Provisions of Prevention of Money Laundering Act, 2002
Prevention of Money Laundering Act, 2002 (PMLA) forms the core of legal framework put in place by India to combat money laundering and related crimes. PMLA and the Rules notified there under came into force from 1ª July, 2005. Under PMLA, all the entries registered with SEBI are required to furnish information of all the suspicious transactions whether or not made in cash to FIU-IND. Under Section 3 of PMLA, projecting of crime as untainted property is an offence of money laundering liable to be punishment under section 4 of the PMLA.
Money Laundering involves disguising financial assets so that they can be used without detection of the illegal activity that produced them. Through money laundering, the launderer transforms the monetary proceeds derived from criminal activity into funds with as apparently legal source.
Financial Intelligence Unit-India (FIU-IND) is the central national agency of India responsible for receiving, processing, analyzing and disseminating information of suspect financial transactions. FIU-IND is also responsible for coordinating and strengthening efforts of national and international intelligence, investigation and enforcement agencies in combating money laundering and related crimes.
Section 2 (1) (g) of PMLA Rules defines suspicious transaction whether or not made in cash which.
to a person acting in good faith:
- Gives rise to a reasonable ground of suspicious that it may involve the proceeds of crime: or
- Appears to be made in circumstances of unusual or unjustified complexity; or
- Appears to have no economic rationale or bonafied purpose; or
- Gives rise to a reasonable ground of suspicious that it may involve facing of the activities relating to terrorism
Some examples of suspicious transactions reported to FIU-IND are as under:
Category | Example of Suspicious transactions |
Identity of clients |
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Suspicious Background |
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Multiple Accounts |
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Activity in Accounts |
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Nature of Transactions |
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Value of transactions |
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Anti-Money Laundering (AML) Policy
Aura Capital Financial Services is strictly committed to preventing money laundering and terrorist financing. We adhere to the Prevention of Money Laundering Act (PMLA), 2002, and SEBI regulations to ensure a secure financial environment.
Anti-Money Laundering Overview
Anti-Money Laundering (AML) refers to a comprehensive set of policies, procedures, and regulations designed to prevent criminals from disguising illegally obtained funds as legitimate income. As a SEBI-registered Research Analyst, Aura Capital Financial Services implements robust measures to detect, prevent, and report potential money laundering activities.
These policies are not just regulatory requirements but are essential for maintaining the integrity of the financial markets and protecting our clients and the firm from financial crimes.
The Money Laundering Process
1. Placement
The introduction of illicit funds into the financial system. This is the most vulnerable stage for launderers as it involves placing large amounts of cash into banks or financial instruments.
2. Layering
Carrying out a complex series of financial transactions to camouflage the illegal origin of the funds. This involves moving money between accounts, countries, or instruments to create confusion.
3. Integration
The final stage where the “cleaned” money is returned to the economy as legitimate funds. It is often used to purchase assets like real estate, luxury goods, or business investments.
Our AML Controls & Framework
Know Your Customer (KYC)
We strictly adhere to SEBI’s KYC norms. Before onboarding any client, we verify their identity, address, and financial status to ensure they are not involved in illegal activities.
- Verification of PAN and Aadhaar.
- Verification of client details as per SEBI guidelines.
- Screening against global sanctions lists.
Monitoring & Reporting
We employ continuous monitoring to identify suspicious activities. Any transaction or behavior that raises a red flag is analyzed and, if necessary, reported to the relevant authorities.
- Tracking unusual transaction patterns.
- Reporting Suspicious Transaction Reports (STR) to FIU-IND.
- Maintaining records for a minimum of 5 years.
Risk-Based Approach
Clients are subject to appropriate verification and monitoring procedures in accordance with SEBI and PMLA guidelines. Where necessary, additional due diligence and supporting documentation may be sought to ensure compliance and prevent suspicious activities.
Technology & Training
We leverage modern technology to screen clients and monitor compliance. Our staff undergoes regular training to stay updated on the latest AML laws and money laundering techniques.
Commitment to Compliance
By combining legal frameworks, careful customer screening, robust record-keeping, and technology-driven monitoring, Aura Capital Financial Services AML program helps reduce financial crime and ensures strict compliance with regulatory requirements. We are dedicated to fostering a transparent and secure investment environment for all our clients.