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AML_KYC Policy

2024-03-20 14:39:47

The Prevention of Money Laundering Act (PMLA) of 2002

The prevention of money laundering act (PMLA) of 2002 is a significant legislative framework in India aimed at preventing money laundering and related offenses. The act was enacted to combat the growing menace of money laundering, which involves the process of making illegally obtained proceeds (generally from criminal activities) appear legal.

Here are key features of the Prevention of Money Laundering act, 2002 in India:

1. Objective:

The primary objective of the PMLA is to prevent money laundering and to provide for the confiscation of property derived from or involved in money laundering.

2. Definitions:

The act provides clear definitions for terms such as "money laundering," "proceeds of crime," and "obligated entities."

3. Offenses and Penalties:

The PMLA outlines various offenses related to money laundering, including acquiring, possessing, or investing in proceeds of crime.

Penalties for offenses under the act include imprisonment, fines, and confiscation of the proceeds of crime.

4. Designated Authority:

The enforcement directorate (ED) is the designated authority responsible for enforcing the provisions of the PMLA.

5. Obligated Entities:

The act places obligations on certain entities, known as "obligated entities," including banks, financial institutions, and intermediaries, to adhere to customer due diligence (CDD) procedures and report suspicious transactions.

6. KYC and Client Due Diligence Procedures:
The PMLA mandates the implementation of Know Your Customer (KYC) and Customer Due Diligence (CDD) procedures by obligated entities to verify the identity of clients and the beneficial ownership of accounts.

7. Reporting Obligations:

Obligated entities are required to report certain transactions to the financial Intelligence Unit-India (FIU-IND), an independent body established under the ministry of finance.

8. Freezing and Seizure of Assets:

The act empowers authorities to freeze and seize assets suspected to be involved in money laundering.

9. International Cooperation:

The PMLA enables cooperation with foreign countries in investigations and derivative platform of information related to money laundering.

10. Amendments:

The act has undergone amendments to strengthen its provisions and align with international standards. amendments may include expanding the list of scheduled offenses and enhancing penalties.

It's essential for financial institutions, including fintech companies, to be well-versed with the provisions of the PMLA and comply with its requirements. The act emphasizes the importance of vigilance, due diligence, and cooperation among various stakeholders to curb money laundering activities in India.

CIFDAQ SOLUTIONS PRIVATE LIMITED ANTI MONEY LAUNDERING POLICY

1. Introduction

Purpose: This policy outlines the commitment of CIFDAQ SOLUTIONS PVT, hereinafter referred to as "the Company," to prevent money laundering and comply with relevant laws and regulations in India.
Scope: This policy applies to all employees, contractors, and third parties acting on behalf of the Company.

2. Legal and Regulatory Framework

The company will adhere to all applicable laws and regulations related to anti-money laundering in India, including but not limited to the Prevention of money laundering act, 2002, and any amendments thereof.
The compliance Officer will stay updated on changes in AML laws and regulations and ensure timely adjustments to the company's policies and procedures.

3. Know Your Customer (KYC) Procedures

The company will implement robust KYC procedures to verify the identity of customers.
Customer due diligence will be conducted during onboarding and regularly reviewed based on risk assessments.
Enhanced due diligence measures will be applied to high-risk customers or transactions.

4. Reporting and Recordkeeping

Suspicious activity reporting: employees are required to report any suspicious transactions promptly to the designated compliance Officer.
Recordkeeping: The company will maintain accurate records of customer identification and transaction history as per regulatory requirements.

5. Training and Awareness

Regular training programs will be conducted to educate employees on AML laws, regulations, and the Company's policies and procedures.
Employees will be informed about their role in preventing money laundering and the consequences of non-compliance.

6. Internal Controls and Risk Assessment

The company will conduct regular risk assessments to identify and evaluate potential money laundering risks associated with its products, services, and customer base.
Internal controls will be established and maintained to mitigate identified risks effectively.

7. Reporting to Authorities

The Company will promptly report any suspicious transactions to the appropriate authorities as required by law.
Cooperation with law enforcement agencies will be ensured in the investigation of potential money laundering activities.

8. Penalties for Non-Compliance

Non-compliance with this AML policy may result in disciplinary actions, including termination, and legal consequences.

9. Review and Update

This policy will be reviewed annually and updated as necessary to reflect changes in the regulatory environment or the Company's operations.

10. Conclusion

All employees are expected to adhere to this AML policy and play an active role in preventing money laundering activities within the Company.

By implementing and enforcing this Anti-Money Laundering Policy, CIFDAQ SOLUTIONS PVT demonstrates its commitment to maintaining the highest standards of integrity and compliance with applicable laws and regulations.

CIFDAQ SOLUTIONS PRIVATE LIMITED DIGITAL KYC PROCESS AND ITS OBJECTIVES

A. CIFDAQ SOLUTIONS PVT, shall develop an application for digital KYC process which shall be made available at customer touch points for undertaking KYC of their customers and the KYC process shall be undertaken only through this authenticated application of CIFDAQ SOLUTIONS PVT.

B. The access of the application shall be controlled by CIFDAQ SOLUTIONS PVT and it should be ensured that the same is not used by unauthorized persons. The application shall be accessed only through login-id and password or Live OTP or Time OTP controlled mechanism given by CIFDAQ SOLUTIONS PVT to its authorized officials.

C. The client, for the purpose of KYC, shall visit the location of the authorized official of the CIFDAQ SOLUTIONS PVT or vice-versa where if required. The original Officially Valid Document (OVD) shall be in possession of the client.

D. The CIFDAQ SOLUTIONS PVT must ensure that the Live photograph of the client is taken by the authorized officer and the same photograph is embedded in the Customer application Form (CAF). Further, the system Application of the CIFDAQ SOLUTIONS PVT shall put a water-mark in readable form having CAF number, GPS coordinates, authorized official's name, unique employee Code (assigned CIFDAQ SOLUTIONS PVT) and Date (DD:MM:YYYY) and time stamp (HH:MM:SS) on the captured live photograph of the client.

E. The application of CIFDAQ SOLUTIONS PVT shall have the feature that only live photograph of the client is captured and no printed or video-graphed photograph of the client is captured. The background behind the client while capturing live photograph should be plain where possible and no other person shall come into the frame while capturing the live photograph of the client.

F. Similarly, the live photograph of the original officially valid document or proof of possession of Aadhaar where offline verification cannot be carried out (placed horizontally), shall be captured vertically from above and water-marking in readable form as mentioned above shall be done. No skew or tilt in the mobile device shall be there while capturing the live photograph of the original documents.

G. The live photograph of the client and his original documents shall be captured in proper light so that they are clearly readable and identifiable.

H. Thereafter, all the entries in the CAF shall be filled as per the documents and information furnished by the client. In those documents where Quick Response (QR) code is available, such details can be auto-populated by scanning the QR code instead of manual filing the details. For example, in case of physical Aadhaar/e-Aadhaar downloaded from UIDAI where QR code is available, the details like name, gender, date of birth and address can be auto-populated by scanning the QR available on Aadhaar/e-Aadhaar.

I. Once the above mentioned process is completed, a One Time Password (OTP) message containing the text that 'Please verify the details filled in form before sharing OTP' shall be sent to client's own mobile number. Upon successful validation of the OTP, it will be treated as client signature on CAF. However, if the client does not have his/her own mobile number, then mobile number of his/her family/relatives/known persons may be used for this purpose and be clearly mentioned in CAF. In any case, the mobile number of authorized officer registered with the CIFDAQ SOLUTIONS PVT shall not be used for client signature. The CIFDAQ SOLUTIONS PVT must check that the mobile number used in client signature shall not be the mobile number of the authorized officer.

J. The authorized officer shall provide a declaration about the capturing of the live photograph of client and the original document.

K. Subsequent to all these activities, the application shall give information about the completion of the process and submission of activation request to activation officer of CIFDAQ SOLUTIONS PVT, and also generate the transaction-id/reference-id number of the process. The authorized officer shall intimate the details regarding transaction-id/reference-id number to client for future reference.

L. The authorized officer of the CIFDAQ SOLUTIONS PVT, shall check and verify that: -

(i) information available in the picture of document is matching with the information entered by authorized officer in CAF.

(ii) live photograph of the client matches with the photo available in the document.; and

(iii) all of the necessary details in CAF including mandatory field are filled properly.;

M. On Successful verification, the CAF shall be digitally signed by authorized representative of the CIFDAQ SOLUTIONS PVT, get digital signatures/signed /thumb-impression of customer at appropriate place, then scan and upload the same in system. Original hard copy may be returned to the customer.

CIFDAQ SOLUTIONS PVT CLIENT DUE DILIGENCE PROCESS AND PROCEDURES

Client Due Diligence

(1) CIFDAQ SOLUTIONS PVT shall at the time of commencement of an account-based relationship or while carrying out occasional transaction of an amount equal to or exceeding rupees fifty thousand, whether conducted as a single transaction or several transactions that appear to be connected, or any international money transfer operations, -

(a) identify its clients, verify their identity using reliable and independent sources of identification, obtain information on the purpose and intended nature of the business relationship, where applicable.

(b) take reasonable steps to understand the nature of the customer’s business, and its ownership and control.

(c) determine whether a client is acting on behalf of a beneficial owner, and identify the beneficial owner and take all steps to verify the identity of the beneficial owner, using reliable and independent sources of identification:

(2) For the purpose of clause (a) of sub-rule (1), a CIFDAQ SOLUTIONS PVT may rely on a third party subject to the conditions that—

(a) the CIFDAQ SOLUTIONS PVT immediately obtains from the third party or from the Central KYC Records Registry, the record or the information of such client due diligence carried out by the third party.

(b) the CIFDAQ SOLUTIONS PVT takes adequate steps to satisfy itself that copies of identification data and other relevant documentation relating to the client due diligence requirements will be made available from the third party upon request without delay;

(c) the CIFDAQ SOLUTIONS PVT is satisfied that such third party is regulated, supervised or monitored for, and has measures in place for compliance with client due diligence and record-keeping requirements in line with the requirements and obligations under the act;

(d) the third party is not based in a country or jurisdiction assessed as high risk;

(e) the CIFDAQ SOLUTIONS PVT is ultimately responsible for client due diligence and undertaking enhanced due diligence measures, as applicable; and

(f)where a CIFDAQ SOLUTIONS PVT relies on a third party that is part of the same financial group, the Regulator may issue guidelines to consider any relaxation in the conditions (a) to (d). .

(3) The beneficial owner for the purpose of sub-rule (1) shall be determined as under—

(a)where the client is a company, the beneficial owner is the natural person(s), who, whether acting alone or together, or through one or more juridical person, has a controlling ownership interest or who exercises control through other means.

Explanation.— For the purpose of this sub-clause—

1. Controlling ownership interest” means ownership of or entitlement to more than ten per cent. of shares or capital or profits of the company;

2.“Control” shall include the right to appoint majority of the directors or to control the management or policy decisions including by virtue of their shareholding or management rights or shareholders agreements or voting agreements;

(b)where the client is a partnership firm, the beneficial owner is the natural person(s), who, whether acting alone or together, or through one or more juridical person, has ownership of/entitlement to more than ten percent of capital or profits of the partnership or who exercises control through other means

Explanation - For the purpose of this clause, “Control” shall include the right to control the management or policy decision;

(c) where the client is an unincorporated association or body of individuals, the beneficial owner is the natural person(s), who, whether acting alone or together, or through one or more juridical person, has ownership of or entitlement to more than fifteen percent of the property or capital or profits of such association or body of individuals;

(d) where no natural person is identified under (a) or (b) or (c) above, the beneficial owner is the relevant natural person who holds the position of senior managing official;

(e) where the client is a trust, the identification of beneficial owner(s) shall include identification of the author of the trust, the trustee, the beneficiaries with 33[ten] percent or more interest in the trust and any other natural person exercising ultimate effective control over the trust through a chain of control or ownership; and

(f) where the client or the owner of the controlling interest is 26[an entity listed on a stock derivative platform in India, or it is an entity resident in jurisdictions notified by the Central Government and listed on stock derivative platforms in such jurisdictions notified by the Central Government, or it is a subsidiary of such listed entities], it is not necessary to identify and verify the identity of any shareholder or beneficial owner of such entities.

(4) Where the client is an individual, he shall for the purpose of sub-rule (1) submit to the CIFDAQ SOLUTIONS PVT, -

(a) the Aadhaar number where,

(i) he is desirous of receiving any benefit or subsidy under any scheme notified under section 7 of the Aadhaar (Targeted Delivery of Financial and Other subsidies, Benefits and Services) act, 2016 (18 of 2016); or

(ii) he decides to submit his aadhaar number voluntarily to a banking company or any CIFDAQ SOLUTIONS PVT notified under first proviso to sub-section (1) of section 11A of the Act; or

(aa)the proof of possession of aadhaar number where offline verification can be carried out; or

(ab) the proof of possession of aadhaar number where offline verification cannot be carried out or any officially valid document or the equivalent e-document thereof containing the details of his identity and address; and

(b) the permanent account number or the equivalent e-document thereof or form No. 60 as defined in income-tax rules, 1962; and

(c) such other documents including in respect of the nature of business and financial status of the client, or the equivalent e-documents thereof as may be required by the CIFDAQ SOLUTIONS PVT

(5) Notwithstanding anything contained in sub-rule (4)25[and as an alternative thereto]23[***], an individual who desires to open a small account in a banking company may be allowed to open such an account on production of a self-attested photograph and affixation of signature or thumb print, as the case may be, on the form for opening the account: Provided that

(i) the designated officer of the banking company, while opening the small account, certifies under his signature that the person opening the account has affixed his signature or thumb print, as the case may be, in his presence.

Provided that where the individual is a prisoner in a jail, the signature or thumb print shall be affixed in presence of the officer in-charge of the jail and the said officer shall certify the same under his signature and the account shall remain operational on annual submission of certificate of proof of address issued by the officer in-charge of the jail.]

(ii) a small account shall be opened only at Core Banking Solution linked banking company branches or in a branch where it is possible to manually monitor and ensure that foreign remittances are not credited to a small account and that the stipulated limits on monthly and annual aggregate of transactions and balance in such accounts are not breached, before a transaction is allowed to take place;

(iii) a small account 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 account 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 account, with the entire relaxation provisions to be reviewed in respect of the said account after twenty four months;

(iiia) Notwithstanding anything contained in clause (iii), the small account shall remain operational between 1st April, 2020 and 30th June 2020 and such other periods as may be notified by the Central Government

(iv) the small account shall be monitored and when there is suspicion of money laundering or financing of terrorism or other high risk scenarios, the identity of client shall be established as per the provisions of sub-rule (4)

(v) foreign remittance shall not be allowed to be credited into a small account unless the identity of the client is fully established as per the provisions of sub-rule (4):

(6) Where the client is a company, it shall for the purposes of sub-rule (1) submit to the CIFDAQ SOLUTIONS PVT one certified copy of the following documents or the equivalent e-documents thereof:-

(i) Certificate of incorporation;

(ii) Memorandum and articles of association;

(iii) Permanent account Number of the company;

(iv) a resolution from the Board of Directors and power of attorney granted to its managers, officers or employees, as the case may be, to transact on its behalf;

(v) such documents as are required for an individual under sub-rule (4) relating to beneficial owner, managers, officers or employees, as the case may be, holding an attorney to transact on the company’s behalf.;

(vi) the names of the relevant persons holding senior management position; and

(vii) the registered office and the principal place of its business, if it is different.

(7) Where the client is a partnership firm, it shall, for the purposes of sub-rule (1), submit to the CIFDAQ SOLUTIONS PVT the certified copies of the following documents or the equivalent e-documents thereof, name. Where the client is a partnership firm, it shall for the purposes of sub-rule (1) submit to the CIFDAQ SOLUTIONS PVT one certified copy of the following documents25[or the equivalent e-documents thereof: -

(i) registration certificate;

(ii) partnership deed;

(iii) Permanent account Number of the partnership firm;

(iv) such documents as are required for an individual under sub-rule (4) relating to beneficial owner, managers, officers or employees, as the case may be, of the person holding an attorney to transact on its behalf; and (v) the names of all the partners and address of the registered office, and the principal place of its business, if it is different.

(8) Where the client is a trust, it shall, for the purposes of sub-rule (1) submit to the CIFDAQ SOLUTIONS PVT one certified copy of the following documents25 [or the equivalent e-documents thereof:-

(i) registration certificate;

(ii) trust deed; and

(iii) Permanent Account Number or Form No.60 of the trust; and

(v) the names of the beneficiaries, trustees, settlor "protector if any" and authors of the trust and the address of the registered office of the trust; and

(vi) list of trustees and documents as are required for individuals under sub-rule (4) for those discharging role as trustee and authorised to transact on behalf of the trust

(9) Where the client is an unincorporated association or a body of individuals, it shall submit to the CIFDAQ SOLUTIONS PVT one certified copy of the following documents25 [or the equivalent e-documents thereof :-

(i) resolution of the managing body of such association or body of individuals;

(ii)power of attorney granted to him to transact on its behalf;

(iii)Permanent account number or form No.60 of the unincorporated association or a body of individuals;

(v) such information as may be required by the CIFDAQ SOLUTIONS PVT to collectively establish the existence of such association or body of individuals

(9A) Every banking Company or financial Institution or intermediary, as the case may be, shall register the details of a client, in case of client being a non-profit organisation, on the DARPAN Portal of NITI aayog, if not already registered, and maintain such registration records for a period of five years after the business relationship between a client and a CIFDAQ SOLUTIONS PVT has ended or the account has been closed, whichever is later.

(9B) Where the client has submitted any documents for the purpose of sub-rule (1), it shall submit to the CIFDAQ SOLUTIONS PVT any update of such documents, for the purpose of updating the records mentioned under sub-rules (4),(5),(6),(7),(8) or (9), as the case may be, within 30 days of such up dation.

(10) Where the client 33[purports to act on behalf of juridical person or individual or trust, the CIFDAQ SOLUTIONS PVT shall verify that any person purporting to act on behalf of such client is so authorized and verify the identity of that person.

Provided that in case of a trust, the CIFDAQ SOLUTIONS PVT shall ensure that trustees disclose their status at the time of commencement of an account-based relationship or when carrying out transactions as specified in clause (b) of sub-rule (1) rule 9

(11) No CIFDAQ SOLUTIONS PVT shall allow the opening of or keep any anonymous account or account in fictitious names or account on behalf of other persons whose identity has not been disclosed or cannot be verified.

(12)

(i) CIFDAQ SOLUTIONS PVT shall exercise 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.

(ii) 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 client identification data, the CIFDAQ SOLUTIONS PVT shall review the due diligence measures including verifying again the identity of the client and obtaining information on the purpose and intended nature of the business relationship, as the case may be.

(iii) The CIFDAQ SOLUTIONS PVT shall apply client due diligence measures also to existing clients on the basis of materiality and risk, and conduct due diligence on such existing relationships at appropriate times or as may be specified by the regulator, taking into account whether and when client due diligence measures have previously been undertaken and the adequacy of data obtained , such that the information or data collected under client due diligence is kept up-to-date and relevant, particularly where there is high risk

(13)

(i)CIFDAQ SOLUTIONS PVT shall carry out risk assessment to identify, assess and take effective measures to mitigate its money laundering and terrorist financing risk for clients, countries or geographic areas, and products, services, transactions or delivery channels that is consistent with any national risk assessment conducted by a body or authority duly notified by the Central Government. (ii) The risk assessment mentioned in clause (i) shall -

(a) be documented;

(b) consider all the relevant risk factors before determining the level of overall risk and the appropriate level and type of mitigation to be applied;

(d) be available to competent authorities and self-regulating bodies.

(14) (i) The regulator shall issue guidelines incorporating the requirements of sub-rules (1) to (13) , sub-rule (15) and sub-rule (17) and may prescribe enhanced or simplified measures to verify the client’s identity taking into consideration the type of client, business relationship, nature and value of transactions based on the overall money laundering and terrorist financing risks involved.

Explanation-For the purpose of this clause, simplified measures are not acceptable whenever there is a suspicion of money laundering or terrorist financing, or where specific higher-risk scenarios apply or where the risk identified is not consistent with the national risk assessment.

(ia) The guidelines issued under clause (i) shall also include appropriate-

(A) exemptions, limitations and conditions and alternate and viable means of identification, to provide account based services to clients who are unable to undergo biometric authentication;

(B) relaxation for continued operation of accounts for clients who are unable to provide Permanent Account Number or Form No. 60; and

(C)exemption, limitations and conditions and alternate and viable means of identification, to provide account based services of clients who are unable to undergo aadhaar authentication for receiving any benefit or subsidy under any scheme notified under section 7 of the aadhaar (Targeted Delivery of Financial and Other subsidies, Benefits and Services) Act, 2016 (18 of 2016); owing to injury, illness or infirmity on account of old age or otherwise, and such like causes.

(ib) the guidelines shall include countermeasures to be undertaken when called upon to do so by any international or intergovernmental organisation of which India is a member and accepted by the Central Government.

(ii) CIFDAQ SOLUTIONS PVT shall formulate and implement a client Due Diligence programme, incorporating the requirements of sub-rules (1) to (13) 23, sub-rule (15) and sub-rule (17) and guidelines issued under clause (i) and (ia).

(iii) the Client Due Diligence programme shall have regard to the money laundering and terrorist financing risks and the size of the business and shall include policies, controls and procedures, approved by the senior management, to enable the CIFDAQ SOLUTIONS PVT to manage and mitigate the risk that have been identified either by the CIFDAQ SOLUTIONS PVT or through national risk assessment

(15) Where the client has submitted -

(a) his Aadhaar number under clause (a) of sub-rule (4) to CIFDAQ SOLUTIONS PVT notified under first proviso to sub-section (1) of section 11A, CIFDAQ SOLUTIONS PVT shall carry out authentication of the client's Aadhaar number using e-KYC authentication facility provided by the Unique Identification Authority of India;

(b) proof of possession of aadhaar under clause (aa) of sub-rule (4) where offline verification can be carried out, the CIFDAQ SOLUTIONS PVT shall carry out offline verification;

(c) an equivalent e-document of any officially valid document, the CIFDAQ SOLUTIONS PVT shall verify the digital signature as per the provisions of the Information Technology act, 2000 (21 of 2000) and any rules issues thereunder and take a live photo as specified under annexure 1.

(d) any officially valid document or proof of possession of aadhaar number under clause (ab) of sub-rule (4) where offline verification cannot be carried out, the CIFDAQ SOLUTIONS PVT shall carry out verification through digital KYC as specified under Annexure 1:

Provided that for a period not beyond such date as may be notified for a class of CIFDAQ SOLUTIONS PVT, instead of carrying out digital KYC, the CIFDAQ SOLUTIONS PVT pertaining to such class may obtain a certified copy of the proof of possession of Aadhaar number or the officially valid document and a recent photograph where an equivalent e-document is not submitted.

Explanation. — Obtaining a certified copy by the CIFDAQ SOLUTIONS PVT shall mean comparing the copy of the proof of possession of Aadhaar number where offline verification cannot be carried out or officially valid document so produced by the client with the original and recording the same on the copy by the authorized officer of the CIFDAQ SOLUTIONS PVT as per the provisions contained in the act.

(16) CIFDAQ SOLUTIONS PVT shall, where its client submits a proof of possession of Aadhaar number containing Aadhaar number, ensure such client redacts or blacks out his Aadhaar number through appropriate means where the authentication of Aadhaar number is not required under sub-rule (15).

(17) (i) A client already having an account based relationship with a CIFDAQ SOLUTIONS PVT, shall submit his Permanent account number or the equivalent e-documents thereof or form No.60, on such date as may be notified by the central Government, failing which the account shall temporarily cease to be operational till the time the Permanent Account Number or the equivalent e-documents thereof or form No. 60 is submitted by the client:

Provided that before temporarily ceasing operations for an account, the CIFDAQ SOLUTIONS PVT shall give the client an accessible notice and a reasonable opportunity to be heard.

Explanation.– For the purpose of this clause, “temporary ceasing of operations” in relation to an account means the temporary suspension of all transactions or activities in relation to that account by the CIFDAQ SOLUTIONS PVT till such time the client complies with the provisions of this clause.

(ii) if a client having an existing account based relationship with a CIFDAQ SOLUTIONS PVT gives in writing to the CIFDAQ SOLUTIONS PVT that he does not want to submit his Permanent account Number or the equivalent e-documents thereof or form No.60, as the case may be, the client’s account with the CIFDAQ SOLUTIONS PVT shall be closed and all obligations due in relation to the account shall be appropriately settled after establishing the identity of the client in the manner as may be determined by the regulator.

(18) In case of officially valid document furnished by the client does not contain updated address, the following documents or the equivalent e-documents thereof shall be deemed to be officially valid documents for the limited purpose of proof of address: -

(a) utility bill which is not more than two months old of any service provider (electricity, telephone, post-paid mobile phone, piped gas, water bill);

(b) property or Municipal tax receipt;

(c) pension or family pension payment orders (PPOs) issued to retired employees by Government Departments or Public Sector Undertakings, if they contain the address;

(d) letter of allotment of accommodation from employer issued by State Government or Central Government Departments, statutory or regulatory bodies, public sector undertakings, scheduled commercial banks, financial institutions and listed companies and leave and licence agreements with such employers allotting official accommodation:

Provided that the client shall submit updated officially valid document or the equivalent e-documents thereof with current address within a period of three months of submitting the above documents.

(19) Where a client has provided his aadhaar number for identification under clause (a) of sub-rule (4) and wants to provide a current address, different from the address as per the identity information available in the central Identities data repository, he may give a self-declaration to that effect to the CIFDAQ SOLUTIONS PVT.

Definitions

(1) In these rules, unless the context otherwise requires, -

(a) "act" means the prevention of money-laundering act, 2002 (15 of 2003);

(aa) "aadhaar number" shall have the meaning assigned to it in clause (a) of section 2 of the Aadhaar (Targeted delivery of financial and other subsidies, benefits and services) act, 2016 (18 of 2016);

(ab) "authentication" means the process as defined under sub-section (c) of section 2 of the aadhaar (Targeted delivery of financial and other subsidies, benefits and services) act, 2016;

(ac) "Central KYC records registry" means a reporting entity, substantially owned and controlled by the central government, and authorised by that government through a notification in the Official gazette to receive, store, safeguard and retrieve the KYC records in digital form of a client as referred to in clause (ha) in such manner and to perform such other functions as may be required under these rules:

(ad) "Depository Receipt" means a foreign currency denominated instrument, whether listed on an international derivative platform or not, issued by a foreign depository in a permissible jurisdiction on the back of eligible securities issued or transferred to that foreign depository and deposited with a domestic custodian and includes 'global depository receipt' as defined in the companies act, 2013 (18 of 2013);

(b) “client due diligence” " means due diligence carried out on a client referred to in clause (ha) of sub-section (1) of section 2 of the act using reliable and independent sources of identification;

(ba) “Designated Director” (ba) "Designated Director" means a person designated by the reporting entity to ensure overall compliance with the obligations imposed under chapter IV of the act and the rules and includes -;

(i)the managing director or a whole-time director duly authorized by the board of directors if the reporting entity is a company,

(ii)the managing partner if the reporting entry is a partnership firm,

(iii)the proprietor if the reporting entity is a proprietorship concern,

(iv)the managing trustee if the reporting entity is a trust

(v)a person or individual, as the case may be, who controls and manages the affairs of the reporting entity if the reporting entity is an unincorporated association or a body of individuals, and

(vi)such other person or class of persons as may be notified by the Government if the reporting entity does not fall in any of the categories above.

Explanation. —For the purpose of this clause, the terms “Managing Director” and “Whole-time Director” shall have the meaning assigned to them in the Companies act, 2013 (18 of 2013);

(bb) “Designated Officer” means any officer or a class of officers authorized by a banking company, either by name or by designation, for the purpose of opening small accounts.

(bba) "digitial KYC" means the capturing live photo of the client and officially valid document or the proof of possession of aadhaar, where offline verification cannot be carried out, along with the latitude and longitude of the location where such live photo is being taken by an authorised officer of the reporting entity as per the provisions contained in the act;

(bc) Digital signature shall have the same meaning as assigned to it in clause (p) of subsection (1) of section (2) of the Information technology act, 2000 (21 of 2000);

(c) "Director " means the director appointed under sub-section (1) of section 49 of the act for the purposes of sections 12, 12A and 13 of the act;

(ca) "e - KYC authentication facility" means an authentication facility as defined in adhaar (Authentication) Regulations, 2016;

(cb) "equivalent e-document" means an electronic equivalent of a document, issued by the issuing authority of such document with its valid digital signature including documents issued to the digital locker account of the client as per rule 9 of the Information technology (Preservation and retention of Information by Intermediaries providing digital locker facilities) rules, 2016;

(cba) “group" shall have the same meaning assigned to it in clause (e) of sub-section (9) of section 286 of the Income-tax act, 1961 (43 of 1961)

(cbb)] “International financial services centre” means an International financial services centre set up under section 18 of the special economic zones act, 2005 (28 of 2005);

(cc) "Know Your Client (KYC) Identifier" means the unique number or code assigned to a client by the Central KYC Records Registry;

(cd) "Know Your Client (KYC) Identifier" means the records, including the electronic records, relied upon by a reporting entity in carrying out client due diligence as referred to in rule 9 of these rules;

(ce) "last KYC verification or updation" means the last transaction made by a reporting entity in the Central KYC Records Registry by which the KYC records of a client were recorded, changed or updated by a reporting entity;

(cf) “Non-profit organization” means any entity or organisation, constituted for religious or charitable purposes referred to in clause (15) of section 2 of the Income-tax act, 1961 (43 of 1961), that is registered as a trust or a society under the Societies Registration act, 1860 (21 of 1860) or any similar State legislation or a Company registered under the section 8 of the Companies Act, 2013 (18 of 2013)

(d) “officially valid document” means the passport, the driving licence, proof of possession of aadhaar number, the Voter’s Identity card issued by the election commission of India, job card issued by NREGA duly signed by an officer of the state government, the letter issued by the unique Identification authority of India or the national population register] containing details of name, address and Aadhaar number or any other document as notified by the central government in consultation with the regulator;

Provided that where simplified measures are applied for verifying the identity of the clients the following documents shall also be deemed to be ‘officially valid documents:

(a) identity card with applicant's photograph issued by central/state government departments, statutory/regulatory authorities, public sector undertakings, scheduled commercial banks, and public financial Institutions;

(b) letter issued by a gazette officer, with a duly attested photograph of the person;

Provided further that where simplified measures are applied for verifying the limited purpose of proof of address of the clients, where a prospective customer is unable to produce any proof of address, the following documents shall also be deemed to be 'officially valid document':

(a) utility bill which is not more than two months old of any service provider (electricity, telephone, post-paid mobile phone, piped gas, Water bill);

(b) property or Municipal tax receipt;

(c) bank account or Post Office savings bank account statement or if the reporting entity is located in an International Financial Services Centre, statement of foreign bank; (d) pension or family pension payment orders (PPOs) issued to retired employees by government departments or public sector undertakings, if they contain the address;

(e) letter of allotment of accommodation from employer issued by state or central government departments, statutory or regulatory bodies, public sector undertakings, scheduled commercial banks, financial institutions and listed companies. Similarly, leave and licence agreements with such employers allotting official accommodation; and

Provided also that in case the officially valid document presented by a foreign national does not contain the details of address, in such case the documents issued by the government departments of foreign jurisdictions and letter issued by the foreign embassy or mission in India shall be accepted as proof of address

Provided also that in an International financial services centre, the national identity card and voter identification card, by whatever name called, issued by the Government of foreign jurisdictions or agencies authorised by them capturing the photograph, name, date of birth and address of a foreign national shall also be considered as officially valid document:]

Provided also that where the client submits his proof of possession of aadhaar number as an officially valid document, he may submit it in such form as are issued by the unique Identification authority of India. explanation. - For the purpose of this clause, a document shall be deemed to an “officially valid document” even if there is a change in the name subsequent to its issuance provided it is supported by a marriage certificate issued by the state government or gazette notification, indicating such a change of name.

(da) “offline verification” shall have the same meaning as assigned to it in clause (pa) of section 2 of the Aadhaar (targeted Delivery of financial and other subsidies, benefits and services) act, 2016 (18 of 2016);

[(db) “Politically Exposed Persons” (PEPs) are individuals who have been entrusted with prominent public functions by a foreign country, including the heads of States or Governments, senior politicians, senior government or judicial or military officers, senior executives of state-owned corporations and important political party officials;

(e) "prescribed value" means the value of transaction prescribed under these rules;

(f) "Principal Officer " means an officer designated by a reporting entity;

Provided that such officer shall be an officer at the management level;

(fa) "Regulator " means

(i) a person or an authority or a government which is vested with the power to license, authorise, register, regulate or supervise the activity of reporting entities or the director as may be notified by the government for a specific reporting entity or a class of reporting entities or for a specific purpose;

(ii) the reserve bank of India with respect to central KYC records registry as defined in clause (ac) of sub-rule (1) of rule 2;

(iii) the central board of Indirect taxes and customs, constituted under central boards of revenue act, 1963, with respect to the dealers in precious metals and precious stones.

(iv) the central board of Indirect taxes and customs, constituted under central Boards of revenue act, 1963, with respect to the real estate agents.

(fb) "Rules " means the prevention of money-laundering (maintenance of records) rules, 2005;

(fc) “small account” means a savings account in a banking company 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.

Provided that this limit on balance shall not be considered while making deposits through government grants, welfare benefits and payment against procurements.

(g) "Suspicious transaction" means a transaction referred to in clause (h), including an attempted transaction, whether or not made in cash, which to a person acting in good faith-

(a) gives rise to a reasonable ground of suspicion that it may involve proceeds of an offence specified in the Schedule to the act, regardless of the value involved; or

(b) appears to be made in circumstances of unusual or unjustified complexity; or

(d) gives rise to a reasonable ground of suspicion that it may involve financing of the activities relating to terrorism;

Explanation. - transaction involving financing of the activities relating to terrorism includes transaction involving funds suspected to be linked or related to, or to be used for terrorism, terrorist acts or by a terrorist, terrorist organisation or those who finance or are attempting to finance terrorism

(h) "transaction" means a purchase, sale, loan, pledge, gift, transfer, delivery or the arrangement thereof and includes -

(i) opening of an account;

(ii) deposits, withdrawal, derivative platform or transfer of funds in whatever currency, whether in cash or by cheque, payment order or other instruments or by electronic or other non-physical means;

(iii) the use of a safety deposit box or any other form of safe deposit;

(iv) entering into any fiduciary relationship;

(v) any payment made or received in whole or in part of any contractual or other legal obligation;

(vi) any payment made in respect of playing games of chance for cash or kind including such activities associated with casino; and

(vii) establishing or creating a legal person or legal arrangement.

(i) "Yes/No authentication facility" means an authentication facility as defined in aadhar (Authentication) Regulations, 2016;

(2) All other words and expressions used and not defined in these rules but defined in the act shall have the meaning respectively assigned to them in the act.

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