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TMI BlogMaster Circular on Money Transfer Service Scheme.X X X X Extracts X X X X X X X X Extracts X X X X ..... X PART-A SECTION I Guidelines for permitting Indian Agents under Money Transfer Service Scheme (MTSS) SECTION II Guidelines for Overseas Principals SECTION III Guidelines for appointment of Sub-Agents by Indian Agents SECTION IV Guidelines for renewal of permission of existing Indian Agents SECTION V Inspection of Indian Agents SECTION VI KYC/ AML/ CFT Guidelines for the Indian Agents PART-B Reports / Statements KYC/ AML/ CFT Guidelines for Indian Agents Statement showing details of remittances received through Money Transfer Scheme during the quarter ended PART-A SECTION I Guidelines for permitting Indian Agents under Money Transfer Service Scheme (MTSS) Brief Introduction 1.1 Money Transfer Service Scheme (MTSS) is a quick and easy way of transferring personal remittances from abroad to beneficiaries in India. Only inward personal remittances into India such as remittances towards family maintenance and remittances favouring foreign tourists visiting India are permissible. No outward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicant's bankers (two) in a sealed cover. Details of sister/ associated concerns functioning in the financial sector. A certified copy of the board resolution for undertaking money transfer business. 4. Collateral requirement Collateral equivalent to 3 days' average drawings or USD 50,000 whichever is higher, may be kept by the Overseas Principal with a designated bank in India. The minimum amount of USD 50,000 shall be kept as a foreign currency deposit while the balance amount may be kept in the form of a Bank Guarantee. The adequacy of collateral should be reviewed at half yearly intervals on the basis of remittances received during the past six months. 5. Other conditions Only personal remittances shall be allowed under this arrangement. Donations/contributions to charitable institutions/trusts, trade related remittances, remittance towards purchase of property, investments or credit to NRE Accounts shall not be made through this arrangement. A cap of USD 2500 has been placed on individual remittance under the scheme. Amounts up to Rs.50,000/- may be paid in cash to a beneficiary in India. Any amount exceeding this limit shall be paid by means ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... untants, regarding steps taken to comply with anti money laundering norms in the home/ host country. The Overseas Principals will be fully responsible for the activities of their Agents and Sub-agents in India. Proper records of remitters as also beneficiaries pertaining to all pay-outs in India are to be maintained by the Overseas Principals. All records must be made accessible on demand to the Reserve Bank or other agencies of the Government of India, viz., Customs, Ministry of Home Affairs, FIU-IND, etc. Full details of the remitters and the beneficiaries should be provided by the Overseas Principals, if called for. SECTION III Guidelines for appointment of Sub-Agents by Indian Agents The Indian Agent may appoint Sub-Agents who have place of business and a minimum net worth of Rs. 5 lakh. The Sub-Agents should operate through the Indian Agents and should not deal directly with the Overseas Principal. The Sub-Agents should act on the payment instructions issued by the Indian Agents. The Indian Agents are fully responsible for the activities of their Sub-agents. While the Indian Agents will be encouraged to act as self-regulated entities, the onus of ensuring the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances received, as per the enclosed format ( Annex-II ) should be furnished to the Regional Office concerned of the Reserve Bank within 15 days from the close of the quarter to which it relates. 2. Agents must arrange to forward to the Chief General Manager-In-Charge, Reserve Bank of India, Foreign Exchange Department, Forex Markets Division, Central Office, Mumbai 400 001 addresses of their additional locations on a quarterly basis. Further, list of their sub-agents should be furnished at the above address on half yearly basis. 3. Indian Agents should also submit to the Chief General Manager-In-Charge, Reserve Bank of India, Foreign Exchange Department, Forex Markets Division, Central Office, Mumbai 400 001 and to the Regional Office concerned, the information for the half-year in the format annexed ( Annex-III ) as at the end of June and December every year within the 15th of the following month. Annex-I KYC/ AML/ CFT Guidelines for Indian Agents SECTION-I Know Your Customer (KYC) norms/Anti-Money Laundering (AML) standards/Combating the Financing of Terrorism (CFT)/Obligation of Authorised Persons (Indian Agents) under Prevention of Money Laundering A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved risk, is not intrusive, and is in conformity with the guidelines issued in this regard. Any other information from the customer, wherever necessary, should be sought separately with his/her consent. 4.2 KYC Policy APs (Indian Agents) should frame their KYC policies incorporating the following four key elements: Customer Acceptance Policy; Customer Identification Procedures; Monitoring of Transactions; and Risk Management. 4.3 Customer Acceptance Policy (CAP) a) Every AP (Indian Agent) should develop a clear Customer Acceptance Policy laying down explicit criteria for acceptance of customers. The Customer Acceptance Policy must ensure that explicit guidelines are in place on the following aspects of customer relationship in the AP (Indian Agent). i. No remittance is received in anonymous or fictitious/ benami name(s). [APs (Indian Agents) should not allow any transaction in any anonymous or fictitious name (s) or on behalf of other persons whose identity has not been disclosed or cannot be verified in view of Government of India Notification dated June 16, 2010 Rule 9, sub-rule (1C)]. ii. Parameters of risk ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay contain information relating to customer s identity, social / financial status, etc. The nature and extent of due diligence will depend on the risk perceived by the AP (Indian Agent). However, while preparing customer profile, APs (Indian Agents) should take care to seek only such information from the customer, which is relevant to the risk category and is not intrusive. The customer profile is a confidential document and details contained therein should not be divulged for cross selling or any other purposes. c) For the purpose of risk categorisation, individuals (other than High Net Worth) and entities whose identities and sources of wealth can be easily identified and transactions by whom by and large conform to the known profile, may be categorised as low risk. Customers that are likely to pose a higher than average risk should be categorised as medium or high risk depending on customer's background, nature and location of activity, country of origin, sources of funds and his client profile, etc. APs should apply enhanced due diligence measures based on the risk assessment, thereby requiring intensive due diligence for higher risk customers, especially those for whom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts) should obtain sufficient identification document /s to verify the identity of the customer and his address/location. For customers that are legal persons, the AP (Indian Agent) should (i) verify the legal status of the legal person through proper and relevant documents; (ii) verify that any person purporting to act on behalf of the legal person is so authorised and identify and verify the identity of that person; and (iii) understand the ownership and control structure of the customer and determine who are the natural persons who ultimately control the legal person. Customer identification requirements in respect of a few typical cases, especially, legal persons requiring an extra element of caution are given in paragraph 4.5 below for guidance of APs (Indian Agents). APs (Indian Agents) may, however, frame their own internal guidelines based on their experience of dealing with such persons, their normal prudence and the legal requirements as per established practices. If the AP (Indian Agent) decides to undertake such transactions in terms of the Customer Acceptance Policy, the AP (Indian Agent) should take reasonable measures to identify the beneficial owner(s) and verify hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment to beneficiaries in Indian Rupees, the identification documents, as mentioned at SECTION-II, should be verified and a copy retained. ii) A cap of USD 2500 has been placed on individual remittances under the scheme. Amounts up to Rs.50,000 may be paid in cash. Any amount exceeding this limit shall be paid only by means of cheque/D.D. /P.O., etc. or credited directly to the beneficiary's bank account. However, in exceptional circumstances, where the beneficiary is a foreign tourist, higher amounts may be disbursed in cash. Only 12 remittances can be received by a single individual during a calendar year. 4.5 Customer Identification Requirements Transactions by Politically Exposed Persons (PEPs) - Indicative Guidelines Politically exposed persons are individuals who are or have been entrusted with prominent public functions in a foreign country, e.g., Heads of States or of Governments, senior politicians, senior government/judicial/military officers, senior executives of state-owned corporations, important political party officials, etc. APs (Indian Agents) should gather sufficient information on any person/customer of this category intending to undertake a transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hanced due diligence measures. Such review of risk categorisation of customers should be carried out periodically. APs (Indian Agents) should 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 [In view of Government of India Notification dated June 16, 2010 -Rule 9, sub-rule (1B)] APs (Indian Agents) should examine the background and purpose of transactions with persons (including legal persons and other financial institutions) from jurisdictions included in the FATF Statements and countries that do not or insufficiently apply the FATF Recommendations. Further, if the transactions have no apparent economic or visible lawful purpose, the background and purpose of such transactions should, as far as possible, be examined and written findings together with all the documents should be retained and made available to the Reserve Bank/ other relevant authorities, on request. 4.7 Attempted transactions Where the AP (Indian Agent) is unable to apply appro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing purposes and financing of terrorism activities. 4.10 Combating Financing of Terrorism a) In terms of PML Rules, suspicious transaction should include inter alia transactions which give rise to a reasonable ground of suspicion that these may involve the proceeds of an offence mentioned in the Schedule to the PMLA, regardless of the value involved. APs (Indian Agents) should, therefore, develop suitable mechanism through appropriate policy framework for enhanced monitoring of transactions suspected of having terrorist links and swift identification of the transactions and making suitable reports to the FIU-IND on priority. b) APs (Indian Agents) are advised to take into account risks arising from the deficiencies in AML/CFT regime of certain jurisdictions viz. Iran, Uzbekistan, Pakistan, Turkmenistan, Sao Tome and Principe, Democratic People s Republic of Korea (DPRK) as identified in FATF Statement (www.fatf-gafi.org) issued from time to time, while dealing with individuals from these jurisdictions. In addition to FATF Statements circulated by the Reserve Bank of India from time to time, (latest as on July 1, 2011, circulated vide the A.P. (DIR Series) Cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntelligence Unit- India (FIU-IND) Section 12 of the Prevention of Money Laundering Act (PMLA), 2002 , as amended by Prevention of Money Laundering (Amendment) Act, 2009, casts certain obligations on the APs (Indian Agents) in regard to preservation and reporting of transaction information. APs (Indian Agents) are, therefore, advised to go through the provisions of Prevention of Money Laundering Act, (PMLA), 2002, as amended by Prevention of Money Laundering (Amendment) Act, 2009 and the Rules notified there under and take all steps considered necessary to ensure compliance with the requirements of Section 12 of the Act ibid . (i) Maintenance of records of transactions APs (Indian Agents) should introduce a system of maintaining proper record of transactions prescribed under Rule 3, as mentioned below: all cash transactions of the value of more than Rupees ten lakh or its equivalent in foreign currency; all series of cash transactions integrally connected to each other which have been valued below Rupees ten lakh or its equivalent in foreign currency where such series of transactions have taken place within a month and the aggregate value of such transactions ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecords and transaction data should be made available to the competent authorities upon request. c) In paragraph 4.6 of this Circular, APs (Indian Agents) have been advised to pay special attention to all complex, unusual large transactions and all unusual patterns of transactions, which have no apparent economic or visible lawful purpose. It is further clarified that the background including all documents/office records / memoranda pertaining to such transactions and purpose thereof should, as far as possible, be examined and the findings at branch as well as Principal Officer s level should be properly recorded. Such records and related documents should be made available to help auditors in their day-to-day work relating to scrutiny of transactions and also to Reserve Bank/other relevant authorities. These records are required to be preserved for ten years as is required under Prevention of Money Laundering Act, (PMLA), 2002, as amended by Prevention of Money Laundering (Amendment) Act, 2009 and Prevention of Money-Laundering (Maintenance of Records of the Nature and Value of Transactions, the Procedure and Manner of Maintaining and Time for Furnishing Information and Verifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scrupulously adhere to the following: i) The Cash Transaction Report (CTR) for each month should be submitted to the FIU‑IND by 15th of the succeeding month. Cash transaction reporting by branches to their controlling offices should, therefore, invariably be submitted on a monthly basis and APs (Indian Agents) should ensure to submit CTR for every month to FIU-IND within the prescribed time schedule. ii) While filing CTR, details of individual transactions below Rs.50,000 need not be furnished. iii) CTR should contain only the transactions carried out by the AP on behalf of their customers excluding transactions between the internal accounts of the AP. iv ) A cash transaction report for the AP as a whole should be compiled by the Principal Officer of the AP every month in physical form as per the format specified. The report should be signed by the Principal Officer and submitted to the FIU-IND. v) In case of Cash Transaction Reports (CTR) compiled centrally by APs (Indian Agents) for the branches at their central data centre level, APs (Indian Agents) may generate centralised Cash Transaction Reports (CTR) in respect of branches under central computeri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t authorities on request. v) In the context of creating KYC/ AML awareness among the staff and for generating alerts for suspicious transactions, APs (Indian Agents) may consider the following indicative list of suspicious activities. Some possible suspicious activity indicators are given below: Customer is reluctant to provide details / documents on frivolous grounds. The transaction is undertaken by one or more intermediaries to protect the identity of the beneficiary or hide their involvement. Large amount of remittances. Size and frequency of transactions is high considering the normal business of the customer. The above list is only indicative and not exhaustive. vi) APs (Indian Agents) should not put any restrictions on payment to beneficiaries where an STR has been made. Moreover, it should be ensured that employees of APs shall keep the fact of furnishing such information as strictly confidential and there is no tipping off to the customer at any level. 4.14 Customer Education/Employees Training/Employees Hiring a) Customer Education Implementation of KYC procedures requires APs (Indian Agents) to demand certain information from cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ures Documents - Legal name and any other names used (i) Passport (ii) PAN card (iii) Voter s Identity Card (iv) Driving licence (v) Identity card (subject to the AP s satisfaction) (vi) Letter from a recognized public authority or public servant verifying the identity and residence of the customer to the satisfaction of the AP - Correct permanent address (i) Telephone bill (ii) Bank account statement (iii) Letter from any recognized public authority (iv) Electricity bill (v) Ration card (vi) Letter from employer (subject to satisfaction of the AP). (any one of the documents, which provides customer information to the satisfaction of the AP will suffice). Section-III List of various reports and their formats Cash Transaction Report (CTR) Electronic File Structure- CTR Suspicious Transaction Report (STR) Electronic File Structure-STR Note:- Formats of the above reports are given in A.P. (DIR Series) Circular No. 18 { A.P. (FL Series) Circular No. 5 } dated November 27, 2009. Annex-II Statement showing details of remittances received through Money Transfer Scheme during the quarter ended __________ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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