2. What is Money Laundering ?
• Activity connected with the proceeds of crime &
projecting it as untainted property
• Involves disguising the true origin of illegitimate
funds
• Converts illegally obtained income into other forms
to appear it as a legitimate income
• Mode to insert dirty money in the financial system.
4. Stages of Money Laundering
• Placement : Initial stage in which cash proceeds from
criminal activities is placed in financial institutions.
5. Stages of Money Laundering
• Layering : Process of conducting a complex series of
financial transactions, with the purpose of hiding the
origin of the money from the criminal activities
6. Stages of Money Laundering
• Integration : Final stage in the re-injection of the
laundered proceeds back into the economy in such a
way that they re-enter the financial system as normal
business funds
8. Prevention of Money Laundering Act,
2002
• PMLA came into force with effect July 01, 2005
• PMLA defines money laundering offence and provides
for the freezing, seizure and confiscation of the
proceeds of crime
• Financial Intelligence Unit–India(FIU-IND) established
in 2004
• Financial Action Task Force (FATF) membership
granted to India in 2010
9. 9
Regulatory Requirements
• Obligations under the Circular:
Written AML Policy & Procedures
Customer Due Diligence
Risk categorization of clients
Record Keeping
Suspicious Transaction Monitoring & Reporting
Freezing of funds
Employee Training
Investor Education
Reporting of Designated Director / Principal officer
to FIU
10. 10
Implementation at I-Sec
• AML Policy (reviewed periodically)
• Client Due Diligence (KYC)
• Enhanced Due Diligence (EDD)
• Identification of PEP (Politically Exposed Person)
• Risk categorization of client (High/Low)
• Periodic updation of client detail (income/contact)
• Record Retention
• Risk based monitoring, action as required
• Reporting suspicion (STR)
11. 11
AML requirement
• Clients might be required to submit documents
evidencing source of funds/income tax returns/bank
records etc.
• The above requirements are the ones emanating from
AML and CFT framework.
12. 12
Anti Money Laundering Team
• Daily Transaction monitoring - Alert generation and
analysis
• MIS preparation/ circulation
• Seeking explanation (Income doc./ trade specific)
• RM/Advisor feedback about client/ transaction
• EDD for High Risk clients and approval for account
opening
