In order to prevent company from being used, intentionally or unintentionally, by criminal elements for money laundering activities, Vachana shall maintain a record of all the transactions; the nature and value of which has been prescribed below.
Risk-based Approach: Based on the risk based approach, VIPL shall apply each of the client due diligence measures on a risk sensitive basis. The basic principle enshrined in this approach is that the VIPL shall adopt an enhanced client due diligence process for higher risk categories of clients. Conversely, a simplified client due diligence process may be adopted for lower risk categories of clients. In line with the risk-based approach, the type and amount of identification information and documents that VIPL shall obtain necessarily depend on the risk category of a particular client. Further, low risk provisions shall not apply when there are suspicions of ML/FT or when other factors give rise to a belief that the customer does not in fact pose a low risk.
The special category clients like Non resident clients, High net-worth clients, Trust, Charities, Non-Governmental Organizations (NGOs) and organizations receiving donations, Companies having close family shareholdings or beneficial ownership, Politically Exposed Persons (PEP) are individuals who are or have been entrusted with prominent public functions in a foreign country, senior politicians, senior government/judicial/military officers, senior executives of state-owned corporations, important political party officials, etc.,
Companies offering foreign exchange offerings, Clients in high risk countries where existence / effectiveness of money laundering controls is suspect, where there is unusual banking secrecy, countries active in narcotics production, countries where corruption (as per Transparency International Corruption Perception Index) is highly prevalent, countries against which government sanctions are applied, While dealing with clients in high risk countries where the existence/effectiveness of money laundering control is suspect, intermediaries apart from being guided by the Financial Action Task Force (FATF) statements that identify countries that do not or insufficiently apply the FATF Recommendations, published by the FATF on its website (www.fatf- gafi.org), shall also independently access and consider other publicly available information.
The KYC policy shall clearly spell out the client identification procedure to be carried out at different stages i.e. while establishing the VIPL- Client relationship, while carrying out transactions for the client or when the VIPL has doubts regarding the veracity or the adequacy of previously obtained client identification data.
VIPL shall be in compliance with appropriate risk management systems to determine whether the client or potential client or the beneficial owner of such client is a politically exposed person. These procedures shall include seeking relevant information from the client, referring to publicly available information or accessing the commercial electronic databases of PEPS.
The VIPL relationship managers will have to seek senior management approval for establishing business relationships with PEPs. Where a client has been accepted and the client or beneficial owner is subsequently found to be, or subsequently becomes a PEP, and also take reasonable measures to verify the sources of funds as well as the wealth of clients and beneficial owners identified as PEP by each original document prior to acceptance of a copy. Failing to which, shall be noted and reported to the higher authority within the VIPL
All such trasactions shall be reported to concerned official by VIPL following the procedures prescribed by SEBI and FIU-IND.
The Principal Officer of VIPL will be responsible for timely submission of CTR and STR to FIU-IND by Utmost confidentiality maintained in filing of CTR and STR to FIU-IND. And such reports may be transmitted by speed/registered post/fax at the notified address. And also, VIPL shall put restrictions on operations in the accounts where an STR has been made. VIPL and Its directors, officers and employees (permanent and temporary) shall be prohibited from disclosing (“tipping off”) the fact that a STR or related information is being reported or provided to the FIU-IND. This prohibition on tipping off extends not only to the filing of the STR and/or related information but even before, during and after the submission of an STR. Thus, it shall be ensured that there is no tipping off to the client at any level.
With respect to the mode of receipt and payment of funds through pre-funded instruments such as Pay Order, Demand Draft, Banker’s cheque, etc from the clients, it has been decided that, If the aggregate value of pre-funded instruments is 50,000/- or more, per day per client, VIPL may accept the instruments only if the same are accompanied by the name of the bank account holder and number of the bank account debited for the purpose, duly certified by the issuing bank. The mode of certification may include the following:
Vachana as a value broker, has three distinct products namely Vachana Discount Delight, Vachana Service Delight and Vachana Investment Delight.
The main objective of surveillance is to stop suspicious and manipulated trading activity by individual or group of individuals on the exchange platform. The Compliance office of Vachana will monitor such activity on regular basis.
The monitoring of such activity depends on Exchange alerts as follows.
|Sr. No.||Transactional Alerts||Segment|
|1||Significantly increase in client activity||Cash|
|2||Sudden trading activity in dormant account||Cash|
|3||Clients/Group of Client(s), deal in common scrips||Cash|
|4||Client(s)/Group of Client(s) is concentrated in a few illiquid scrips||Cash|
|5||Client(s)/Group of Client(s) dealing in scrip in minimum lot size||Cash|
|6||Client / Group of Client(s) Concentration in a scrip||Cash|
|8||Pump and Dump||Cash|
|9||Wash Sales||Cash & Derivatives|
|10||Reversal of Trades||Cash & Derivatives|
|12||Concentrated position in the Open Interest/High Turnover concentration||Derivatives|
|13||Order book spoofing i.e. large orders away from market||Cash|
On receiving the said alerts from the exchange we shall analyze each and every alerts with the information available with us. In order to analyze/verify such alert we shall examine trading activity of the Client(s) / Group of Client(s) or scrips identified based on above alerts.
a) We may seek written explanation/undertaking from such identified Client(s) / Group of client(s) for entering in to such transactions.
b) We also ask for documentary evidences such as Bank statement /Demat transaction or holding statement within the period of such transactions or more than that. We may also ask for financial Details of the client such as income tax return , salary slip , Annual returns etc.
After analyzing the documentary evidences, such as the bank / demat statement or any other documents relevant to the said alert/transaction, we shall record its observations for such identified transactions or Client(s) / Group of Client(s). In case any adverse observations are recorded, We shall report all such instances to the Exchange.
In case adverse observations/alerts are recorded, we shall report such instances to the Exchanges within 45 days of alert generation. In case there is delay, we shall seek extension of the time period from the exchange after giving proper reason for delay.
After analysis of the transaction/alerts, documentary evidences and information available with us. We shall identify the suspicious / manipulative transactions of any of the client/group of clients, if any and shall report the same to the exchange within the prescribed time limit Further we may stop/banned client for doing further trading at our end.
We shall maintain and keep all such records and documentary evidences that have been analyzed/taken by us either In soft copy or In hard copy for the time period as prescribed by the regulatory authority. We shall produce such records as and when asked by exchanges or by the regulatory authority.