Provisions of Prevention of Money Laundering Act, 2002 The Prevention of Money Laundering Act, 2002 (PMLA) forms the core of the legal framework established by India to combat money laundering and related crimes. The PMLA and the Rules notified under it came into effect on 1st July 2005. Under the PMLA, all entities registered with SEBI must furnish information about suspicious transactions, whether or not made in cash, to the Financial Intelligence Unit-India (FIU-IND). Key Provisions of PMLA Section 3: Projecting the proceeds of crime as untainted property constitutes an offense of money laundering. Section 4: Punishment for money laundering includes imprisonment and fines. Money Laundering Definition: Money laundering involves disguising financial assets to prevent detection of illegal activities that produced them. Through this process, illicit monetary proceeds are transformed into funds with an apparently legal origin. Role of FIU-IND The Financial Intelligence Unit-India (FIU-IND) is the central national agency responsible for: Receiving, processing, analyzing, and disseminating information about suspicious financial transactions. Coordinating with national and international agencies to combat money laundering and related crimes. Definition of Suspicious Transactions under PMLA Rules As per Section 2(1)(g) of the PMLA Rules, a suspicious transaction (whether in cash or not) is one that: Gives rise to reasonable suspicion that it may involve proceeds of crime. Appears to be made under unusual or unjustified complexity. Has no economic rationale or bona fide purpose. Is suspected to involve activities related to terrorism. Policy and Procedures for Anti-Money Laundering (AML) Measures The policies outlined below summarize the provisions of the PMLA, 2002 and provide guidance on implementing AML and anti-terrorist financing measures. General Requirements: Notification and Rules: Necessary rules under PMLA were published in the Gazette of India on 1st July 2005. Entities like banks, financial institutions, and intermediaries (stockbrokers, portfolio managers, etc.) must maintain records of transactions as prescribed under PMLA. Transactions to Be Monitored: All cash transactions exceeding Rs. 10 lakh (or its equivalent in foreign currency). Series of cash transactions below Rs. 10 lakh but integrally connected, occurring within a calendar month. All suspicious transactions, whether or not made in cash. Client Due Diligence (CDD) Process To comply with PMLA, entities should adopt written procedures for: Acceptance of Clients: Do not open accounts in fictitious or anonymous names. Ensure KYC compliance and avoid onboarding banned entities. Verify client details using SEBI/Stock Exchange records. Identification of Clients: Use reliable documents to establish identity and purpose of relationships. Follow SEBI’s KYC norms. Transaction Monitoring and Reporting (Suspicious Transactions Reporting - STR): Monitor cash and suspicious transactions. Report suspicious activity to the Principal Officer for submission to FIU-IND. Responsibilities of the Compliance Officer and Staff Ensure adherence to AML policies. Communicate the policy to all relevant personnel. Report suspicious transactions promptly to FIU-IND. Reporting to FIU-IND: Information related to cash and suspicious transactions must be reported to: Director, FIU-IND Financial Intelligence Unit India 6th Floor, Hotel Samrat Chanakyapuri, New Delhi – 110021 Role of The Big Bull As an organization providing Research Analyst Services, The Big Bull adheres to SEBI KYC norms and ensures compliance with PMLA. Client Data: Execution services are not part of our offerings, and transactional data remains with the client’s broker. Fee Collection: Only through bank transfers; no cash payments are accepted. Policy Communication: Shared with all staff and reviewed annually. For more information, visit thebigbull.co.in or contact: Mr. Sandeep Gupta SEBI Research Analyst SEBI Registration No.: INH000013147