A white paper published by the Government of India in the year 2012 suggests that about INR 92.95 bn have been laundered or stacked by Indians in Swiss banks. Experts however contend that the real number is much higher. Though an individual account holder is held responsible in money laundering cases, the accountability also lies equally with financial institutions for adequate reporting of facts to the authorities. Financial institutions could therefore attract penalties in case of delays, non-reporting, and/or misreporting of information.
In India, Money laundering is regulated under the Prevention of Money Laundering Act, 2002 (PMLA) which obligates banking companies, financial institutions, and intermediaries to verify and record client identity, fund beneficiaries, and related transaction details and furnish this information to the Financial Intelligence Unit – India (FIU-IND).
If any action is suspected to be a money laundering offense, the proceeds are liable to be frozen, seized, and confiscated under the PMLA.
Why do you need to report to FIU-IND?
The FIU-IND or FIU is the regulatory arm of the government that keeps track of all the suspicious transactions and/or cash transactions taking place across the country and devises strategies to counter money laundering.
The FIU maintains a national database of all transactions received from the reporting entities, and analyses it for discrepancies.
The agency also disseminates information to domestic and international intelligence/fraud investigation agencies, promotes awareness of the issue, and suggests policy changes to counter it.
Who needs to report to FIU-IND?
The Financial Intelligence Unit in India (FIU-IND) is responsible for analyzing and raising red flags for all money laundering activities in the country. But the FIU is dependent on receiving information from other organizations that wade through several thousand financial transactions daily and report such cases.
All financial entities in the economic system are supposed to report the Cash Transaction Reports (CTRs) and Suspicious Transaction Reports (STRs) to the FIU under the Prevention of Money Laundering Act, 2002 (PMLA). The rules of PMLA apply to:
- Financial institutions such as chit funds, housing finance companies, payment system operators, non-banking financial companies, private cash loans lenders, and the Department of Posts.
- Financial intermediaries such as stock brokers, registrars, portfolio managers, investment advisors, underwriters, etc.
- Enforcement Agency
- National Data Portal
What do you need to report under Anti-Money Laundering?
Under the prevention of money laundering act all reporting entities need to submit reports to the FIU from time to time. The following reports need to be submitted monthly:
- Cash Transaction Report (CTR):
a. Cash transactions of value more than rupees ten lakhs or its equivalent in foreign currency.
b. Number of transactions for a single account, which are valued at more than rupees ten lakhs within a month.
- Cross Border Wire Transfer (CBWT) / Electronic Fund Transfer
- Non-Profit Organization Transaction Report: Cash transactions of more than rupees ten lakhs involving a non-profit organization as recipient.
- Cross Border Transaction Report: All cross-border wire transfers of value more than rupees five lakhs and above or its equivalent in foreign currency.
The reporting entities also need to submit the following cash transaction reports within 7 days of the identification of a suspicious transaction:
- Counterfeit Currency Report (CCR): Reporting of counterfeit currency.
- Suspicious Transaction Report (STR): All suspicious transactions irrespective of whether they are in cash or otherwise.
IRIS FIU-IND Reporting Application
The IRIS FIU Reporting Solution is a standalone desktop application for CTR, STR, NTR (Nil-CTR), CCR, and Electronic Fund Transfer (EFT) reporting to FIU-IND. In India, over 60 reporting entities including banks, financial intermediaries, and other financial institutions have used IRIS application to file their reports. The application takes input in pre-defined MS Excel® or flat file format and converts it into electronic (XML) format as prescribed by the regulator. The easy-to-use application also validates the document against all business rules and schema checks required by the FIU.
For more information on our solution, please contact me at [email protected]