IIBF AML KYC NOTES 2023
AML KYC NOTES:- IIBF’s AML & KYC exam dates are just around the corner and the time for the registrations for the 2023 attempt has been closed on the 18th of June 2023.
If you are looking for the AML notes for the 2023 attempt then you are at the right place. Learning Sessions hereby provides you with notes with the help of which you can revise your AML topics very easily.
ANTI-MONEY LAUNDERING & KNOW YOUR CUSTOMER SYLLABUS FOR 2023
| PAPER | MODULE-A i.e AML & KYC: Anti-Money Laundering
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| AML & KYC | The module-A introduces you to the topic of Money Laundering, how it originated, the Definition of Anti Money Laundering, Techniques that are used for money laundering, Impact on Banks-Structuring; Integration, Preventive Legislations, International Cooperation, United Kingdom; USA; India, Basel Committee, Prevention of Money Laundering Act, 2002 Objectives, Reserve Bank of India Guidelines on the System Adequacy to Combat Money Laundering issues, IBA Working Group, Financial Intelligence Unit i.e FIU, Antiterrorism finance, The Financial Action Task Force, Software for AML Screening: Money Laundering & Correspondent Banking, Exchange Companies including Foreign Branches. |
MODULE – A: Anti-Money Laundering
Money laundering: It means acquiring, owning, possessing or transferring any money proceeds of crime or concealing or aiding in the concealment of the proceeds of crime or knowingly entering into any transaction that is related to the proceeds that arise from crime (directly or indirectly), within or outside India.
It is a conversion process of the money that is obtained illegally to make it seem like it originated from legitimate sources.
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Money Laundering Elements:
- a crime is committed,
- there are gains or proceeds from the crime,
- proceeds have been received from crime &
- there is a transaction in respect of the said gains or proceeds.
Legal set-up in India:
The Prevention of Money Laundering Act, 2002 was passed in Indian Parliament in December 2002 to prevent money laundering.
Offences and punishment:
Offences are cognizable or non-bailable. Punishment for money laundering is imprisonment for not less than 3 years but can expand up to 7 years and a fine of up to Rs.5,00,000.00
Enforcement Directorate:
It is the authority that is designated to track the cases of money laundering and has far more powers than what is available to the Enforcement Directorate under FERA.
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The Prevention of Money Laundering Act, 2002 (PMLA):
PMLA was introduced in India to combat the problem of money laundering. PMLA and the Rules came into force with effect from July 1, 2005. The director, FIU-IND, and ED have the exclusive & concurrent powers to implement the provisions of the Act.
The Act & the Rules impose obligations on banking companies, financial institutions, and intermediaries to verify the identity of clients, maintain records & furnish information. It also defines money laundering offences and provides for the freezing, seizure & confiscation of the crime proceeds.
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Applicability: PMLA extends to the whole of India.
Section 3: Offence of Money-Laundering
The Act doesn’t define the term ‘Money Laundering’. However, as per Section 3 of the PMLA Act, whosoever (whether directly or indirectly) tries to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity that is connected with the proceeds of crime and projecting it as untainted property shall be this offence.
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Section 4: Punishment for Money Laundering
The persons committing this offence of money laundering shall be punishable with imprisonment for a term that can range between 3 to 7 years along with a fine up to Rs. 5,00,000.00
However, if the crime involved in money laundering relates to any offence under the Necrotic Drug and Psychotropic Substances Act, of 1985, the imprisonment could extend to 10 years.
Section 12: Obligations of Financial Institutions, Banking Companies & Intermediaries of securities market
As per the said section of the Act, the above-mentioned entities shall:
- maintain a record of all transactions, their nature & value may be prescribed, whether it’s a single transaction or a series of transactions that are integrally connected to each other, and where such series of transactions happen within a month;
- furnish information on transactions referred to in clause (a) to the Director within the prescribed time;
- verify & maintain the identity records of all its clients in the prescribed manner.
The records of transactions (a) & (b) shall be maintained for 10 years from the date of the transactions. And the records referred to in clause (c) shall be maintained for a period of 10 years from the date of cessation of transactions (both domestic or international).
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The records will permit the reconstruction of individual transactions (e.g. copies of documents like passports, identity cards, PAN cards, driving licenses, and utility bills) so as to provide evidence for the prosecution of persons who are involved in criminal activity.
The Director appointed by Central Government has the power to call for records and make such inquiry or cause such inquiry to be made, as he or she thinks fit. If the Director, finds that anyone who was required to comply with the provisions contained in the Act has not complied, then, Director may levy a fine on such banking company or financial institution or intermediary from Rs.10,000.00 to Rs. 1,00,000.00 for each failure.
Note: The banking companies, financial institutions, intermediaries, and their officers shall not be liable for any civil proceedings against them for furnishing information.
Important Topic:- IIBF AML KYC EXAM DATE 2023, REGISTRATION DATE, HOW TO APPLY
Records to be maintained (nature and value): Rule 3
As per Rule 3 of the 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 & Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions, and Intermediaries) Rules, 2005 following are the obligations for the maintenance of records. Every banking company or financial institution or intermediary (as per the case) shall maintain the record of all transactions.
The notes will continue in the second part of the notes. So, stay tuned as we will be updating the Short Notes Part-2 of the AML KYC Notes.
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