TaxTMI 
TaxTMI 
2015 (8) TMI 1425
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....ver 5000 branches of public sector banks i.e. Bank of India and Union Bank of India who were also registered as corporate agents. It was submitted that initially the monitoring of AML transactions was being carried out manually as the automated system were yet to be set up; all receipt of money was done through banks who would accept cash without any limit or any number of transactions; the appellant company recognized this limitation where there was no automated monitoring of limits of cash received during a months and hence, initiated a project for implementation of system for AML monitoring and also issued directions to its employees on limit for acceptance of cash. Upon implementation of remedial measures, data for past transactions was extracted to view violation if any, and the transactions which were required to be reported to respondent were voluntarily reported in March, 2010 which shows the appellant's will to ensure compliance with the AML regulations. 3. He submitted that during the internal review by appellant, certain transactions which took place between the periods April, 2009 to March, 2010 and were above the threshold limit specified by IRDA i.e. where cash ....
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....luntarily in the Suspicious Transaction Report. He submitted that the respondent did not took any action after filing of these details vide above letters in March and April, 2010. In February, 2014, the appellant was served with a show cause notice for failure to comply with the provisions of Section 12 of PMLA. The counsel argued that unless the appellant had voluntarily furnished the details of these transactions vide letter dated 11th March, 2010 and letter dated 26th April, 2010, the respondent could not have even come to know about these transactions. The voluntary filing of details of transactions shows appellant's sincere approach towards compliance of provisions of PMLA and other regulations governing appellant's business in letter and spirit. 7. The counsel submitted that the appellant started its business only in February, 2009 and these transactions took place in the month of August, 2009 when the appellant was at a very nascent stage and was in the process of setting up systems and processes. At that point of time, as the work was being carried out manually and the deposit of cash in the banks was direct, the appellant could not take timely action to file the Cash....
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....y connected transactions. He submitted that filing of suspicious transactions reports is altogether a different obligation under PMLA for compliance by the appellant and filing of that report would not be a compliance of filing of Cash Transaction Report. 11. He submitted that obligations under Section 12 of PMLA is to report transactions to Director FIU-India as prescribed in the Rules and Rule 3(1)(B) of Rules prescribe that integrally connected cash transactions should be reported as per Cash Transaction Report after aggregation in relevant months within the time prescribed. In the present case 18 integrally connected cash transactions of Kalawati Devi Paswan and 13 integrally connected cash transactions of Chinta Devi aggregating to more than Rs. 10 Lakh and, therefore, these transactions were reportable to Director FIU-India as per Cash Transaction Report but were admittedly not reported. Therefore, the appellant was liable for penalty for non-reporting of 31 integrally connected cash transactions. 12. The counsel submitted that the Director FIU-India after considering the submissions of the appellant that it was newly established and had not been able to establish....
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....ies of transactions integrally connected to each other, and where such series of transactions take place within a month; (b) furnish information of transactions referred to in clause (a) to the Director within such time as may be prescribed; (c) verify and maintain the records of the identity of all its clients, in such a manner as may be prescribed : Provided that where the principal officer of a banking company or financial institution or intermediary, as the case may has reason to believe that a single transaction or series of transactions integrally connected to each other have been valued below the prescribed limit so as to defeat the provisions of this section, such officer shall furnish information in respect of such transactions to the Director within the prescribed time. (2) (a) The records referred to in clause (a) of sub-section (1) shall be maintained for a period of ten years from the date of transactions between the clients and the banking company or financial institution or intermediary, as the case may be. (b) the records referred to in clause (c) of sub-section (1) shall be maintained for a period of ten years from the date of cessation of trans....
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.... (4) It shall be the duty of every banking company, financial institution and intermediary to observe the procedure and the manner of furnishing information referred to in rule 3 as specified by Reserve Bank of India, the Securities Exchange Board of India and the Insurance Regulatory and Development Authority under sub-rule (3), as the case may be." 18. Rule 8 prescribes the procedure to be followed furnishing the information in respect of transactions referred to in rule 3 which reads as follows : "8. Furnishing of information to the Director. - (1) The Principal Officer of a banking company, a financial institution and an intermediary, as the case may be, shall furnish the information in respect of transactions referred to in clauses (A) and (B) of sub-rule (1) of Rule 3 every month to the Director by the 15th day of the succeeding month. (2) The Principal Officer of a banking company, a financial institution and an intermediary, as the case may be, shall furnish the information promptly in writing or by fax or by electronic mail to the Director in respect of transactions referred to in clause (C) of sub-rule (1) of Rule 3 not later than seven working days....