TaxTMI 
TaxTMI 
Master Circular on Money Transfer Service Scheme
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Guidelines for permitting Indian Agents under Money Transfer Service Scheme (MTSS).... SECTION II.. Guidelines for Overseas Principals.. SECTION III... Guidelines for appointment of Sub-Agents by Indian Agents... SECTION IV ..... SECTION V ..... 3 3 6 366 8 8 9 9 10 Inspection of Indian Agents....... 10 SECTION VI 10 KYC/ AML/CFT Guidelines for the Indian Agents...... 10 PART-B 11 Reports/Statements 11 KYC/ AML/CFT Guidelines for Indian Agents. 12 Statement showing details of remittances received through Money Transfer Scheme during the quarter ended 30 2 PART-A SECTION I Guidelines for permitting Indian Agents under Money Transfer Service Scheme (MTSS) Brief Introduction 1.1 Money Transfer Service Scheme (MTSS) is a quick and easy way of transferring personal remittances from abroad to beneficiaries in India. Only inward personal remittances into India such as remittances towards family maintenance and remittances favouring foreign tourists visiting India are permissible. No outward remittance from India is permissible under MTSS. The system envisages a t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....w Board. Confidential Report from the applicant's bankers (two) in a sealed cover. (h) (i) Details of sister/ associated concerns functioning in the financial sector. (j) A certified copy of the board resolution for undertaking money transfer business. 4. Collateral requirement Collateral equivalent to 3 days' average drawings or USD 50,000 whichever is higher, may be kept by the Overseas Principal with a designated bank in India. The minimum amount of USD 50,000 shall be kept as a foreign currency deposit while the balance amount may be kept in the form of a Bank Guarantee. The adequacy of collateral 4 should be reviewed at half yearly intervals on the basis of remittances received during the past six months. 5. Other conditions a) Only personal remittances shall be allowed under this arrangement. Donations/contributions to charitable institutions/trusts, trade related remittances, remittance towards purchase of property, investments or credit to NRE Accounts shall not be made through this arrangement. b) A cap of USD 2500 has been placed on individual remittance under the scheme. Amounts up to Rs.50,000/- may be paid ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ne of the international credit rating agencies. g) The Overseas Principal should submit confidential reports from two banks. 6 h) i) j) The Overseas Principal should submit a report certified by independent Chartered Accountants, regarding steps taken to comply with anti money laundering norms in the home/ host country. The Overseas Principals will be fully responsible for the activities of their Agents and Sub-agents in India. Proper records of remitters as also beneficiaries pertaining to all pay-outs in India are to be maintained by the Overseas Principals. All records must be made accessible on demand to the Reserve Bank or other agencies of the Government of India, viz., Customs, Ministry of Home Affairs, FIU-IND, etc. Full details of the remitters and the beneficiaries should be provided by the Overseas Principals, if called for. 7 SECTION III Guidelines for appointment of Sub-Agents by Indian Agents The Indian Agent may appoint Sub-Agents who have place of business and a minimum net worth of Rs. 5 lakh. The Sub-Agents should operate through the Indian Agents and should not deal directly with the Overseas....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (AML) standards/Combating the Financing of Terrorism (CFT) for Indian Agents under MTSS in respect of cross-border inward remittance activities, in the context of the FATF Recommendations on Anti Money Laundering standards and on Combating the Financing of Terrorism have been prescribed (Annex-I). 110 10 PART-B Reports / Statements 1. A quarterly statement of the volume of remittances received, as per the enclosed format (Annex-II) should be furnished to the Regional Office concerned of the Reserve Bank within 15 days from the close of the quarter to which it relates. 2. Agents must arrange to forward to the Chief General Manager-In-Charge, Reserve Bank of India, Foreign Exchange Department, Forex Markets Division, Central Office, Mumbai 400 001 addresses of their additional locations on a quarterly basis. Further, list of their sub-agents should be furnished at the above address on half yearly basis. 3. Indian Agents should also submit to the Chief General Manager-In-Charge, Reserve Bank of India, Foreign Exchange Department, Forex Markets Division, Central Office, Mumbai 400 001 and to the Regional Office concerned,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tails thereof are not to be divulged for cross selling or any other like purposes. APs (Indian Agents) should, therefore, ensure 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, wherever necessary, should be sought separately with his/her consent. 4.2 KYC Policy APs (Indian Agents) should frame their KYC policies incorporating the following four key elements: Customer Acceptance Policy; Customer Identification Procedures; a) b) c) Monitoring of Transactions; and d) Risk Management. 4.3 Customer Acceptance Policy (CAP) a) Every AP (Indian Agent) should develop a clear Customer Acceptance Policy laying down explicit criteria for acceptance of customers. The Customer Acceptance Policy must ensure that explicit guidelines are in place on the following aspects of customer relationship in the AP (Indian Agent). i) ii) No remittance is received in anonymous or fictitious/ benami name(s). Parameters of risk perception are clearly defined in terms of the nature of b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ring customer profile, APs (Indian Agents) should take care to seek only such information from the customer, which is relevant to the risk category and is not intrusive. The 14 customer profile is a confidential document and details contained therein should not be divulged for cross selling or any other purposes. c) For the purpose of risk categorisation, individuals (other than High Net Worth) and entities whose identities and sources of wealth can be easily identified and transactions by whom by and large conform to the known profile, may be categorised as low risk. Customers that are likely to pose a higher than average risk should be categorised as medium or high risk depending on customer's background, nature and location of activity, country of origin, sources of funds and his client profile, etc. APs should apply enhanced due diligence measures based on the risk assessment, thereby requiring intensive 'due diligence' for higher risk customers, especially those for whom the sources of funds are not clear. Examples of customers requiring enhanced due diligence include (a) nonresident customers; (b) customers from countries tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of a few typical cases, especially, legal persons requiring an extra element of caution are given in paragraph 4.5 below for guidance of APs (Indian Agents). APs (Indian Agents) may, however, frame their own internal guidelines based on their experience of dealing with such persons, their normal prudence and the legal requirements as per established practices. If the AP (Indian Agent) decides to undertake such transactions in terms of the Customer Acceptance Policy, the AP (Indian Agent) should take reasonable measures to identify the beneficial owner(s) and take all reasonable steps to verify his identity. b) Some close relatives, e.g. wife, son, daughter and parents, etc. who live with their husband, father / mother and son / daughter, as the case may be, may find it difficult to undertake transactions with APs (Indian Agents) as the utility bills required for address verification are not in their name. It is clarified, that in such cases, APs (Indian Agents) can obtain an identity document and a utility bill of the relative with whom the prospective customer is living along with a declaration from the relative that the said person (pros....
X X X X Extracts X X X X
X X X X Extracts X X X X
....k all the information available on the person in the public domain. APs (Indian Agents) should verify the identity of the person and seek information about the source /s of wealth and source /s of funds before accepting the PEP as a customer. The decision to undertake a transaction with a PEP should be taken at a senior level which should be clearly spelt out in Customer Acceptance Policy. APs (Indian Agents) should also subject such 17 transactions to enhanced monitoring on an ongoing basis. The above norms may also be applied to transactions with the family members or close relatives of PEPS. The above norms may also be applied to customers who become PEPs subsequent to establishment of the business relationship. 4.6 Monitoring of Transactions Ongoing monitoring is an essential element of effective KYC procedures. APs (Indian Agents) can effectively control and reduce their risk only if they have an understanding of the normal and reasonable receipt of remittances of the beneficiary so that they have the means of identifying receipts that fall outside the regular pattern of activity. However, the extent of monitoring will depend on ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t's) own policies and procedures, including legal and regulatory requirements. APs (Indian Agents) should ensure that their audit machinery is staffed adequately with individuals who are well-versed in such policies and procedures. The concurrent auditors should check all cross border inward remittance transactions under MTSS to verify that they have been undertaken in compliance with the anti-money laundering guidelines and have been reported whenever required to the concerned authorities. Compliance on the lapses, if any, recorded by the concurrent auditors should be put up to the Board. A certificate from the Statutory Auditors on the compliance with KYC / AML/CFT guidelines should be obtained at the time of preparation of the Annual Report and kept on record. 4.9 Introduction of New Technologies APs (Indian Agents) should pay special attention to any money laundering threats that may arise from new or developing technologies including transactions through internet that might favour anonymity and take measures, to prevent their use for money laundering purposes and financing of terrorism activities. 19 4.10 Combating Financing of T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nsactions Reporting to Financial Intelligence Unit- India (FIU-IND) Section 12 of the Prevention of Money Laundering Act (PMLA), 2002, as amended by Prevention of Money Laundering (Amendment) Act, 2009, casts certain obligations on the APs (Indian Agents) in regard to preservation and reporting of transaction information. APs (Indian Agents) are, therefore, advised to go through the provisions of Prevention of Money Laundering Act, (PMLA), 2002, as amended by Prevention of Money Laundering (Amendment) Act, 2009 and the Rules notified there under and take all steps considered necessary to ensure compliance with the requirements of Section 12 of the Act ibid. (i) Maintenance of records of transactions APs (Indian Agents) should introduce a system of maintaining proper record of transactions prescribed under Rule 3, as mentioned below: a) all cash transactions of the value of more than Rupees Ten Lakh or its equivalent in foreign currency; b) all series of cash transactions integrally connected to each other which have been valued below Rupees Ten Lakh or its equivalent in foreign currency, where such series of transactions have ta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as far as possible, be examined and the findings at branch as well as Principal Officer's level should be properly recorded. Such records and related documents should be made available to help auditors in their day-to-day work relating to scrutiny of transactions and also to Reserve Bank/other relevant authorities. These records are required to be preserved for ten years as is required under Prevention of Money Laundering 22 Act, (PMLA), 2002, as amended by Prevention of Money Laundering (Amendment) Act, 2009 and 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, as amended from time to time. - (iv) Reporting to Financial Intelligence Unit – India a) In terms of the PML rules, APs (Indian Agents) are required to report information relating to cash and suspicious transactions to the Director, Financial Intelligence Unit-India (FIU-IND) in respect of tra....
X X X X Extracts X X X X
X X X X Extracts X X X X
....U-IND within the prescribed time schedule. ii) While filing CTR, details of individual transactions below Rs. 50,000 need not be furnished. iii) CTR should contain only the transactions carried out by the AP on behalf of their customers excluding transactions between the internal accounts of the AP. iv) A cash transaction report for the AP as a whole should be compiled by the Principal Officer of the AP every month in physical form as per the format specified. The report should be signed by the Principal Officer and submitted to the FIU-IND. v) In case of Cash Transaction Reports (CTR) compiled centrally by APs (Indian Agents) for the branches at their central data centre level, APs (Indian Agents) may generate centralised Cash Transaction Reports (CTR) in respect of branches under central computerized environment at one point for onward transmission to FIU-IND, provided: a) The CTR is generated in the format prescribed by Reserve Bank in Para 4.12(iv)(b) of this Circular. 24 b) c) A copy of the monthly CTR submitted on its behalf to the FIU-IND is available at the branch concerned for production to auditors/inspectors,....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Some possible suspicious activity indicators are given below: " Customer is reluctant to provide details / documents on frivolous grounds. The transaction is undertaken by one or more intermediaries to protect the identity of the beneficiary or hide their involvement. Large amount of remittances. Size and frequency of transactions is high considering the normal business of the customer. The above list is only indicative and not exhaustive. vi) APs (Indian Agents) should not put any restrictions on payment to beneficiaries where an STR has been made. Moreover, it should be ensured that employees of APs shall keep the fact of furnishing such information as strictly confidential and there is no tipping off to the customer at any level. 4.14 Customer Education/Employees' Training/Employees' Hiring a) Customer Education Implementation of KYC procedures requires APs (Indian Agents) to demand certain information from customers which may be of personal nature or which has hitherto never been called for. This can sometimes lead to a lot of questioning by the customer as to the motive and purpose of collecting such information. There is,....