed, whether through structuring or otherwise, to evade
the any requirements of PMLA Act and Rules framed thereof
- the transaction has no business or apparent lawful purpose or is not the sort in
which the customer would normally be expected to engage, and we know, after examining
the background, possible purpose of the transaction and other facts, of no reasonable
explanation for the transaction, or
- the transaction involves the use of the Company to facilitate criminal activity
All STRs will be reported quarterly to the Board of Directors, with a clear reminder
of the need to maintain the confidentiality of the STRs
Preservation of Anti Money Laundering (AML) Records and Transactions
The Company will retain and preserve the records for the prescribed time period.
We will hold STRs and any supporting documentation confidential.
We will hold STRs and any supporting documentation confidential. Procedure- Principal
Officer will be responsible to ensure that AML records are maintained and preserved
properly for the period of 10 years. Where the records relate to on-going Investigations
or transactions which have been the subject of a suspicious transaction reporting,
they should be retained until it is confirmed that the case has been closed.
We will not inform anyone outside of a law enforcement or regulatory agency or securities
regulator about a STR. We will refuse any requests for STR information and immediately
tell FIU IND of any such request we receive. We will segregate STR filings and copies
of supporting documentation from other Company books and records to avoid disclosing
STR filings. Our Principal Officer will handle all requests or other requests for
As part of our AML program, the Principal Officer will maintain STRs and CTRs and
relevant documentation on customer identity and verification. We will maintain STRs
and their accompanying documentation for at least ten years. Where the records relate
to on-going Investigations, they will be retained until it is confirmed that the
case has been closed.
We will develop ongoing employee training under the leadership of the Principal
Our training will occur on at least an annual basis. It will be based on our Company’s
size, its customer base, and its resources
Our training will include, at a minimum
- how to identify red flags and signs of money laundering that arise during the course
of the employees’ duties
- what to do once the risk is identified;
- what employees' roles are in the Company's compliance efforts and how to perform
- the Company's record retention policy; and
- the disciplinary consequences (including civil and criminal penalties) for non-compliance
with the PMLA Act.
We will develop training in our Company, or contract for it. Delivery of the training
may include educational pamphlets, videos, intranet systems, in-person lectures,
and explanatory memos.
We will review our operations to see if certain employees, such as those in compliance,
margin, and corporate security, require specialized additional training. Our written
procedures will be updated to reflect any such changes.
Program to Test AML Program
The Company’s AML program will be tested and reviewed annually
The testing of our AML program will be performed by the Statutory Auditors of the
Company After the testing, the Auditor will report its findings to the Board of
Directors. They will address each of the resulting recommendations.
Recruitment and Monitoring Employee Conduct and Accounts
Policy for recruitment of personnel
The HR department is instructed to cross check all the reference and should take
adequate safeguards to establish the authenticity and genuineness of the person
befor recruiting the department should obtain the following documents
- proof of address
- identity proof
- retention of records
We will subject employee accounts to the same AML procedures as customer accounts,
under the supervision of the Principal Officer. We will also review the AML performance
of supervisors, as part of their annual performance review. The Principal Officer’s
accounts will be reviewed by the Board of Directors
Confidential Reporting of AML Non-Compliance
Employees will report any violations of the Company’s AML compliance program to
the Principal Officer, unless the violations implicate the Compliance Officer, in
which case the employee shall report to the Chairman of the Board, Shri Ramesh Chandra
Manya. Such reports will be confidential, and the employee will suffer no retaliation
for making them.
Updating the policy
Above said policy is reviewed on 31/03/15 by us to keep it updated as per the various
amendments in the PMLA rules on least once in every six month by our directors.
Board of Directors Approval
We approve and undertake the responsibility of implementation this AML program as reasonably designed to achieve and monitor our Company’s ongoing compliance with the requirements of the PMLA and the implementing regulations under it.