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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 ..... mitting 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 remittance from India is permissible under MTSS. The system envisages a tie-up between reputed money transfer companies abroad known as Overseas Principals and agents in India known as Indian Agents, who would disb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al 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 of account payee cheque/ demand draft/ payment order, etc. or credited directly to the beneficiary's bank account only. However, in exceptional circumstances, where the beneficiary is a foreign tourist, higher amounts may be disbursed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ords 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 proper conduct of activities of the Sub-agents in the prescribed manner will lie solely on the Indian Agents. Every Indian Agent would be required to conduct due diligence before appointing a Sub-agent and any irregularity observed cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rge, 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 Act, (PMLA), 2002, as amended by Prevention of Money Laundering (Amendment) Act, 2009 - Cross Border Inward Remittance under Money Transfer Service Scheme 1. Introduction The offence of Money Laundering has been defined in Section 3 of the Prevention of Money Laundering Act, 2002 (PM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments: * 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 perception are clearly defined in terms of the nature of business activity, location of customer and his clients, mode of payments, volume of turnover, social and financial status, etc. to enable categorisation of customers into low, medium and high risk (APs may choose any suitable nomenclature viz. level I, level II and level III). Customers requiring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial 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 the sources of funds are not clear. Examples of customers requiring enhanced due diligence include (a) nonresident customers; (b) customers from countries that do not or insufficiently apply the FATF standards; (c) high net worth individuals; (d) politically exposed persons (PEPs); (e) non-face to face customers; and (f) those with dubious reputation as per public information available, etc. d) It is import ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d (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 his/her/their identity in a manner so that it is satisfied that it knows who the beneficial owner(s) is/are [in view of Government of India Notification dated June 16, 2010 - Rule 9 sub-rule (1A) of PML Rules].. b) Some close relatives, e.g. wife, son, daughter and parents, etc. who live with their husband, father / mother and son / daughter, as the case may be, may find it difficult to undertake transactions with APs (In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mstances, 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 transaction and check all the information available on the person in the public domain. APs (Indian Agents) should verify the identity of the person and seek information about the source /s of wealth and source /s of funds before accepting the PEP as a customer. The decision to undertake a transaction with a PEP should be taken at a senior level which should be clearly spelt out in the Customer Acceptance Policy. APs (Indian Agents) should also subje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a 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 appropriate KYC measures due to non-furnishing of information and /or non-cooperation by the customer, the AP should not undertake the transaction. Under these circumstances, APs should make a suspicious transactions report to FIU-IND in relation to the customer, even if the transaction is not put through. 4.8 Risk Management a) The Board of Directors of the AP (Indian Agent) should ensure that an effective KYC programme is put in place by establishing approp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oring 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) Circular No. 66 dated May 20, 2011), APs (Indian Agents) should also consider using publicly available information for identifying countries, which do not or insufficiently apply the FATF Recommendations. All A P (Indian Agents) are accordingly advised to take into account risks arising from the deficiencies in AML/CFT regime of these countries, while entering into business relationships and transactions with persons (including legal persons and other financial institutions) from or in these co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere 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 exceeds Rupees ten lakh; * all transactions involving receipts by non-profit organisations of value more than Rupees ten lakh or its equivalent in foreign currency [In view of Government of India Notification dated November 12, 2009 - Rule 3, sub-rule (1) clause (BA) of PML Rules]; * 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 or a document has taken place facilitating the transaction; and * All suspicious t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 Verification and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Rules, 2005, as amended from time to time. (iv) Reporting to Financial Intelligence Unit - India a) In terms of the PML rules, APs (Indian Agents) are required to report information relating to cash and suspicious transactions to the Director, Financial Intelligence Unit-India (FIU-IND) in respect of transactions referred to in Rule 3 at the following address: The Director, Financial Intelligenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 computerized environment at one point for onward transmission to FIU-IND, provided: * The CTR is generated in the format prescribed by Reserve Bank in Para 4.12(iv)(b) of this Circular. * A copy of the monthly CTR submitted on its behalf to the FIU-IND is available at the branch concerned for production to auditors/inspectors, when asked for. * The instruction on 'Maintenance of records of transactions', 'Information to be preserved' and 'Maintenance and Preservation of records' as contained above in this circular at Para 4.12 (i), (ii) and (iii) respectively are scrupulously ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidering 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 customers which may be of personal nature or which has hitherto never been called for. This can sometimes lead to a lot of questioning by the customer as to the motive and purpose of collecting such information. There is, therefore, a need for APs (Indian Agents) to prepare specific literature/ pamphlets, etc. so as to educate the customer of the objectives of the KYC programme. The front desk staff needs to be specially trained to handle such situations while dealing with customers. b) Employees' Training APs (Indian Agents) must have an ongoing employee training programme so that the members of the st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action 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 __________________ Name of the Agent in India ______________________________________ Name of the Overseas Principal Total amount of foreign currency received (in USD) Rupee equivalent Note : This statement is required to be submitted to the concerned Regional Office of RBI, FED within 15 days from the close of the quarter to which it relates. Annex-III Statement of Collateral kept by Indian Agents Name of the Indian Agent __________________________ Name of the Overseas Principal Total amount of foreign currency received during the past 6 months in USD Amount of Collateral obtained in USD Collateral kept in the form of Last review of adequacy of collateral along-with the observations ..... X X X X Extracts X X X X X X X X Extracts X X X X
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