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Agenda
KYC/ AML/ CFT Overview The 3D approach Banks V/s Insurance Companies Controls & Elements of Checks AML Framework in Banks Summary
Agenda
KYC/ AML/ CFT Overview The 3D approach Banks V/s Insurance Companies Controls & Elements of Checks AML Framework in Banks Summary
Section 3 of the Prevention of Money Laundering Act (PMLA), 2002 defines the offence of money laundering as under: 3. 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' is the process by which illegal funds and assets are converted into legitimate funds and assets The International monetary fund in 1996 estimated per year laundering volume between USD 600 bn and USD 1.5 tn. Illegal/ Dirty money Legal/Clean Money
A/c 5
Placement
A/c 8 Integration
Layering
Placement Stage - easy to detect start of ML Layering Stage - Relatively Difficult to detect Integration Stage - Almost impossible to detect
Money Laundering Motive Profit Source of funds Il egal Volume of funds Large Modus operandi Front Companies Final effect Drain of the country's resources
Terrorist Financing Ideological Legal + Il egal Small Charities + Individuals Acts of Terror
August 16, 2002 - The Reserve Bank of India (RBI) released its first circular on Guidelines on "Know Your Customer" norms and Cash transactions January 17, 2003 Prevention of Money Laundering Act (PMLA) published in the Gazette November 24, 2004 - The first set of comprehensive guidelines on 'Know Your Customer' (KYC) Guidelines Anti Money Laundering Standards issued July 1, 2005 PMLA Rules November 27, 2006 India becomes an 'observer' at the Financial Action Task Force (FATF) March 6, 2009 Amendment to PMLA, 2002 November 12, 2009 Amendment to PMLA Rules, 2005 June 25, 2010 India becomes a member of the FATF
Regulatory Agencies
RBI SEBI IRDA
Enforcement Agencies
IB
Enforcement Agencies
IB
FIU-IND
RAW
REIC CBDT-DGIT/CCIT CBEC-DGDRI/DGCEI ED EOW of Police EOW of CBI
Foreign FIUs
Foreign FIUs
Criminal Activities
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Agenda
KYC/ AML/ CFT Overview The 3D approach Banks V/s Insurance Companies Controls & Elements of Checks AML Framework in Banks Summary
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Disrupting
Reporting transactions
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Agenda
KYC/ AML/ CFT Overview The 3D approach Banks V/s Insurance Companies Controls & Elements of Checks AML Framework in Banks Summary
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Insurance Banking
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Agenda
KYC/ AML/ CFT Overview The 3D approach Banks V/s Insurance Companies Controls & Elements of Checks AML Framework in Banks Summary
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Performed on the basis of pre defined rules based on product , customer and transaction risk Identification of unusual transactions Confirmation of Suspicion
Typologies observed
Large value and volume of cash deposits followed by immediate RTGS payment or transfer. Large value of RTGS or transfer followed by immediate withdrawal/ transfers. Issuing large number of cheques. Cash deposits across various branches followed by withdrawals, transfer. Frequent closure and subsequent opening of accounts. Sudden activity in a dormant account.
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Agenda
KYC/ AML/ CFT Overview The 3D approach Banks V/s Insurance Companies Controls & Elements of Checks AML Framework in Banks Summary
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Summary
Appointment of Principal Officer Creation of KYC/ AML/ CFT framework Understanding the industry & product vulnerabilities to ML/ TF Awareness about the various typologies related to the products Timely & effective reporting to FIU-IND
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Thank you
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