Suspicious transaction reports

Suspicious transaction reports

Subject : Security

Section: Money laundering

Context:

The Enforcement Directorate (ED) has filed a First Information Report (FIR) against certain entities, including some employees of the bank, over alleged financial irregularities.

Details:

The IndusInd bank had suo moto filed Suspicious Transaction Reports (STRs) with the regulatory authorities regarding certain entities for alleged irregularities with regard to remittances for import transactions carried out from 2011 to 2014.

Prevention of Money Laundering Act, 2002  – Obligations of NBFCs:

• Section 12 of the PMLA, 2002 casts certain obligations on the NBFCs in regard to preservation and reporting of customer account information.
• NBFCs were advised to appoint a Principal Officer and put in place a system of internal reporting of suspicious transactions and cash transactions of Rs.10 lakh and above. 
•  Maintenance of records of transactions:
  • all cash transactions of more than rupees ten lakh or its equivalent in foreign currency.
  • all series of cash transactions below rupees ten lakh or its equivalent in foreign currency within a month and the aggregate value of such transactions exceeds rupees ten lakh;
  • all cash transactions where forged or counterfeit currency notes or bank notes have been used;
  • all suspicious transactions.
•  Information to be preserved
  • 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.
• Maintenance and Preservation of records-that allows data to be retrieved easily and quickly whenever required or when requested by the competent authorities at least for 10 years.
• The identification records and transaction data should be made available to the competent authorities upon request.
• NBFCs are advised to adopt the format prescribed for banks with suitable modifications. There are five reporting formats prescribed for a banking company:

1. Manual reporting of cash transactions
2. Manual reporting of suspicious transactions
3. Consolidated reporting of cash transactions by Principal Officer of the bank
4. Electronic data structure for cash transaction reporting and
5. Electronic data structure for suspicious transaction

• NBFCs are required to report information relating to cash and suspicious transactions to the Director, Financial Intelligence Unit-India (FIU-IND).