NHB had vide their Circular NHB (ND)/DRS/POL.13/2006 dated April 10, 2006 framed the guidelines on KYC & AML for all HFCs". Now NHB has vide letter no. NHB (ND)/DRS/Pol-No. 33/2010-11 dated October 11,2010 advised all HFCs to amend their existing policy framework. This KYC Policy for Ind Bank Housing Ltd is framed in pursuance of the letter cited above.
The four elements comprising this policy are:
(i) Customer Acceptance Policy
(ii) Customer Identification Procedure
(iii) Monitoring of transactions
(iv) Risk Management
For the purpose of KYC policy, a 'Customer' may be defined as:
• A person or entity that maintains an account and/or has a business relationship with the HFC;
• One on whose behalf the account is maintained (i.e. the beneficial owner);
• Beneficiaries of transactions conducted by professional intermediaries, such as Stock Brokers, Chartered Accountants, Solicitors, etc. as permitted under the law, and aAny person or entity connected with a financial transaction which can pose significant reputation or other risks to the Company, such as a wire transfer or issue of a high value demand draft as a single transaction.
" IBHL would verify the identity of the customer with proper adherence to the customer identification procedure and ensure that no account is opened in anonymous or fictitious/benami name(s).The extent of risk involved with a customer with respect to the location of customer and his clients and mode of payments are clearly ascertained.
Volume of turnover, social and financial status, etc. will form the basis to categorize customers into low risk, medium risk and high risk respectively; customers requiring very high level of monitoring, e.g. Politically Exposed Persons would be dealt with due degree of diligence and caution.
Documentation requirements and other information would be collected in respect of different categories of customers depending on perceived risk and keeping in mind the requirements of PML Act, 2002 and guidelines issued from time to time.
No account would be opened or an existing account would be closed where Ind Bank Housing Ltd is unable to apply appropriate customer due diligence measures, i.e. Ind Bank Housing Ltd is unable to verify the identity and /or obtain documents required as per the risk categorisation due to non co-operation of the customer or non reliability of the data/information furnished to the HFC. Suitable built-in safeguards would be put into place to avoid harassment of the customer. For example, decision to close an account may be taken at a reasonably high level in the management after giving due notice to the customer explaining the reasons for such a decision;
Circumstances, in which a customer is permitted to act on behalf of another person/entity or occasions when an account is operated by a mandate holder or where an account may be opened by an intermediary in a fiduciary capacity are as follows in conformity with the existing laws and practices
• If the Applicant is a Non Resident Indian
• If the Applicant is a limited company
• If the Applicant is a partnership firm
• Any other circumstance where the applicant cannot be physically present at the branch premises
Necessary checks would be performed before opening a new account to ensure that the identity of the customer does not match with any person with known criminal background or with banned entities such as individual terrorists or terrorist organizations.
The Customer Profile will contain information relating to the customer's identity, social/financial status, nature of business activity, information about his clients' business and their location, etc. The nature and extent of due diligence will depend on the risk perceived by the Company. The customer profile will be a confidential document and details contained therein shall not be divulged for cross selling or any other purposes. The profile of customer would be prepared based on the risk categorisation. Only information relevant for risk categorization would be collected and shall not be intrusive.
Risk Categorization would be done as follows:
Low Risk: These are individuals (other than High Net Worth) and entities whose identities and sources of wealth can be easily identified and transactions in whose accounts by and large conform to the known profile.Eg. salaried employees whose salary structures are well defined, people belonging to lower economic strata of the society whose accounts show small balances and low turnover, Government departments & Government owned companies, regulators and statutory bodies.In these cases the identity and location of the customer shall be verified
Medium Risk and High Risk: Variables such as customer's background, nature and location of activity, country of origin, sources of funds and his client profile would enable categorization into medium or high risk. The Company shall exercise due diligence based on risk assessement and intensive due diligence shall be exercised in case of high risk customers particularly where the sources of funds are unclear. Examples of customers requiring higher due diligence may include
a. Non Resident Customers
b. High Net worth Individuals
c. Trusts, Charities, NGOs and organization receiving donations
d. Companies having close family shareholding or beneficial ownership
e. Firms with sleeping partners
f. Politically Exposed Persons (PEPs) of foreign origin
g. Non face to face Customers
h. Those with dubious reputation as per public information available etc.
The information sought from the customer will be in conformity with the extant KYC guidelines. Any other information apart from this that is matters not covered under the guidelines would be separately sought after obtaining the customer consent.
While Dealing with Politically Exposed persons and customers who subsequently became Politically Exposed persons the Company would take Senior Management Approval for continuing the business relationship with such PEPs and the monitoring of transactions of such persons would be at an enhanced level.
The Company shall ensure that the adoption of customer acceptance policy and its implementation shall not become too restrictive and result in denial of housing finance companies' services to general public, especially to those, who are financially or socially disadvantaged.
Customer identification means identifying the customer and verifying his/ her identity by using reliable, independent source documents, data or information. This shall be in accordance with Rule 9 of 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. The Company would :
Identity the client, verify their identity and obtain all necessary information that is required for the business relationship.
In transactions exceeding Rs.50,000 and in international money transfers , the identity of the customers are to be verified.
Ind Bank Housing Ltd shall obtain sufficient information necessary to establish, and satisfy, the identity of each new customer, whether regular or occasional and the purpose of the intended nature of relationship. This would be done by obtaining documents such as voter ID, PAN number, passport etc. Satisfaction shall mean the competent authorities of the company shall ensure that due diligence observed based on the risk profile of the customer in compliance with the extant guidelines in place. The Company shall also ensure that there is no burdensome regime for the customers. The nature of documents /information would depend also on the type of customer (individual, corporate etc). For customers that are natural persons sufficient identification data to verify the identity of the customer, his address/location, and also his recent photograph shall be obtained. For customers that are legal persons or entities, the Company will,
(i) verify the legal status of the legal person/ entity through proper and relevant documents .
(ii) verify that any person purporting to act on behalf of the legal person/entity is so authorized and identify and verify the identity of that person . For the aforesaid categories, this would be done by verifying the respective memorandum and articles of association and a board resolution in case of a company. For a partnership firm, the partnership deed, registration certificate of the firm and the power of attorney in favour of the person purporting to act on behalf of the firm shall be collected.
(iii) understand the ownership and control structure of the customer and determine who are the natural persons who ultimately control the legal person. For this purpose the shareholding pattern duly certified by a chartered accountant or company secretary shall be obtained and verified. In respect of entities such as trust, the trust deed and particulars of the author of the trust shall be verified.
The extent of monitoring will depend on the risk sensitivity of the account. The Company shall pay special attention to all complex, unusually large transactions and all unusual patterns which have no apparent economic or visible lawful purpose. The Company shall monitor and maintain a record of record/information in cases of prepayment /closure of loan accounts by remitting cash of Rs. 10.00 lac and above and in respect 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;
High Risk accounts shall be subjected to intensive monitoring. Ind Bank Housing Ltd shall maintain a record of transactions in the accounts and preserve and maintain the same as required in terms of section 12 of the PML Act, 2002. Transactions of suspicious nature and/or any other type of transaction notified under section 12 of the PML Act, 2002, shall be reported to the appropriate law enforcement authority.
Internal Audit: Internal Audit function shall verify the compliance and adherence to KYC policies and procedures. The application of KYC procedures at the branches' level would be reviewed by the internal auditors. The compliance function shall provide an independent evaluation of the company's own policies and procedures, including legal and regulatory requirements distinct from that of the internal audit. Internal Auditors specifically check and verify the application of KYC procedures at the branches and comment on the lapses observed in this regard. The compliance in this regard is put up before the Audit Committee of the Board at quarterly intervals.
The Company has in place adequate systems and safeguards to ensure that there are no serious lapses. There is also a system of fixing accountability in the event of serious lapses.
Ongoing Employee Training: The Company shall provide training on KYC procedures to frontline staff, compliance staff and staff dealing with new customers catering to the distinct needs of each staff category.
Proper education would be imparted to ensure that the Customer appreciates the motives and objectives of collecting information under the KYC programmes.
The Company shall pay special attention to any money laundering threats that may arise from new or developing technologies including on-line transactions that might favour anonymity, and take suitable measures as needed to prevent their use in money laundering schemes.
The Company will apply the KYC norms to all the existing customers on the basis of materiality and risk envisaged for the loan accounts. Transactions would be continuously monitored and unusual patterns would occasion a immediate review. In cases where the company is unable to apply appropriate KYC measures due to non-furnishing of information and /or non-cooperation by the customer, such accounts shall be terminated after issuing a due notice to the customer explaining the reasons for such a decision. Such decisions would be taken by the top management.
The Company does not have any subsidiaries and branches abroad.
The Company Secretary of the Company acts as the Principal Officer He functions from the corporate office of the Company and oversees monitoring and reporting of all transactions and sharing of information as required under the law. A proper system of fixing accountability for serious lapses and intentional circumvention of prescribed procedures and guidelines shall also be ensured by the Company.
Proper records of the following transactions shall be maintained. 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;
Aall 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.
All suspicious transactions whether or not made in cash and by way of as mentioned in the Rules.
• The nature of the transactions;
• The amount of the transaction and the currency in which it was denominated;
• The date on which the transaction was conducted; and
• The parties to the transaction.
The Company has a system for proper maintenance and preservation of account information in a manner that allows data to be retrieved easily and quickly whenever required or when requested by the competent authorities. The Company will maintain for atleast ten years from the date of cessation of transaction between the company and the client, all necessary records of transactions, both domestic or international, which will permit reconstruction of individual transactions (including the amounts and types of currency involved if any) so as to provide, if necessary, evidence for prosecution of persons involved in criminal activity.
The Company will maintain proper records pertaining to the identification of the customer and his address (e.g. copies of documents like passports, identity cards, driving licenses, PAN, utility bills etc.) obtained while opening the account and during the course of business relationship would be preserved for at least ten years after the business relationship is ended.
The Company shall report information relating to cash and suspicious transactions to the Director, Financial Intelligence Unit-India (FIU-IND) at the following address:
New Delhi -110021
(a) The information in respect of the transactions referred to in clause(A), (B) and (BA) of sub-rule (1) of rule 3 of the PML Rules ( i.e. clauses (i) , (ii) and (iii) referred to in Paragraph 19 supra) would be submitted to the Director every month by the 15th day of the succeeding month.
(b) The information in respect of the transactions referred to in clause(C) of sub-rule (1) of rule 3 of the PML Rules ( i.e. clause(iv) in Paragraph 19 supra) would be furnished promptly to the Director in writing, or by fax or by electronic mail not later than seven working days from the date of occurrence of such transaction.
(c) The information in respect of the transactions referred to in clause(D) of sub-rule (1) of rule 3 of the PML Rules ( i.e. clause(v) in Paragraph 19 supra) would be furnished promptly to the Director in writing, or by fax or by electronic mail not later than seven working days on being satisfied that transaction is suspicious.
Cash transactions or series of integrally connected cash transactions would be reported by 15th of the month succeeding the month of reporting the transaction. Suspicious transactions and transactions involving counterfeit notes would be reported within seven days of the occurrence