POLICIES & PROCEDURES

Transcription

1 Guidelines by JK Securities Private Limited: POLICIES & PROCEDURES i. Appointment of Principal Officer of JK Securities Private Limited to act as a central reference point for coordinating and reporting to FIU-IND [Financial intelligence unit] ii. All dormant accounts transactions directly reported to principal officer. iii. Dormant Account transaction during the period of high volatility in the market should be evaluated. iv. Transaction above Rs. 5 Lacks monitored by top management day-to-day basis. Clients capacity to purchase shares in high volume should be reviewed with latest financial information. Procedure at JK Securities Private Limited: 1. In view of the said developments, it has become necessary to put in place policies and procedures for complying with the requirements mentioned above. 2. In order to meet the provisions of the Act and Guidelines of SEBI issued in this regard, various departments within the organization have been identified to undertake certain activities for compliance of the Act and the Guidelines. The departments so identified are as given below, Front Desk and Mid-office Compliance Human Resource Department Besides, the sub-brokers will also be fully responsible for reporting of suspicious transactions of clients who operate through them. 3. The following activities are to be carried out for the purpose of compliance with the Act and the Guidelines. 3.1 Staff training The Guidelines provide that staff of the intermediary should be provided proper training on anti-money laundering and anti-terrorist financing and high standards are maintained while hiring employees. The Guidelines also state that an intermediary should assess key roles within the organization with regard to risk of money laundering and terrorist financing and ensure that employees taking up such key roles are suitable and competent to perform their duties. A training program shall be conducted in consultation/co-ordination with Compliance department, for employees who will be handling activities under the Guidelines. Audit and Inspection section within Compliance will lead the exercise. 3.2 Department-wise activities The department-wise activities which need to be performed for compliance of the Guidelines are as given under, Front Desk & Mid-office The Front Desk and Mid-office is the first step towards the beginning of a relationship with the client. Vital information about the client is captured by the Front Desk /Back-Office while opening a client

2 account. The back-office plays an important role in assessing the details of the client. In view of the Guidelines, the following activities shall be performed by the back-office. a. Application of KYC norms: As per mentioned in Client s Registration b. Client Acceptance Policy: As per mentioned in Client s Registration c. Client Identification Policy: As per mentioned in Client s Registration d. Record keeping and maintenance: With regard to record keeping and maintenance, the Guidelines provide the following: a) Maintaining records of clients reported to it for a period of ten years from the date of cessation of the transactions between the clients and the intermediary. b) In case where investigations have been initiated by FIU-IND or transactions have been subject matter of suspicious activity reporting, records may be preserved until it is confirmed that ongoing investigations have been closed. In order to meet the requirements of the aforesaid guidelines and also reproduce the required details to FIU-IND, when called for, the below mentioned action shall be initiated by mid-office, with regard to clients who have been reported to FIU-IND: Following records of the client shall be maintained permanently by the mid office i. KYC form along with necessary details/documents. ii. Statement of accounts of the client. iii. Details of trades executed by the client. 3.3 Suspicious transactions monitoring and reporting I. The Guidelines provide an illustrative list of various types of transactions which need to be monitored by the concerned intermediary. However, the Guidelines pertain to transactions through various kinds of intermediaries. For a broking firm, the basis of monitoring transactions will be on the aforesaid lines. II. The Guidelines provide that any suspicious transactions needs to be immediately notified to the Money Laundering Control Officer (Principal Officer) or any other designated officer with the intermediary. A detailed report along with specific reference to the clients, transactions and the nature/reason of suspicion needs to be furnished to the Money Laundering Control Officer (Principal Officer). III. The following procedure needs to be adopted by JKSPL while reporting to the FIU-IND, IV. The RMG will analyze and furnish a report of any such transactions to the Principal Officer at the end of every month for his analysis and review. V. The Principal Officer shall arrange to forward the report in the given format to the FIU-IND within the stipulated time, through Compliance department. VI. The Compliance Department (audit and inspection) will maintain record of all such reports forwarded to the FIU-IND. VII. A copy of the above report shall also be forwarded by the Compliance Department to Mid- Office. The Mid-Office shall maintain records of the clients reported to FIU-IND. As per the Guidelines suspension of transactions of the client shall be done in exceptional circumstances. Circumstances for suspension of activities of a client will be formulated by RMG.

3 3.4 Compliance Department The Compliance Department, through its Audit and Inspection wing shall conduct the following activities: i. Designation of Principal Officer ii. Formulating PMLA policy (the Policy) in co-ordination with other departments iii. Intimating and creating awareness amongst sub-brokers/concerned departments. iv. Periodic review of the Policy v. The compliance department shall review the policy regularly and intimate the decisions taken to the sub-brokers/branches/concerned departments. The Guidelines state that the person conducting the review shall be different from the one who framed such policies and procedures. vi. vii. viii. ix. Reporting to FIU-IND on behalf of JKSPL Report to the FIU-IND in regard to direct clients shall be done by the Compliance Department, through the Principal Officer, after seeking necessary details from the RMG, within the time stipulated and format given in the Guidelines. Ongoing Training of staff for implementation of the Policy Compliance Department (Audit and Inspection) in co-ordination with the HR shall undertake necessary training for employees and sub-brokers for implementing the Policy. x. Record maintenance xi. xii. xiii. xiv. xv. Maintain records of all reports sent to the FIU-IND by JKSPL as well as its sub-brokers. Maintain details of Principal Officer appointed by the sub-broker Follow ups: Follow up for non-submission of details by sub-brokers shall be conducted by the Compliance Department. Implementation: Ensure that policies, procedures and controls stipulated in regard to the Guidelines are effectively implemented. Non-reporting: The compliance team shall review the reports and seek reasons for nonreporting of suspicious transaction by the risk department/sub-broker. Reasons for nonreporting shall be recorded and maintained. 3.5 Human Resource Department The HR Department shall undertake the following activities: i. Making arrangements for conducting training program on anti money-laundering and anti terrorist-financing for the staff, by Compliance Department, in order to equip them to meet the requirements of the Guidelines. ii. Adequate screening procedures shall be put in place to ensure high standards when hiring employees. Key positions within the organization structures having regard to the risk of money laundering/terrorist financing and size of business shall be identified. It shall be ensured that employees taking up such key positions are suitable and competent to perform their duties. 4. Power of Attorney Under this facilities whenever the client sells, on behalf of the client the DP generates the pay in slip to make the pay in, And for this procedure the agreement is made between the DP and the client is called POA (POWER OF ATTORNEY) and the procedure is called the auto pay in facility. The procedure and check points are as under: a) The client comes personally with the id proof. b) The agreement is signed in presence of the DP officer c) The person and the sign are verified with the A/c opening form and the data base of system. After verification at the different level agreement is send to the depository department, where again the officer verifies and confirms with the a/c holders and flag ups the POA tick mark in the depository

4 module system and signs it. And sends the agreement to the Clearing department, where separately data is maintained in ms office. And POA tick mark is done in the back office system and signs it. At the end of so much process the original agreement is send back to the depository department and the photo copy of the same is kept with back office system for the record. Sending contract notes, Daily margin statement, Quarterly statements of accounts to clients We are sending contracts notes and margin statement to our clients on daily basis as well as we are also sending quarterly statement on regular basis. We are sending Daily contracts, margin statements and quarterly statement through courier. All POD s to be maintained and also some of that are randomly cross check by our officials on regular basis. We are also providing service of sending e-contracts to our valuable client s who have opted for it. For having contracts on client s registered , he/she have to sign a prescribed from of application for e- communication. Every trading day after generating bills by fetching file from exchange, e-contracts are generating from e-sign software and sending to respective clients from esign@jksecurities.com. We also follows procedure of maker and checker where one person generate and send contract notes on to the clients and another person verifies that all mails reaches to the recipients. If he founds any bounce then, same time a physical contract notes to be issue to client in printed from on or before due deadlines. 5. Policy of Internal shortage Due to excess selling or pay in not made by client, auction take place of the particular script which stands against the pay out of the same day. In this situation the arrangement made by the DP is called internal short. And to simplify the process the DP follows the particular procedure with certain policies is as under. First of all the DP shortens the buyer s pay out (script) for the pay in (script) of the very same day. DP moves the buyer s pay out to its home Demat A/c and buys the same script through its Auction / short delivery Trading A/c. And on the day of pay out the DP transfers the script to the actual buyer. i. We select the buyer who has not sold the pay out. ii. We select the buyer who is debtor. iii. If the auction is confirmed with client, we buy the script the next day of buying. iv. We intimate the client about the shortage to avoid the auction again. 6. Risk Management: A) Risk Management pertaining to System: i. All computers have the backup facility. ii. Server has backup features. iii. In the event of failure of Connectivity, alternate arrangements are made available. iv. Power backup, UPS v. Periodic maintenance by System vendor. vi. Online supervision at HO level. vii. Disaster Data Management viii. Antivirus software s are installed and updated. B) Risk Management pertaining to client trade / transactions: i. New clients are accepted only after proper verification at various levels.

5 ii. Trade limits to clients are permitted with the approval of seniors on the basis of deposits / margins lying with us. iii. Clients are periodically reviewed for financial information. iv. Clients are not permitted to trade in the event of debit balance and / or insufficient margin till the shortfall is fully secured. v. Funds / Shares pay-in and pay-out are routed through designated accounts of the respective clients. vi. Periodic statements of accounts are sent to clients. vii. All feedback from clients is reported to senior officials. viii. Unusual volumes by clients are reported to senior executive. Reports of high value transaction are given to MD. ix. Transactions in penny stocks are permitted on the basis of volume in the respective stock. Clients are required to provide evidence of stock before sell order similarly clients are required to arrange payment for buying. The clients having direct or indirect interest in the management of the company are avoided to deal in such shares unless duly approved by the senior management. Clients are not allowed to deal in illiquid stocks unless approved by seniors. x. While accepting client it is the policy of the company to seek information from the client to disclose any managerial interest if any in any listed company of the exchange. xi. The clients are not permitted to enter order at a rate which is quiet / significantly different from the current price in the market. xii. Clients are permitted to place order in reasonable quantity depending upon the financial status of the client. C) Risk Document for prevention of Client Default: i. The clients are permitted on the basis of payments and margins and on financial status. ii. The clients are given exposure on the basis of funds available and value of margins. iii. The Clients are required to bring in full payment of obligation before the exchange pay-in date. iv. The Clients are given delivery of shares after receipt of payment. v. The client is informed in the event of delay in payment and clients who fail to make payment and/or of habitual of late payment are brought to the knowledge of the senior management and are not permitted to trade further. vi. Similarly clients who fail to deliver shares after selling are warned and are not allowed trading in future unless the deliveries are received. vii. It is the policy of the company to prepare and monitor the list of clients who have not made payments and are in arrears. The senior management is reported along with the list of securities against the arrear of payments. It is the policy of the company to stop / prevent further trading with such clients and clients are directed to either sell the shares or clear outstanding. viii. The clients who are doing more speculations and placing orders in high risk shares in large quantity are not entertained. ix. The financial status of the clients are monitored on periodic basis and updated in client database. The clients who have been forbidden or prevented by the relevant authority (SEBI, BSE etc) are not allowed. x. The financial information of client is also examined on the CIBIL data base. xi. In the event of in ordinate delay of payment the senior managements have the policy of closing out the account by giving a final opportunity to the concerned client. D) Internal control system and procedure:

6 i. New Clients are admitted only after execution of Client Registration form, Member Client Agreement, Risk Disclosure Form and other requirements. ii. The client is interviewed by the senior staff before acceptance. iii. The client is enquired in respect of his investment objective. iv. The senior staff is required to verify the correctness of documents given by the client. The genuineness of details is further verified with the details available on Income Tax site, CIBIL, SEBI etc. v. All the data are uploaded to exchange with allocation of UCC. vi. The physical records are stored in a safe location. vii. The clients are required to bring in funds / margins for trading. viii. The dealers are instructed to accept order within the permitted limit approved by the senior staff to client. ix. The clients are informed about the execution of trade and contract notes are issued to respective clients. x. The settlement obligations are prepared and necessary instructions are prepared for delivery of shares and fund pay-in. xi. The clients are allotted shares on the basis of settlement obligations and payments are given to the clients. xii. The settlement is completed after giving effect in respect of short delivery to respective client and the data are stored. xiii. The deliveries and payment are given to the account of the client only. xiv. The list of clients who are arrears of payment is prepared along with the value of securities lying with us and forwarded to senior management for necessary actions. xv. The periodic review of performance of business by way of volume, location wise growth, financial reports are done by senior management and issues are discussed for betterment. xvi. It is ensured that all statutory details are prepared and filed with the authority in time e.g. Payment of Service Tax, Stamp Duty, SEBI Fees, Exchange dues etc. xvii. It is further ensured that periodic filing of annual compliance with exchange is done. xviii. The balance of margin register along with the shares of the respective clients is reconciled and dividends, interest if any received on account of clients are credited to the accounts of respective clients. xix. The clients are provided with the details of statement of account along with the details of securities on quarterly basis. xx. The financial status of clients are enquired and updated in data system periodically. xxi. The backup of all critical data is kept on the method of disaster data recovery system. xxii. The senior management is required to examine the details of business and made observations especially from the point of view of requirements of Prevention of Money Laundering Act E) Procedure for prevention of insider trading: i. The clients are admitted only after scrutiny of various factors. The clients are enquired to disclose their interest directly or indirectly in the affairs of a listed company. ii. The client is not permitted to trade in a company in which the client is directly or indirectly connected.

7 iii. iv. The volume of trade in any stock of excessive nature is examined from the angle whether the client is making a genuine investment or acting on the basis of some inside information. The client is not permitted to place orders of large quantity not commensurate with the status. The company keeps a watch on list of persons prohibited from trading in capital market by regulatory authority (SEBI). 7. Transfer of Trades: In case of any typing or punching error while placing an order, is rectified by transferring trade to correct client account. After intimating to NSE after market hour by uploading file to NSE to FTP in a standard format laid down by the exchange. We collect information regarding trade modification from various dealing offices within 10 minutes of closer of market threw intranet (webmail) and necessary file is uploaded in a stipulated time. No other trades are manually transferred to any of the client account. 8. Temporarily suspending or closing a client's account: The Stock Broker can suspend/close the client account and also withhold the pay-outs of client if there is any judicial or/and regulatory order/action requiring suspension/closure of client's account. The Stock Broker can also suspend/close the client account if the Stock Broker observes any abnormal or suspicious activity in the client account through its monitoring and surveillance of the client account. The Stock Broker may also temporarily suspend/close the client account if there is no activity in the client account for a period, as deemed fit by the Stock Broker from time to time. The client's account can also be put under temporary suspension/closure if the client has not cleared the uncovered debit in its account or if the client has not submitted Know Your Client (KYC) details sought by the Stock Broker to fulfill its own surveillance or exchange related requirements. In the event of information/reports reaching the Stock Broker of the client's death, the account can also be put under temporary suspension/closure. The Stock Broker can also put the client's account under temporary suspension/closure if the client has failed to provide or update its communication details like correspondence address, Mobile number, landline numbers or ID. The client may also request the Stock Broker to temporarily suspend/close his account, Stock Broker may do so subject to client accepting / adhering to conditions imposed by Stock Broker including but not limited to settlement of account and / or other obligation. 9. De-registering a client: The client has the option to De-register his account after settling his account with the Stock Broker. The client would be liable to pay all dues in his account before the De-registration. The Stock Broker shall have the right to terminate the agreement with immediate effect in any of the following circumstances: The client account figures in the list of debarred entities published by SEBI. The actions of the Client are prima facie illegal / improper or such as to manipulate the price of any securities or disturb the normal / proper functioning of the market, either alone or in conjunction with others. i. If there is any legal /regulatory proceeding against the client under any law in force. ii. If there is reasonable apprehension that the Client is unable to pay its debts or the Client has admitted its inability to pay its debts, as they become payable; a) If the Client is in breach of any term, condition or covenant of this Agreement; b) When the Stock Broker is informed or ascertains that the client has deceased / become insolvent / not able to act in the market due to lunacy/disability etc.

8 c) The Stock Broker shall have the right to close out the existing positions, sell the collaterals to recover any dues with or without consent of the client before the de-registration of the client. d) Either party will be entitled to terminate the agreement without assigning any reason, after giving notice in writing of not less than 30days to the other party. e) Conditions under which a client may not be allowed to take further position or the Stock Broker may close the existing position of a client The Stock Broker may refuse to execute order of a client or may close the existing position of the client due to lack of margin / securities or the order being outside the limits set by Stock Broker / exchange/ SEBI. Other reasons for not allowing further positions or closing out of existing positions could be as: i. Client has not met his pay-in obligations in cash by the scheduled date of pay-in for purchases done in CM segment. ii. Non-payment or erosion of margins or other amounts, outstanding debts, etc. iii. Client is dealing in illiquid scripts or contracts/penny stock. iv. Cheque submitted by the client has bounced or clear funds not received with the Stock Broker for the cheque submitted by the client. v. If in the opinion of the Stock Broker, the client has committed a fraud, crime, or acted in contravention to the agreement. vi. Non Payment of Marked to Market loss in Cash. vii. Open positions in a contract exceed or are close to market wide cut-off limits. viii. Client's position is close to client-wise permissible open positions. ix. Intraday orders after the cut-off time would not be allowed. 10. Closer of Client Accounts / Dormant Account: We are closing client s account only on receipt of Closing Account Form duly signed by the client. In case of dormant account when client come to our office or call our dealer to registered his/her trade if we found dormant client then we check all the KYC and if require we follow KYC procedure again. 11. Client Registration: JK Securities provides service of account opening with all due complied and follow all rules and regulations. We have design a procedure of account opening in such a way that the chances of error reduced by percent. One client s individual registration form verifies by reception level, branch level, account opening office as well as compliance officer also Application of KYC norms: i. The back-office shall ensure compliance of the existing KYC norms, as prescribed by SEBI. ii. The back-office shall capture information of the client s income as per last year s IT returns. The client may just give the range of the income. A firm may quote the last year s profit/loss. (Accordingly, changes will have to be carried out in KYC form by the compliance dept.) iii. The back-office shall compulsorily collect copy of PAN Card from any new client and also verifies with Income Tax Department website. iv. Upon receipt of these details, the back-office shall upload them in the database Client Acceptance Policy: The back-office shall take due care to ensure that, i. Once the client meets the acceptance norms, a recommendation on the account opening form shall be given by the sub-broker/branch manager/relationship manager, to open the account.

9 ii. No account is opened in anonymous or fictitious/ benami name(s). To prevent the opening of account in fictitious or benami name following steps shall be taken: a) The signature of the client shall be verified with the signature appearing on the proof of photo identity. b) The client shall be present in person at the time of submitting the account opening documents. c) A client account shall not be opened where it is not possible to apply appropriate client due diligence measures/policies e.g. suspected non genuine/incomplete information, client s non-cooperation, incomplete KYC form, non-availability of documents with the client. d) Make reasonable enquiries about the client s background so as to ensure that the client does not have a criminal background or has not defaulted in payments to other brokers. e) The Guidelines state that where it is not possible to ascertain the identity of client, information provided to the intermediary is suspected to be non genuine, the client does not co-operate in providing full and complete information, intermediaries should not deal with such clients and file a suspicious activity report Client Identification Policy: i. A client shall be identified by using reliable, independent source documents, data and adequate information in order to satisfy the competent authorities in future. For this purpose, it is desirable that the client is introduced by one of the existing clients/relationship managers/subbrokers/branch managers or employees of the company. ii. Each original document shall be seen prior to acceptance of its copy. Relationship managers/branch managers/sub-brokers shall ensure that they inscribe Verified with originals along with their name and signature after duly checking the originals. iii. Customer identification requires not only to identify the client but also to identify the beneficial owners. The beneficial owner is a natural person or persons who ultimately own, control or influence a client and/or person on whose behalf a transaction is being conducted. It also incorporates those persons who exercise ultimate effective control over a legal person or arrangement. To identify beneficial ownership, the undernoted steps shall be taken: iv. Details of bank accounts/ Demat accounts shall be obtained from the client. v. If a client is a private investment company, an analysis of the structure of the company shall be done to determine the source of funds, principal owners of the shares and those who have control over the funds. vi. Where the Client is a Trustee, the structure of trust shall be understood to ascertain the provider of funds and the person controlling the corpus and the beneficiaries of the Trust vii. PAN number shall be compulsory for opening any new account and also for existing accounts. This shall help in, viii. Verifying if more than one account has been opened by the same person mentioning same or different address. ix. The relationship managers shall find out the reasons for the same. x. The Mid-Office shall formulate a procedure for an official of JKSPL to undertake a visit to the residence/office of the client before or soon after the client starts trading. xi. This will help in ascertaining that the client s life-style matches with the particulars given by him in the KYC. It will also ensure that the address is correct. xii. If accounts in multiple names have been opened from the same address, it will ensure that such persons really reside or are related to that address. In case of a firm, will ensure that the firm operates from the address given by it in the KYC form.

10 14. Investor Complaint Redressal Mechanism: We have a mechanism of receiving clients suggestion as well as complain. We have installed a box in every dealing offices and a blank pre-printed suggestion form cum complain form is kept in all dealing offices. Any client, who has any complain fills up form, sealed it and post in a locked box. This is only opened by the management of the company. On receipt of forms from various dealing offices sealed forms directly goes to managing director of the company. He himself unsealed the form and takes necessary actions for suggestion as well as complains. After studying all forms by MD, he sends to admin department where data entry is made for all types of suggestions. Grading of satisfaction level etc is entered in an excel format to review it in a graphs also. Above all suggestions, complains are separated and necessary redressal is done after taking necessary hearing from concern staff member against to any complain is made. In many cases, where management feels suitable, disciplinary action is also initiated against concern person. We have also kept complain register in all reception area of our branch offices. We have also dedicated a Id: info@jksecurities.com for receiving complain threw and we have Investor s Grievance tag on front page of our website by opening that tag Investor can get information about where to register their complaints. We also have also displayed id of our key person and compliance officer on contact us page in our website including Id of our different branches. 15. Liquidation of client position: In case, client fails to fulfill the pay-in obligation of funds is only done after several reminders to client to clear their debit balance, for purchase of shares. On the pay-out day we transfer the shares of such client where we have not received a payment to a separate Demat account opened by the company under DP ID IN Demat account no and after several reminders we liquidate the position in client account only and we transfer the shares lying with us to client beneficiary account. And pay-in obligation of said securities is made from client account only. Order receipt and execution This is the policy of the company that any dealer or any other person cannot punch order on behalf of client without the permission of account holder. Each and every trade that punches in the terminal has to concern form respective client. Many of our clients personally come to our office and registered their order in trading terminals. Those clients who are not able to come they can call to trading department and registered trade. We have also put Telephone Recording system on those telephones of trading department. If in some case we found that client tells us that he/she did not call us to register his/her trade then in this case we usually check telephone recording track. We are also offerings Trade Confirmation to our clients after execution of trade of client our system directly sent SMS to client on their registered mobile number. 16. Prevention of Anti Money Laundering: The Prevention of Money Laundering Act, 2002 (the Act) has imposed certain responsibilities on the various financial institutions and intermediaries with regard to preventing terrorist financing and money laundering. A broker/sub-broker, being a financial intermediary is also assigned a responsibility to prevent money laundering and terrorist financing. Under section 12 of the Prevention of Money Laundering Act, 2002,

11 i. Every banking company, financial institution and intermediary shall maintain a record of all transactions of a specific nature and value, whether it is a single transaction or a series of small transactions. ii. Such transactions shall be reported to the director of Financial Intelligence Unit India, by the 15th of the succeeding month. iii. iv. Verify and maintain the records of the identity of all its clients. Records of such client are required to be maintained for a period of ten years from the date of cessation of the transactions between the clients and the banking company or financial institution or intermediary. Subsequently, SEBI issued circular dated January 18, 2006 providing broad guidelines on Anti-Money Laundering Standards (the Guidelines). The intermediaries were also advised by SEBI, to ensure that a proper policy framework on anti-money laundering measures is put into place. SEBI has in its circular dated March 20, 2006, invited attention to notifications dated July 01, 2005 and December 13, 2005, issued by the Central Government, notifying the rules under the Prevention of Money Laundering Act, 2002 (the Rules). These Rules cast certain obligations on the intermediaries in regard to preservation and reporting of transactions. As per the Rules, every intermediary shall put a system of maintaining proper record of transactions prescribed in the Rules, which are as mentioned below, i. All cash transactions of value more than 10 lakhs or its equivalent in foreign currency ii. Series of smaller cash transactions integrally connected to each other where such series of transactions have taken place within a month and value of such transaction exceeds Rs. 10 lakhs. iii. 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. iv. All suspicious transactions whether or not made in cash or by way of as mentioned in the Rules. As per the Rules, the following information needs to be maintained in respect of the aforesaid transactions, i. Nature of transaction ii. Amount of transaction and currency in which it was denominated iii. Date of transaction iv. Parties to the transaction 17. Maintenance and preservation of records: Under the Rules, records of client are required to be maintained for a period of 10 years from the date of cessation of transactions between the client and the intermediary. Reporting to Financial Intelligence Unit India As per the Rules, information of cash and suspicious transactions are to be reported to the Director, Financial Intelligence Unit India (FIU -IND) in manual and electronic formats, as per the given Guidelines. The Rules also state that intermediaries who are not in a position to file electronic reports, may file manual reports to FIU-IND. Intermediaries are required to adhere to the following, i. The Cash Transaction Report (CTR) for each month should be submitted to FIU)IND by 15th of the succeeding month ii. The Suspicious Transaction Report (STR) should be submitted within 7 days of arriving at a conclusion that any transactions, whether cash or non-cash or a series of transactions, integrally connected are of suspicious nature.

12 iii. iv. The Principal Officer shall be responsible for timely submission of the reports. Utmost confidentiality should be maintained in filing the reports. The reports should be forwarded to FIU-IND by speed/registered post/fax. No restrictions should be placed on clients whose transactions have been reported to FIU-IND. No tipping off to the client should be done at any level. The Act provides that, in case a banking company, financial institution and intermediary or its officers have failed to comply with the provisions of the Act, such banking company, financial institution and intermediary are liable for a fine of Rs. 10,000/- which may extend up to Rs. 1,00,000/- for each failure.