AntiAnti-money laundering Policy

Of
Techno Group

Introduction
The term "money laundering" is said to originate from Mafia ownership of Laundromats in the
United States. Gangsters there were earning huge sums in cash from extortion, prostitution,
gambling and bootleg liquor. In modern days, it is used as a financial tool in terrorist activities. They
needed to show a legitimate source for these monies. Money laundering is generally defined as
engaging in acts designed to conceal the true origins of criminally derived proceeds so that the
unlawful proceeds appear to have derived from legitimate origins or constitute legitimate assets.
Laws related to Anti money laundering kick started in US seriously after the 9/11 incident shocked
the entire world. This paved the way to many legislations all over the world.
In India Money Laundering Laws are still in the nascent stage but the techniques of Laundering has
been existing since long. Hawala form of Laundering is very common in India.
The Government of India has appointed a committee to look into the matters of Anti-money
laundering activities in line with global scenario. The Prevention of Money Laundering Act, 2002
(PMLA 2002) forms the core of the legal framework put in place by India to combat money
laundering. PMLA 2002 and the Rules notified there under came into force with effect from July 1,
2005. Director, Financial Intelligence Unit India (FIU-IND) and Director (Enforcement) have been
conferred with exclusive and concurrent powers under relevant sections of the Act to implement the
provisions of the Act.
Financial Intelligence Unit India (FIU-IND) was set by the Government of as the central
national agency responsible for receiving, processing, analyzing and disseminating information
relating to suspect financial transactions. FIU-IND is also responsible for coordinating and
strengthening efforts of national and international intelligence, investigation and enforcement
agencies in pursuing the global efforts against money laundering and related crimes. FIU-IND is an
independent body reporting directly to the Economic Intelligence Council (EIC) headed by the
Finance Minister.
The PMLA 2002 and rules notified thereunder impose obligation on intermediaries including Stock
Brokers, Depository Participants etc., to verify identity of clients, maintain records and furnish
information to FIU-IND. PMLA 2002 defines money laundering offence and provides for the
freezing, seizure and confiscation of the proceeds of crime

Technos commitment to comply with PMLA 2002

It is the policy of the firm to prohibit and actively prevent money laundering and any activity that
facilitates money laundering or the funding of terrorist or criminal activities. To fulfill this
obligation, Techno undertakes the following:

Prior to the opening of any new account, the A/c opening department of Techno will
document the identity, nature of business, income, source of assets, and investment
objectives of each prospective customer.

On an on-going basis, Techno will review account activity for evidence of transactions that
may be indicative of money laundering activities.

Every officer, employee and associated person of Techno is responsible for assisting in the
firms efforts to uncover and report any activity that might constitute, or otherwise indicate
or raise suspicions of, money laundering.

To this end, Techno provides continuing education and training of all such persons.
The relevant provisions of the Prevention of Money Laundering Act 2002, enacted by GOI, have
been taken into account in the Anti-money laundering policy. The policy is very exhaustive and
takes into consideration the various complexities and provides guidelines and procedures to be
followed by Techno personnel, including its front line staff. To achieve the policy objectives, the
emphasis has given for the following key areas:





Verification of identity of Client

Monitoring the transactions of Client
Reporting suspicious transactions
Educating and Training of concerned employees

This policy manual consists of eight sections as under:

Section-1

Organizational Structure

Page 1

Section-2

Adherence with various Laws

Page 2

Section-3

Verification of Identity of Client

Page 3

Section-4

Monitoring the Transactions of Client

Page 4

Section-5

Reporting Suspicious Transactions

Page 5

Section-6

Maintenance of Records

Page 6

Section-7

Education and Training

Page 7

Section-8

Miscellaneous

Page 8

Section-1 Organizational Structure

Techno (Techno Shares & Stocks Ltd. & Techno Commodity Broking Pvt. Ltd.) has been promoted
and managed by a group of professionals having vast experience in Accountancy, Law, Capital
Markets and Information Technology under the superintendence of Board of Directors. Broadly,
Techno group has four business divisions namely,




Broking
Distribution
DP

For the purpose of implementation of Anti-money laundering measures, Techno has appointed the
Principal Officer as per the provisions of PMLA. The Principal Officer is a person in the Director
Level who is responsible for the compliance of PMLA of the Techno group. Under the Principal
Officer, an AML Compliance Officer has been appointed to take care day to day monitoring of the
compliance. All the business divisions have a designated officer who reports the various activities to
AML Compliance Officer. The duties of the AML Compliance Officer will include monitoring the
firms compliance with AML obligations, verification and analysis of reports sent by business
divisions, overseeing communication, recruitment and training for employees, record keeping and
reporting, if required to the Principal Officer.
In short, the organizational Structure has been designed for this purpose as follows:

Principal Officer-Director Level

AML Compliance Officer-Manager Level

Designated Officer- Broking / Distribution / DP / PMS

a) All the designated officers are usually the Head of the business division or next to the
Head of the division.
b) The designated Officer is responsible for the compliance of Anti-money laundering
measures under this policy and PMLA.
c) The Designated Officer reports to AML Compliance Officer about new accounts
opened and high value transactions on a daily basis, probably at 6.00 Pm.

Section 2 Adherence with various Securities and Corporate Laws

To protect the overall interests of the capital market and investors, the Government of India via its
enforcement agencies like RBI, SEBI, Exchanges and Depositories have formulated Regulations,
Rules & guidelines and come out with amendments regularly through Circulars. Therefore it is very
crucial for us to ascertain whether our business is being carried in accordance with the regulatory
requirements, in particular KYC norms.
It includes the adherence of the following Laws & Regulations:

Companies Act, 1956

SEBI Act, 1992
SCRA, 1956
Depository Act, 1996
Income Tax Act, 1961
Service Tax
RBI Guidelines
IRDA Guidelines
AMFI Guidelines
SEBI Regulations & Rules
FMC Regulations & Rules
NSE/BSE/CDSL/NSDL Regulations, Rules, Bye Laws, Circulars
NCDEX/MCX/ICEX Regulations, Rules, Bye Laws, Circulars

The following points to be noted:

a) For monitoring the regulatory compliances, each business division has a Compliance
Officer as per the provisions of the relevant Laws or/and Regulations, who reports to
the Board of Directors.
b) All the Compliance Officers are working in conjunction with the AML Compliance
Officer. If any non-compliance comes into picture, it will be corrected immediately
and reported to Board of Directors.
c) Periodic Internal Audits and Inspections are conducted to improve the existing
system.
d) Techno will comply with all trade and economic sanctions imposed by the
Government of India against targeted foreign countries and shall cooperate fully with
government agencies, self-regulatory organizations and law enforcement officials.
e) As provided by the Act, Techno may supply information about former, current or
prospective customers to such bodies.

Section-3 Verification of identity of Client

Section 12 of the Prevention of Money Laundering Act, 2002 and rules thereunder require every
intermediary to verify and maintain the records of the identity of all its clients, in such manner as
may be prescribed.
SEBI has laid down various KYC/KRA norms, which a market intermediary is required to comply
with at the time of opening an account. Techno implements strict controls for verification of details
provided in the account opening form and genuineness of documents submitted. The basic objective
underlying adherence to KYC norms is to identify applications made in fictitious names to prevent
possibility of money laundering.
The verification of Identity of the prospective clients are done by two ways:
1. Conventional which comprises of collection of documentary proofs
2. Non-conventional which comprises of in person verification
Conventional Mode
Prior to opening an account with Techno, we will collect the following information for all accounts:
Documentary Proofs
of
Identity, address, Bank account details,
Demat account details (applicable for trading account)

Photo Identity Proof of prospective clients:

In order to verify the identity of the client, self attested copies of the following documents are
collected after due verification with the originals a) PAN Card b) Passport c) Voter Id Card d)
Driving License e) Photo Identity Card issued by Employer
Proof of Address of prospective clients:
In order to verify the address of the client, self attested copies of the following documents are
collected after due verification with the originals: a) Electricity Bill b) Voter Id Card c) Rent
Agreement d) Bank Pass Book/Statement e) Society Maintenance Bill f) Insurance Premium
Receipt h) Telephone Bill
Proof of Bank a/c details of prospective clients:

In order to verify the address of the client, self attested copies of the following documents are
collected after due verification with the originals: a) Bank Verification b) Cancelled Cheque leaf
with name of the client printed on it c) Latest Bank Passbook/Statement
Proof of Demat a/c details of prospective clients
If the client has demat a/cs other than with Techno, the following documents are collected after due
verification with originals: a) Cancelled Instruction Slip of demat account with the name of
prospective client printed on it b) Latest Holding Statement c) Latest Transaction Statement
Verification of Signature and Photograph
All the clients signatures and photograph on KYC form are matched with any of the proof of
identity as an additional step in this regard.
Activities:
It includes the following:
 After due verification, the officer puts the stamp Verified with original on the copies with
signature of the officer. If the officer feels that one proof of identity is not sufficient to prove
the identity of the client, he may ask the client for an additional proof. Once the concerned
officer satisfies the identity of the client, he will send to a senior officer. The senior officer
should authenticate the documents so collected from client before entering details to the
system.
 Date entry works are done properly and cross verification is done by a senior officer
 The KYC forms alongwith supporting documents are filed properly in a chronological
manner
 In case of DP operations, special care has to be taken to check genuineness of the client if
disproportionately large no. of accounts (above 20) are opened with same or similar names
or/and same address or/and with same bank details.
Non-conventional mode:
Techno will use the following non-documentary methods of verifying identity:

Contacting a customer
Independently verifying the customers identity through the comparison of information
provided by the customer with information obtained from a consumer reporting agency,
public database, or other source
Checking references with other financial institutions or Obtaining a financial statement.

Steps if the prospective clients refuse to give relevant documents

a) If a potential or existing customer either refuses to provide the information described
above when requested, or appears to have intentionally provided misleading

information, our firm will not open a new account and, after considering the risks
involved, consider closing any existing account.
b) If we find suspicious information that indicates possible money laundering or terrorist
financing activity, the designated officer informs the same to AML Compliance
Officer for necessary actions.
Guidelines on Identification of Beneficial Ownership
A. For clients other than individuals or trusts:
Where the client is a person other than an individual or trust, viz., company, partnership or
unincorporated association/body of individuals, the intermediary shall identify the beneficial owners
of the client and take reasonable measures to verify the identity of such persons, through the
following information:
a. The identity of the natural person, who, whether acting alone or together, or through one or more
juridical person, exercises control through ownership or who ultimately has a controlling ownership
interest.
Explanation: Controlling ownership interest means ownership of/entitlement to:
i. more than 25% of shares or capital or profits of the juridical person, where the juridical person is a
company;
ii. more than 15% of the capital or profits of the juridical person, where the juridical person is a
partnership; or
iii. more than 15% of the property or capital or profits of the juridical person, where the juridical
person is an unincorporated association or body of individuals.
b. In cases where there exists doubt under clause 4 (a) above as to whether the person with the
controlling ownership interest is the beneficial owner or where no natural person exerts control
through ownership interests, the identity of the natural person exercising control over the juridical
person through other means.
Explanation: Control through other means can be exercised through voting rights, agreement,
arrangements or in any other manner.
c. Where no natural person is identified under clauses 4 (a) or 4 (b) above, the identity of the
relevant natural person who holds the position of senior managing official.
B. For client which is a trust:
Where the client is a trust, the intermediary shall identify the beneficial owners of the client and take
reasonable measures to verify the identity of such persons, through the identity of the settler of the
trust, the trustee, the protector, the beneficiaries with 15% or more interest in the trust and any other
natural person exercising ultimate effective control over the trust through a chain of control or
ownership.
C. Exemption in case of listed companies:
Where the client or the owner of the controlling interest is a company listed on a stock exchange, or
is a majority-owned subsidiary of such a company, it is not necessary to identify and verify the
identity of any shareholder or beneficial owner of such companies.

D. Applicability for foreign investors:

Clients under the categories - Foreign Institutional Investors, Sub Accounts and Qualified Foreign
Investors, may be guided by the clarifications issued vide SEBI circular CIR/MIRSD/11/2012 dated
September 5, 2012, for the purpose of identification of beneficial ownership of the client.

Section-4 Monitoring the transactions of Client

Under PMLA, 2002, it is the obligation of every intermediary to furnish FIU-IND the information of
all suspicious transactions whether or not made in cash. Suspicious transaction means a transaction
whether or not made in cash which, to a person acting in good faith:
o
o
o

gives rise to a reasonable ground of suspicion that it may involve the proceeds of crime
appears to be made in circumstances of unusual or unjustified complexity
appears to have no economic rationale or bonafide purpose

Broadly, Techno categories the reason for suspicion and suspicious transactions as under:
Identity of Client
False identification documents
Identification documents which could not be verified within reasonable time
Non-face to face client
Doubt over the real beneficiary of the account
Accounts opened with names very close to other established business entities
Suspicious Background
Suspicious background or links with known criminals
Multiple Accounts
Large number of accounts having a common account holder, introducer or
authorized signatory with no rationale
Unexplained transfers between multiple accounts with no rationale
Activity in Accounts
Unusual activity compared to past transactions
Use of different accounts by client alternatively
Sudden activity in dormant accounts
Activity inconsistent with what would be expected from declared business
Account used for circular trading
Nature of Transactions
Unusual or unjustified complexity
No economic rationale or bonafide purpose
Source of funds are doubtful
Appears to be case of insider trading
Investment proceeds transferred to a third party
Transactions reflect likely market manipulations
Suspicious off market transactions

Value of Transactions
Value just under the reporting threshold amount in an apparent attempt to avoid
reporting
Large sums being transferred from overseas for making payments
Inconsistent with the clients apparent financial standing
Inconsistency in the payment pattern by client
Block deal which is not at market price or prices appear to be artificially
inflated/deflated
Presently the alerts are generated for transaction per scrip per day having value of
Rs. 25,00,000 and Volume of 25000
Techno puts Red flags that signal possible money laundering or terrorist financing include, but are
not limited to:

The customer exhibits unusual concern about the firm's compliance with government
reporting requirements and the firm's AML policies (particularly concerning his or her
identity, type of business and assets), or is reluctant or refuses to reveal any information
concerning business activities, or furnishes unusual or suspicious identification or business
documents.

The customer wishes to engage in transactions that lack business sense or apparent
investment strategy, or are inconsistent with the customer's stated business or investment
strategy.

The information provided by the customer that identifies a legitimate source for funds is
false, misleading, or substantially incorrect.

Upon request, the customer refuses to identify or fails to indicate any legitimate source for
his or her funds and other assets.

The customer (or a person publicly associated with the customer) has a questionable
background or is the subject of news reports indicating possible criminal, civil, or regulatory
violations.

The customer exhibits a lack of concern regarding risks, commissions, or other transaction
costs.

The customer appears to be acting as an agent for an undisclosed principal, but declines or is
reluctant, without legitimate commercial reasons, to provide information or is otherwise
evasive regarding that person or entity.

The customer has difficulty describing the nature of his or her business or lacks general
knowledge of his or her industry.

The customer attempts to make frequent or large deposits of currency, insists on dealing only
in cash, or asks for exemptions from the firm's policies relating to the deposit of cash.

The customer engages in transactions involving cash or cash equivalents or other monetary
instruments that appear to be structured to avoid the government reporting requirements,
especially if the cash or monetary instruments are in an amount just below reporting or
recording thresholds.

For no apparent reason, the customer has multiple accounts under a single name or multiple
names, with a large number of inter-account or third-party transfers.

The customer makes a funds deposit for the purpose of purchasing a long-term investment
followed shortly thereafter by a request to liquidate the position and transfer of the proceeds
out of the account.

The customer requests that a transaction be processed to avoid the firm's normal
documentation requirements.

The customer, for no apparent reason or in conjunction with other red flags, engages in
transactions involving certain types of securities, such as penny stocks, illiquid stocks, which
although legitimate, have been used in connection with fraudulent schemes and money
laundering activity. (Such transactions may warrant further due diligence to ensure the
legitimacy of the customer's activity.)

The customer's account shows an unexplained high level of account activity with very low
levels of securities transactions.

The customer maintains multiple accounts, or maintains accounts in the names of family
members or corporate entities, for no apparent purpose.

The customer's account has inflows of funds or other assets well beyond the known income
or resources of the customer.

Activity
When the designated officer detects any red flag he or she will investigate further under the direction
of the AML Compliance Officer. This may include gathering additional information internally or
from third-party sources, contacting the government, freezing the account etc.

Sector-5 Reporting suspicious transactions

The Prevention of Money-laundering Act, 2002, and the rules thereunder require every intermediary,
to furnish to FIU-IND information relating to:
a) All cash transactions of the value of more than rupees ten lakhs or its equivalent in
foreign currency
b) All series of cash transactions integrally connected to each other which have been
valued below rupees ten lakhs or its equivalent in foreign currency where such series
of transactions have taken place within a month
c) All cash transactions where forged or counterfeit currency notes or bank notes have
been used as genuine and where any forgery of a valuable security has taken place
d) All suspicious transactions whether or not made in cash
In order to monitor and verify suspicious transactions, Techno uses internal and external reports. The
back office software, which is used by various business divisions of Techno generates various
transaction reports. It includes the following:
1.
2.
3.
4.
5.

Trade Reports
Fund/Securities Pay-in Reports
Fund/Securities Pay-out Reports
OFF Market Reports-Applicable to DP
High value transaction Reports

External Reports consist of:

1. Fortnightly Reports sent by NSDL/CDSL
2. Reports sent by SEBI/RBI
3. Reports sent by Ministry of Finance

Activities:

The designated Officer sends a consolidated report to AML Compliance Officer on a daily
basis

AML Compliance Officer verifies the data based upon certain parameters


If AML Compliance Officer feels that the same has to be reported to FIU-IND, the report
along with comments is sent to Principal Officer

After the approval of Principal Officer, the report is sent to Financial Intelligence Unit
India

Sector-6 Maintenance of Records

Section 12 of the Prevention of Money Laundering Act, 2002, makes it mandatory for intermediary
to maintain a record of all transactions, the nature and value of which may be prescribed time to
time. Our AML Compliance Officer and his or her designee is responsible to ensure that AML
records are maintained properly as per the requirements.
The records include:
1. KYC forms of clients along with supporting documents
2. Transaction details which comprises of the following:
a.
b.
c.
d.

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
the parties to the transaction

Points to be noted:


All the records is maintained for a period of ten years from the date of cessation of the
transactions

Strict procedures both to ensure that only relevant information is shared and to protect the
security and confidentiality of this information, including segregating it from the firms other
books and records

All the records and registers are maintained in accordance with the SEBI Act, 1992 and
various Regulations applicable to different business divisions

One senior officer under the guidance of Designated Officer will oversee the activities
related to record maintenance

Account opening forms are properly filed location wise and date wise

All the files are kept in the safe storage for the purpose of easy retrieval

Designated Officer reports the status of record maintenance on a weekly basis

No records is given to any third party without the approval of Principal Officer or AML
Compliance Officer

Section-7 Education and Training

The success of implementation of the policy is highly depended on the employees who handle
various jobs, which have linked directly or indirectly to money laundering activities. Techno has
decided to develop an ongoing employee training under the leadership of the AML Compliance
Officer and senior management.
The training includes:
a) how to identify red flags and signs of money laundering that arise during the course of the
employees duties;
b) what to do once the risk is identified
c) what employees' roles are in the firm's compliance efforts and how to perform them
In this regard, Techno undertakes:
1.
2.
3.
4.
5.

Distribution of educational pamphlets

videos
intranet systems
in-person lectures
explanatory memos.

Others:
1. Techno will maintain records to show the persons trained, the dates of training, and the
subject matter of their training.
2. Techno will review our operations to see if certain employees, such as those in compliance,
margin, and corporate security, require specialized additional training.
3. Our written procedures will be updated to reflect any such changes.
4. All the transactions of employees are monitored and actions are taken, wherever necessary.
5. Employees will report any violations of the firms AML compliance program to the AML
Compliance Officer, unless the violations implicate the Compliance Officer, in which case

the employee shall report to Such reports will be confidential, and the employee will suffer
no retaliation for making them.

Section-8 Miscellaneous

Practical Difficulties in implementation:

1
2
3
4

Check the criminal Back ground of Client

Terrorist link of client
Source of money of client
Cost and Man hours for compliance

In the future, Techno may consider of purchasing Anti-money laundering software depending upon
the size and expansion. The following companies are providing Anti-money laundering softwares:
1.
2.
3.
4.

TCS
Infosys
Wipro
3iinfotech

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