Know Your Customer And Anti Money Laundering Policy

Introduction:

M/s Aurum Instafinance India Private Limited (Formerly Dico Transport corporation private Limited) was incorporated on 21/04/1987 under the Companies Act, 2013, having CIN U63090WB1987PTC042227 and situated at 33/1, N. S. Road, Room No. 247 2ND FLOOR, Kolkata, West Bengal-700001.

The Company is a registered NBFC in terms of Section 45-IA of the RBI Act, 1934 vide registration number B.-05-05595 under the classification as NBFC-Non-Systemically Important Non-Deposit taking Company, now called as NBFC- Base Layer and regulated by the RBI.

Purpose of the Policy:

Reserve Bank of India, one of the regulatory agencies entrusted with the responsibility of driving the anti-money laundering initiatives advised NBFCs to follow certain customer identification procedure for opening of accounts and monitoring transactions of suspicious nature for the purpose of reporting it to appropriate authority.

Reserve Bank of India (RBI) has issued Master Direction - ‘Know Your Customer’ (KYC) Direction 2016, RBI/DBR/2015-16/18 DBR.AML.BC.No.81/14.01.001/2015-16 dated February 25th, 2016 as amended from time to time thereby setting standards in terms of provisions of Prevention of Money Laundering Act, 2002 and the Prevention of Money Laundering (Maintenance of Records) Rules, 2005 as amended from time to time by the Government of India.

The Company is committed for transparency and fairness in dealing with all stakeholders and in ensuring adherence to provisions of Prevention of Money-Laundering Act, 2002 and the Prevention of Money- Laundering (Maintenance of Records) Rules, 2005, as amended from time to time by the Government of India.

The Company commits that information sought from the customer is relevant to the perceived risk, is not intrusive, and is in conformity with the guidelines issued in this regard. Any other information from the customer shall be sought separately with his /her consent and after effective rendering of services. The company shall also communicate its KYC norms to its customers. The company shall ensure that the implementation of the KYC norms is the responsibility of the entire organization .

Objective of the policy:

• To prevent NBFCs being used, intentionally or unintentionally, by criminal elements for money laundering activities.

• To make reasonable efforts to determine the following points:

  • true identity and beneficial ownership of accounts,

  • source of funds,

  • the nature of customer’s business,

  • reasonableness of operations in the account in relation to the customer’s business etc which in turn would help the Company to manage risks prudently.

• To enable the company to have positive identification of its customers.

• To develop measures for conducting due diligence

Scope of the Policy:

This policy is applicable across all branches / business segments of the company.

Appointment of Designated Director: -

Designated Director” means a person designated by the Company to ensure overall compliance with the obligations imposed under Chapter IV of the PML Act and the Rules.

Designated Officer shall be responsible for monitoring and reporting of all transaction and sharing of information as required under the law.

Mr. Rajiv Kumar Jha, Director of the company Shall be appointed as Designated Officer to ensure overall compliance with the obligations imposed under chapter IV of the Act and the Rules.

Appointment of Principal Officer: -

The Principal Officer shall be responsible for ensuring compliance, monitoring transactions, and sharing and reporting information as required under the law/regulations.

Mr. Prabindra Singh, Director of the company shall be appointed as Principal Officer.

Compliance of KYC Policy: -

• Company shall ensure compliance with KYC Policy through:

• A senior officer (designated officer) will constitute as ‘Senior Management’ for the purpose of KYC Compliance.

• Allocation of responsibility for effective implementation of policies and procedures at Head office/Regional office/Branch Office Level.

• Independent evaluation of the compliance functions of the Company’s policies and procedures, including legal and regulatory requirements be done by Internal auditor and Secretarial Auditor appointed by the Company

• Internal team shall verify the compliance with KYC / AML policies and procedures periodically.

  • Company shall ensure that decision-making functions of determining compliance with KYC norms are not outsourced.

Know Your Customer Standards:

The KYC policy shall include following four key elements:

1. Customer Acceptance Policy;

2. Risk Management;

3. Customer Identification Procedures (CIP); and

4. Monitoring of Transactions

Customer Acceptance Policy:

Company’s Customer Acceptance policy (CAP) lays down the criteria for acceptance of customers. The guidelines in respect of the customer relationship with the company broadly are detailed below:

• No account is opened in anonymous or fictitious/benami name(s)/entity(ies);

• No account is to be opened where the company is unable to apply appropriate CDD measures, either due to non-cooperation of the customer or non-reliability of the documents/information furnished by the customer;

• No transaction or account-based relationship is undertaken without following the CDD procedure;

• The mandatory information to be sought for KYC purpose while opening an account and during the periodic updation, is specified;

• ‘Optional’/additional information, is obtained with the explicit consent of the customer after the account is opened;

• The company shall apply the Customer Due Diligence (CDD) procedure at the unique Customer Identification Code (UCIC) level. Thus, if an existing KYC compliant customer of a company desires to open another account with us, there shall be no need for a fresh CDD exercise;

• CDD Procedure is followed for all the joint account holders, while opening a joint account;

• Circumstances, in which a customer is permitted to act on behalf of another person/ entity shall be clearly spelt out;

• Suitable system is put in place to ensure that the identity of the customer does not match with any person or entity, whose name appears in the sanctions lists circulated by Reserve Bank of India;

• Where Permanent Account Number (PAN) is obtained, the same shall be verified from the verification facility of the issuing authority;

• Where an equivalent e-document is obtained from the customer, company shall verify the digital signature as per the provisions of the Information Technology Act, 2000;

• Adoption of customer acceptance policy and its implementation shall not become too restrictive and shall not result in denial of financial services to general public, especially to those, who are financially or socially disadvantaged.

• Where Goods and Services Tax (GST) details are available, the GST number shall be verified from the search/verification facility of the issuing authority

Risk Management:

For Risk Management, the Company will have a risk-based approach which includes the following:

• Customers shall be categorized as low, medium and high-risk category, based on the assessment and risk perception of the Company;

• Risk categorization shall be undertaken based on parameters such as customer’s identity, social/financial status, nature of business activity, and information about the clients’ business and their location etc. While considering customer’s identity, the ability to confirm identity documents through online or other services offered by issuing authorities may also be factored in;

• The customers will be monitored on regular basis with built in mechanism for tracking irregular behaviour for risk management and suitable timely corrective action;

Customer Identification Procedures (CIP):

Customer identification means refers to the process of identifying the customer and verifying his/her identity with the help of reliable, independent source documents, data or information. NBFCs have been advised to lay down a Customer Identification Procedure to be carried out at different stages i.e. while establishing a relationship; carrying out a financial transaction or when the NBFC has a doubt about the authenticity/veracity or the adequacy of the previously obtained customer identification data.

For the purpose of the KYC Policy, a customer is defined as:

• A person or entity that has relationship with the NBFC;

• One on whose behalf the account is maintained (i.e. the beneficial owner);

• Any person or entity connected with a financial transaction, which can pose significant reputation or other risks to the NBFC.

List of documents required to be obtained from customers:

The features to be verified and documents that may are required to be obtained for customers, vary. A list of documents which can be sought from customers is as below mentioned:

Customer Due Diligence:

The company will carry out the due diligence in respect of each customer by using reliable and independent sources of identification as below mentioned:

On-going Due Diligence:

The company shall undertake on-going due diligence of customers to ensure that their transactions are consistent with their knowledge about the customers, customers’ business and risk profile; and the source of funds.

Monitoring of Transactions:

• The extent of monitoring shall be aligned with the risk category of the customer

• High risk accounts have to be subjected to more intensified monitoring.

• Periodic review of risk categorisation of accounts shall be done in once in every year by the company

Secrecy Obligations and Sharing of Information:

• Company shall maintain secrecy regarding the customer information which arises out of the contractual relationship with the customer;

• Information collected from customers for the purpose of opening of account/providing loan shall be treated as confidential and details thereof shall not be divulged for the purpose of cross selling, or for any other purpose without the express permission of the customer

Periodic Updation of KYC documents as per RBI Guidelines:

According to the Reserve Bank of India's (RBI's) guidelines on KYC (Know Your Customer) norms, NBFCs are required to periodically update identification data of their customers, including the customer's photograph, proof of identity and proof of address. Updating KYC details regularly also ensures the security of your accounts to keep your loan account compliant with RBI's KYC guidelines. It is necessary for each customer to update the NBFC about his/her latest communication details and the updation shall be carried out on the basis of risk assessment approach for different kind of customers such as for:

For High Risk Customers: once in every two years

For Medium Risk Customers: once in every eight years

For Low-Risk Customers: once in every ten years

The company will send the SMS alert to customers and other aligned persons in every two years for the updation of KYC details on the registered phone number or email ID to request them for the updation at the nearest branch of the company or in case of no change then asked to confirmation over the call or message to the company.

CDD Procedure and sharing KYC information with Central KYC Records Registry (CKYCR):

CDD Procedure and sharing KYC information with Central KYC Records Registry (CKYCR) Company shall capture the KYC information for sharing with the CKYCR in the manner mentioned in the Rules, as required by the KYC templates prepared for individuals, Legal Entities or any other as prescribed as the case may be.

Period for presenting payment instruments:

Payment of cheques/drafts/pay orders/banker’s cheques, if they are presented beyond the period of three months from the date of such instruments, shall not be made.

Unique Customer Identification Code (UCIC):

• A Unique Customer Identification Code (UCIC) shall be allotted while entering into new relationships with individual customers as also the existing customers by the company;

• The company shall, at their option, not issue UCIC to all walk-in/occasional customers such as buyers of pre-paid instruments/purchasers of third-party products provided it is ensured that there is adequate mechanism to identify such walk-in customers who have frequent transactions with them and ensure that they are allotted UCIC.

Quoting of PAN

Permanent account number (PAN) or equivalent e-document thereof of customers shall be obtained and verified while undertaking transactions as per the provisions of Income Tax Rule 114B applicable to company, as amended from time to time. Form 60 shall be obtained from persons who do not have PAN or equivalent e-document thereof.

Employee training

On-going employee training programme shall be put in place so that the members of staff are adequately trained in AML/KYC policy. The focus of the training shall be different for frontline staff, compliance staff and staff dealing with new customers. The front desk staff shall be specially trained to handle issues arising from lack of customer education. Proper staffing of the audit function with persons adequately trained and well versed in AML/KYC policies of the Company, regulation and related issues shall be ensured.

RECORD MANAGEMENT:

The following steps shall be taken regarding maintenance, preservation and reporting of customer account information, with reference to provisions of PML Act and Rules. Company shall:

• The company shall maintain all necessary records of transactions between the company and the customer, both domestic and international, for at least five years from the date of transaction;

• The company shall preserve the records pertaining to the identification of the customers and their addresses obtained while opening the account and during the course of business relationship, for at least five years after the business relationship is ended;

• The company shall make available the identification records and transaction data to the competent authorities upon request;

• The company shall maintain all necessary information in respect of transactions prescribed under PML to permit reconstruction of individual transaction, including the following:

  • 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.

  • evolve a system for proper maintenance and preservation of account information in a manner that allows data to be retrieved easily and quickly whenever required or when requested by the competent authorities;

  • Maintain records of the identity and address of their customer, and records in respect of transactions referred to in Rule 3 in hard or soft format.

Points to be noted:

• The company shall ensure to redact or blackout the Aadhaar number while sharing the information with any third party due to regulatory requirements

• The company shall capture a clear image of PAN card to be displayed by the customer during the process, except in cases where e-PAN is provided by the customer. The PAN details shall be verified from the database of the issuing authority including through DigiLocker.

• If the address of the customer is different from that indicated in the OVD, suitable records of the current address shall be taken or allow to submit the address proof within 2 months from the opening of account with the company.

• The authorised official of the RE shall ensure that photograph of the customer in the Aadhaar/OVD and PAN/e-PAN matches with the customer.

Money Laundering and Terrorist Financing Risk Assessment:

• The company shall carry out ‘Money Laundering (ML) and Terrorist Financing (TF) Risk Assessment’ exercise periodically to identify, assess and take effective measures to mitigate its money laundering and terrorist financing risk for clients, countries or geographic areas, products, services, transactions or delivery channels, etc. The assessment process should consider all the relevant risk factors before determining the level of overall risk and the appropriate level and type of mitigation to be applied. While preparing the internal risk assessment, company shall take cognizance of the overall sector-specific vulnerabilities, if any, that the regulator/supervisor may share with the company from time to time;

• The risk assessment by the company shall be properly documented and be proportionate to the nature, size, geographical presence, complexity of activities/structure, etc. of the company. Further, the periodicity of risk assessment exercise shall be determined by the Board of the company, in alignment with the outcome of the risk assessment exercise.

• The outcome of the exercise shall be put up to the Board or any committee of the Board to which power in this regard has been delegated, and should be available to competent authorities and self- regulating bodies.

• The company shall apply a Risk Based Approach (RBA) for mitigation and management of the identified risk and should have Board approved policies and committee in this regard. Further, the company shall monitor the implementation of the controls and enhance them if necessary.

Reporting Requirements to Financial Intelligence UNIT – INDIA:

The company will submit the report to the financial intelligence Unit- India (FIU-IND) version 2 about the prescribed transaction as below mentioned within the time period as prescribed in the standard format.

The nature of transactions that’s need to be reported with the ministry as follows:

• All cash transactions of the value of more than ten lakh rupees or its equivalent in foreign currency

• All series of cash transactions integrally connected to each other which have been individually valued below rupees ten lakh or its equivalent in foreign currency where such series of transactions have taken place within a month and the monthly aggregate exceeds an amount of ten lakh rupees or its equivalent in foreign currency

• All transactions involving receipts by non-profit organizations of value more than rupees ten lakh, or its equivalent in foreign currency

• All cash transactions where forged or counterfeit currency notes or bank notes have been used as genuine or where any forgery of a valuable security or a document has taken place facilitating the transactions

• All suspicious transactions whether or not made in cash

• All cross-border wire transfers of the value of more than five lakh rupees or its equivalent in foreign currency where either the origin or destination of fund is in India.

• All purchase and sale by any person of immovable property valued at fifty lakh rupees or more that is registered by the reporting entity, as the case may be.

ANNEXURE — I

Customer Identification Procedure Features to be verified and documents that shall be obtained from customers.

KYC CHECKLIST