Obligation of Reporting Entity:::( Maintenance of records)
Section 12 of the Prevention of Money Laundering Act, 2002, makes it mandatory for every reporting entity to maintain a record of all transactions and submit to Director such reports at such intervals as prescribed by Rules 3,4,5,7 and 8 of Prevention of Money Laundering (Maintenance of Records) Rules, 2005.
Rule 3 of the Prevention of Money Laundering (Maintenance of Records) Rules, 2005 prescribes the kind of report which need to be submitted by the Reporting Entities.
" 3. Maintenance of records of transactions (nature and value)
(1) Every reporting entity shall maintain the record of all transactions including, the record of—
(A) all cash transactions of the value of more than ten lakh rupees 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;
(BA) all transactions involving receipts by non-profit organisations of value more than rupees ten lakh, or its equivalent in foreign currency;
(C) 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;
(D) all suspicious transactions whether or not made in cash and by way of—
(i) deposits and credits, withdrawals into or from any accounts in whatsoever name they are referred to in any currency maintained by way of—
(a) cheques including third party cheques, pay orders, demand drafts, cashiers cheques or any other instrument of payment of money including electronic receipts or credits and electronic payments or debits, or
(b) travellers cheques, or
(c) transfer from one account within the same banking company, financial institution and intermediary, as the case may be, including from or to Nostro and Vostro accounts, or
(d) any other mode in whatsoever name it is referred to;
(ii) credits or debits into or from any non-monetary accounts such as d-mat account, security account in any currency maintained by the banking company, financial institution and intermediary, as the case may be;
(iii) money transfer or remittances in favour of own clients or non-clients from India or abroad and to third party beneficiaries in India or abroad including transactions on its own account in any currency by any of the following:—
(a) payment orders, or
(b) cashiers cheques, or
(c) demand drafts, or
(d) telegraphic or wire transfers or electronic remittances or transfers, or
(e) internet transfers, or
(f) Automated Clearing House remittances, or
(g) lock box driven transfers or remittances, or
(h) remittances for credit or loading to electronic cards, or
(i) any other mode of money transfer by whatsoever name it is called;
(iv) loans and advances including credit or loan substitutes, investments and contingent liability by way of—
(a) subscription to debt instruments such as commercial paper, certificate of deposits, preferential shares, debentures, securitised participation, inter bank participation or any other investments in securities or the like in whatever form and name it is referred to, or
(b) purchase and negotiation of bills, cheques and other instruments, or
(c) foreign exchange contracts, currency, interest rate and commodity and any other derivative instrument in whatsoever name it is called, or
(d) letters of credit, standby letters of credit, guarantees, comfort letters, solvency certificates and any other instrument for settlement and/or credit support;
(v) collection services in any currency by way of collection of bills, cheques, instruments or any other mode of collection in whatsoever name it is referred to.
(E) 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;
(F) 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.
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Records containing Information
Rule 4 of the Prevention of Money-laundering (Maintenance of Records) Rules, 2005 require recording of certain information in the records maintained for this purpose.
"4. Records containing Information
The records referred to in rule 3 shall contain all necessary information specified by the Regulator to permit reconstruction of individual transaction including* the following information:-
(a) the nature of the transactions;
(b) the amount of the transaction and the currency in which it was denominated;
(c) the date on which the transaction was conducted; and
(d) the parties to the transaction."
Procedure and Manner
Every reporting entity is required to evolve an internal mechanism for maintaining transactional details in such form and at such intervals as may be specified by its regulator, from time to time.
Rule 5 of the Prevention of Money-laundering (Maintenance of Records Rules, 2005 lays down the procedure and manner of maintaining information.
"5. Procedure and manner of maintaining information
(1) Every reporting entity shall maintain information in respect of transactions with its client referred to in rule 3 in accordance with the procedure and manner as may be specified by its Regulator from time to time.
(2) Every reporting entity shall evolve an internal mechanism for maintaining such information in such form and manner and at such intervals as may be specified by its Regulator from time to time.
(3) It shall be the duty of every reporting entity, its designated director, officer and employees to observe the procedure and the manner of maintaining information as specified by its Regulator under sub-rule (1).”
Retention Of Records
Rule 6 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 and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Rules, 2005 provide for retention of records for a specified time. Accordingly, the records should be maintained for a period of ten years from the date of cessation of the transactions.
"6. Retention of records - The records referred to in rule 3 shall be maintained for a period of ten years from the date of cessation of the transactions between the client and the banking company, financial institution or intermediary, as the case may be."
Section 12 of the Prevention of Money Laundering Act, 2002, makes it mandatory for every reporting entity to maintain a record of all transactions and submit to Director such reports at such intervals as prescribed by Rules 3,4,5,7 and 8 of Prevention of Money Laundering (Maintenance of Records) Rules, 2005.
Rule 3 of the Prevention of Money Laundering (Maintenance of Records) Rules, 2005 prescribes the kind of report which need to be submitted by the Reporting Entities.
" 3. Maintenance of records of transactions (nature and value)
(1) Every reporting entity shall maintain the record of all transactions including, the record of—
(A) all cash transactions of the value of more than ten lakh rupees 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;
(BA) all transactions involving receipts by non-profit organisations of value more than rupees ten lakh, or its equivalent in foreign currency;
(C) 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;
(D) all suspicious transactions whether or not made in cash and by way of—
(i) deposits and credits, withdrawals into or from any accounts in whatsoever name they are referred to in any currency maintained by way of—
(a) cheques including third party cheques, pay orders, demand drafts, cashiers cheques or any other instrument of payment of money including electronic receipts or credits and electronic payments or debits, or
(b) travellers cheques, or
(c) transfer from one account within the same banking company, financial institution and intermediary, as the case may be, including from or to Nostro and Vostro accounts, or
(d) any other mode in whatsoever name it is referred to;
(ii) credits or debits into or from any non-monetary accounts such as d-mat account, security account in any currency maintained by the banking company, financial institution and intermediary, as the case may be;
(iii) money transfer or remittances in favour of own clients or non-clients from India or abroad and to third party beneficiaries in India or abroad including transactions on its own account in any currency by any of the following:—
(a) payment orders, or
(b) cashiers cheques, or
(c) demand drafts, or
(d) telegraphic or wire transfers or electronic remittances or transfers, or
(e) internet transfers, or
(f) Automated Clearing House remittances, or
(g) lock box driven transfers or remittances, or
(h) remittances for credit or loading to electronic cards, or
(i) any other mode of money transfer by whatsoever name it is called;
(iv) loans and advances including credit or loan substitutes, investments and contingent liability by way of—
(a) subscription to debt instruments such as commercial paper, certificate of deposits, preferential shares, debentures, securitised participation, inter bank participation or any other investments in securities or the like in whatever form and name it is referred to, or
(b) purchase and negotiation of bills, cheques and other instruments, or
(c) foreign exchange contracts, currency, interest rate and commodity and any other derivative instrument in whatsoever name it is called, or
(d) letters of credit, standby letters of credit, guarantees, comfort letters, solvency certificates and any other instrument for settlement and/or credit support;
(v) collection services in any currency by way of collection of bills, cheques, instruments or any other mode of collection in whatsoever name it is referred to.
(E) 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;
(F) 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.
banner
Records containing Information
Rule 4 of the Prevention of Money-laundering (Maintenance of Records) Rules, 2005 require recording of certain information in the records maintained for this purpose.
"4. Records containing Information
The records referred to in rule 3 shall contain all necessary information specified by the Regulator to permit reconstruction of individual transaction including* the following information:-
(a) the nature of the transactions;
(b) the amount of the transaction and the currency in which it was denominated;
(c) the date on which the transaction was conducted; and
(d) the parties to the transaction."
Procedure and Manner
Every reporting entity is required to evolve an internal mechanism for maintaining transactional details in such form and at such intervals as may be specified by its regulator, from time to time.
Rule 5 of the Prevention of Money-laundering (Maintenance of Records Rules, 2005 lays down the procedure and manner of maintaining information.
"5. Procedure and manner of maintaining information
(1) Every reporting entity shall maintain information in respect of transactions with its client referred to in rule 3 in accordance with the procedure and manner as may be specified by its Regulator from time to time.
(2) Every reporting entity shall evolve an internal mechanism for maintaining such information in such form and manner and at such intervals as may be specified by its Regulator from time to time.
(3) It shall be the duty of every reporting entity, its designated director, officer and employees to observe the procedure and the manner of maintaining information as specified by its Regulator under sub-rule (1).”
Retention Of Records
Rule 6 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 and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Rules, 2005 provide for retention of records for a specified time. Accordingly, the records should be maintained for a period of ten years from the date of cessation of the transactions.
"6. Retention of records - The records referred to in rule 3 shall be maintained for a period of ten years from the date of cessation of the transactions between the client and the banking company, financial institution or intermediary, as the case may be."
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