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IIBF AML KYC NOTES 2022

IIBF AML KYC NOTES 2022

AML KYC NOTES:- IIBF’s AML & KYC exam dates are just around the corner and the time for the registrations for the 2021 attempt has been closed on the 24th of November 2021. 

If you are looking for the AML notes for the 2021 attempt then you are at the right place. Learning Sessions hereby provides you the notes with the help of which you can revise your AML’s topics very easily. 

ANTI-MONEY LAUNDERING & KNOW YOUR CUSTOMER SYLLABUS FOR 2021-2022

PAPER MODULE-A i.e AML & KYC: Anti-Money Laundering

 

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 Co-operation, 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 had originated from legitimate sources. 

Read Also:- IIBF KYC/ AML EXAM QUESTION ANSWER AND STUDY MATERIAL PDF NOTES

Money Laundering Elements:

  1. a crime is committed, 
  2. there are gains or proceeds from the crime, 
  3. proceeds have been received from crime & 
  4. 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 during December 2002 to prevent money laundering. 

Offenses and punishment: 

Offenses 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 fine 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. 

Read Also:- AML KYC FREE SHORT NOTES | MODULE – A: ANTI-MONEY LAUNDERING

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 the effect from July 1, 2005. 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 offenses and provides for the freezing, seizure & confiscation of the crime proceeds. 

Important Topic:- IIBF AML KYC NOTES PART 2 2022

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 offense. 

Important Topic:- IIBF AML KYC MOCK TEST 2022

Section 4: Punishment for Money Laundering

The persons committing this offense 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, the crime involved in money laundering relates to any offense under the Necrotic Drug and Psychotropic Substances Act, 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:

  1. maintain a record of all transactions, their nature & value of 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; 
  2. furnish information of transactions referred in clause (a) to the Director within the prescribed time; 
  3. 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 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). 

Important Topic:- AML & KYC SYLLABUS 2021-2022

The records will permit reconstruction of individual transactions (e.g. copies of documents like passports, identity cards, PAN cards, driving licenses, 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 to any civil proceedings against them for furnishing information.

Important Topic:- IIBF AML KYC EXAM DATE 21-2022, 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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