KYC / AML / CFT Policy
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compliance@tradeucare.com
1. KYC/AML/CFT Policy Statement
At TRADEUCARE, we are firmly committed to upholding the highest standards in financial integrity by implementing robust measures to prevent money laundering and the financing of terrorism. In line with regulatory requirements, we adhere strictly to Know Your Customer (KYC) protocols, Anti-Money Laundering (AML) regulations, and Combating the Financing of Terrorism (CFT) guidelines.
We recognize that achieving strong compliance is a shared responsibility. TRADEUCARE is dedicated to equipping all employees with the knowledge and tools necessary to meet our compliance obligations effectively. Every member of staff is expected to understand and align with the company's commitment to preventing illicit financial activities, regardless of the nature or scale of business involved.
This policy serves to educate our employees on the global efforts and legal frameworks designed to combat money laundering and terrorist financing. Compliance with this policy is mandatory. Any failure to adhere to its principles and procedures will result in strict internal disciplinary action.
By fostering a culture of awareness and accountability, TRADEUCARE ensures that it operates with transparency, integrity, and in full compliance with all applicable laws and regulations.
2. What is Money Laundering?
Money laundering refers to the act of disguising the origins of funds acquired through unlawful means, in order to make them appear legitimate. It involves a range of techniques used to obscure the true source and ownership of criminal proceeds, allowing such funds to enter the financial system without raising suspicion.
Contrary to common perception, money laundering is not confined to drug-related crimes. It encompasses the proceeds of various illegal activities including tax evasion, armed robbery, human trafficking, smuggling, prostitution, terrorism, arms trafficking, fraud, bribery, corruption, forgery, and counterfeiting, among others.
The impact of money laundering extends far beyond individual transactions or institutions—it poses a serious risk to the integrity of global financial systems and economic stability. In response, governments across the world have established stringent legal frameworks to combat money laundering, imposing specific obligations on financial institutions to detect, prevent, and report such activities.
In India, the offence of money laundering is defined under Section 3 of the Prevention of Money Laundering Act, 2002 (PMLA). It states that any individual who is directly or indirectly involved in, assists with, or attempts any activity related to the handling of criminal proceeds with the intention of portraying them as lawful assets is committing the offence of money laundering.
Simply put, money laundering is the transformation of illegally acquired money or assets into forms that appear lawful—effectively "cleaning" dirty money to obscure its criminal origins.
3. The Money Laundering Process
The primary goal of a money launderer is to convert illegally obtained funds—often referred to as "dirty money"—into assets that appear legitimate, while minimizing any traceable connection to their criminal origin. To avoid detection by regulatory and law enforcement authorities, these funds are often moved through various channels, including foreign currencies, traveler's cheques, and postal orders, making it difficult to link them back to the original crime.
Money laundering typically unfolds in three key stages:
1. Placement
This is the initial step where illicit funds are introduced into the financial system. It represents the point of highest risk for criminals, as it involves the physical deposit of unlawful proceeds into banks, businesses, or other financial entities.
2. Layering
In this phase, the goal is to obscure the origin of the funds through a series of complex and often international financial transactions. These layers are deliberately designed to create confusion and disrupt the audit trail, making it difficult to trace the money back to its criminal source.
3. Integration
Finally, the funds are reintroduced into the legitimate economy in a way that appears lawful. At this point, the money may be used to acquire assets, invest in businesses, or fund other ventures, blending seamlessly with legitimate capital and making it extremely challenging to detect its illicit roots.
Key Point: It is not necessary for all three stages to be completed for money laundering to be deemed an offence. The involvement in any one of these steps, even in isolation, can be enough for legal action under anti-money laundering laws.
4. The Objective
The primary aim of TRADEUCARE's KYC, Anti-Money Laundering (AML), and Combating the Financing of Terrorism (CFT) Policy is to safeguard the organization from being exploited—whether knowingly or unknowingly—for money laundering or terrorist financing purposes. Implementing thorough KYC procedures helps TRADEUCARE gain a deeper understanding of its customers and their financial behavior, enabling the company to assess and manage associated risks more effectively.
This policy also establishes a framework for identifying, monitoring, and reporting suspicious transactions in line with relevant legal and regulatory requirements.
To ensure consistent compliance, TRADEUCARE is committed to providing appropriate training to all relevant staff members, equipping them with the knowledge and tools needed to implement the KYC/AML/CFT policy effectively.
The policy, approved by the Board, undergoes a comprehensive review on an annual basis. However, if changes in regulatory requirements or legislation necessitate revisions before the scheduled review, the Risk Assessment Committee is empowered to make those amendments. Such changes will be formally presented at the subsequent Board meeting for ratification.
5. Scope of the Policy
This policy applies to all employees of TRADEUCARE, regardless of their role or level within the organization. It is intended to be read alongside relevant operational guidelines and internal procedures that may be issued periodically.
The provisions outlined in this policy are dynamic in nature and must be interpreted in alignment with any updates, directives, or amendments issued by the Reserve Bank of India (RBI) or other applicable regulatory authorities. In the event of regulatory changes, the policy shall be deemed to stand updated to the extent of such revisions, and all staff are expected to comply with the most current requirements.
6. Definitions
6.1 "Customer": For the purpose of KYC Norms, a 'Customer' is defined as a person who is engaged in a financial transaction or activity with TRADEUCARE and includes a person on whose behalf the person who is engaged in the transaction or activity, is acting.
6.2 "Customer Due Diligence (CDD)": Means identifying and verifying the customer and the beneficial owner.
6.3 "Customer identification": Means undertaking the process of CDD.
6.4 "Certified Copy": Obtaining a certified copy shall mean comparing the self-certified copy of the proof of officially valid document (OVD) so produced by the customer with the original and recording the same on the copy by the authorized officer of the TRADEUCARE as "Original Seen and Verified" with date, name, designation, employee code and signature of verifying officer.
6.5 "Video based Customer Identification Process (V-CIP)": Video based Customer Identification Process (V-CIP) is an alternate method of customer identification with facial recognition and customer due diligence by an authorised official of the TRADEUCARE by undertaking seamless, secure, live, informed-consent based audio-visual interaction with the customer to obtain identification information required for CDD purpose, and to ascertain the veracity of the information furnished by the customer through independent verification and maintaining audit trail of the process.
6.6 "Cross-border wire transfer": Cross-border wire transfer refers to any wire transfer where the ordering financial institution and beneficiary financial institution are located in different countries. This term also refers to any chain of wire transfer in which at least one of the financial institutions involved is located in a different country.
6.7 "Digital signature": Means authentication of any electronic record by a person in whose name the electronic signature Certificate is issued by means of an electronic method or procedure in accordance with the provisions of section 3 of the Information Technology Act, 2000.
6.8 "Equivalent e-document": Means an electronic equivalent of a document, issued by the issuing authority of such document with its valid digital signature including documents issued to the digital locker account of the customer as per rule 9 of the Information Technology (Preservation and Retention of Information by Intermediaries Providing Digital Locker Facilities) Rules, 2016.
6.9 "Know Your Client (KYC) Identifier": Means the unique number or code assigned to a customer by the Central KYC Records Registry (CKYCR).
7. Know Your Customer (KYC) Policy
The purpose of KYC policy is to prevent our system from being used for money laundering. The four key elements of KYC Policy are:
- Customer Acceptance Policy (CAP)
- Customer Identification Procedure (CIP)
- Monitoring of Transactions
- Risk Management
7.1 Customer Acceptance Policy (CAP)
TRADEUCARE is committed to maintaining a strong and transparent customer onboarding process by implementing well-defined customer acceptance policies and procedures. These are designed to identify and mitigate risks associated with customers who may pose a higher-than-average risk of involvement in money laundering or terrorist financing.
As part of this framework, the following key principles shall govern TRADEUCARE's approach to customer relationships:
- a) Prohibition on Anonymous or Fictitious Accounts - TRADEUCARE will not engage in transactions involving customers using anonymous, fictitious, or benami names under any circumstances.
- b) Requirement for Complete Customer Due Diligence (CDD) - Transactions will not be undertaken where TRADEUCARE staff are unable to complete CDD measures.
- c) Customers Acting on Behalf of Others - If a customer is authorized to act on behalf of another individual or entity, the nature of this arrangement must be clearly documented.
- d) Prohibition on Relationships with Shell Entities - TRADEUCARE will not establish business relationships with shell banks, corporations, or institutions.
- e) Sanctions Screening and Blacklist Compliance - TRADEUCARE will ensure that it does not engage in any transaction with individuals or entities listed in sanctions databases.
7.2 Customer Identification Procedure (CIP)
TRADEUCARE shall carry out mandatory Customer Due Diligence (CDD) for every individual or entity engaging in the purchase or sale of foreign exchange, as well as in transactions conducted under the Money Transfer Service Scheme (MTSS).
| Customer Type | Required Documents |
|---|---|
| Indian Individuals |
|
| Foreign Nationals |
|
| Companies |
|
| Partnership Firms |
|
7.3 Monitoring of Transactions
TRADEUCARE shall perform ongoing Due Diligence (regular monitoring) of customers to ensure that their transactions remain consistent with the knowledge of the customer and their business. The extent of monitoring will be proportionate to the customer's risk category.
TRADEUCARE should pay particular attention to:
- Encashment of Foreign Currency above USD 5,000
- Receipt of Payment in Cash just below the threshold limit
- Corporate and Individual Customers categorized as High Risk
- Reconversion Transactions above Rs. 10,000
- Remittance by Tour Operators
- Remittance for Film Shooting
- Foreign Currency Notes Sold in excess of USD 3,000 to an individual
7.4 Risk Management
TRADEUCARE shall adopt a risk-based approach in its operations. Customers will be classified into Low, Medium, and High-Risk categories based on their risk profile.
| Purpose | Low Risk | Medium Risk | High Risk |
|---|---|---|---|
| Private (BTQ) Travel | Up to Rs.10 Lacs | Up to Rs.25 Lacs | Above Rs.25 Lacs |
| Business Travel | Up to Rs.30 Lacs | Up to Rs.45 Lacs | Above Rs.45 Lacs |
| Medical/Education/Employment | Up to Rs.30 Lacs | Up to Rs.45 Lacs | Above Rs.45 Lacs |
| MTSS Transactions | Up to 15 txns/year | 16-25 txns/year | Above 25 txns/year |
8. Requirements/Obligations under International Agreements
8.1 Obligation under UAPA Act, 1967
TRADEUCARE shall ensure full compliance with the provisions of Section 51A of the Unlawful Activities (Prevention) Act, 1967, including:
- Daily Screening Against UNSC Lists (ISIL/Da'esh & Al-Qaida, Taliban)
- Reference to Indian Sanctions Orders
- Reporting Suspicious Matches to FIU-IND and Ministry of Home Affairs
- Asset Freezing Procedures as per UAPA Order
8.2 Obligations under WMD Act, 2005
In accordance with the Weapons of Mass Destruction Act, 2005:
- Transaction restriction for designated WMD sanctions list matches
- Ongoing verification of customers against designated lists
- Immediate reporting to Central Nodal Officer
- Execution of freeze orders when received
8.3 FATF Recommendations
TRADEUCARE shall refer to Financial Action Task Force (FATF) Statements circulated by RBI and apply Enhanced Due Diligence for High-Risk Jurisdictions.
9. Wire Transfer
TRADEUCARE shall ensure that all cross-border wire transfers are accompanied by accurate, complete, and meaningful information relating to both the originator and the beneficiary.
Originator Information Required:
- Full name of the originator
- Account number (if applicable)
- Residential address OR National identity number OR Customer ID OR Date and place of birth
Beneficiary Information Required:
- Full name of the beneficiary
- Account number (if applicable)
10. Designated Director
A "Designated Director" refers to an individual appointed by the Board of TRADEUCARE, responsible for ensuring overall compliance with the obligations prescribed under Chapter IV of the Prevention of Money Laundering Act (PMLA), 2002.
The Designated Director shall be a senior-level functionary empowered to oversee the institution's adherence to AML/CFT regulatory requirements.
Important: Under no circumstances shall the Principal Officer be nominated as the Designated Director. The roles must remain distinct to ensure proper oversight and segregation of duties.
11. Principal Officer
The Principal Officer of TRADEUCARE shall be responsible for ensuring compliance with the provisions of the Prevention of Money Laundering Act (PMLA), 2002, its associated Rules, and other applicable regulatory guidelines.
Responsibilities include:
- Overseeing the monitoring of financial transactions
- Ensuring prompt sharing of relevant information
- Submitting statutory reports (STRs and CTRs) to FIU-IND
TRADEUCARE has appointed an Alternate Principal Officer to assist and ensure continuity in compliance functions.
12. Secrecy Obligation & Sharing of Information
TRADEUCARE staff shall strictly maintain confidentiality and secrecy regarding customer information. Exceptions to confidentiality apply:
- When disclosure is mandated by law or under legal compulsion
- When there exists a duty to the public to disclose
- When TRADEUCARE's legitimate business interests require disclosure
- When express or implied consent has been obtained from the customer
13. Introduction of New Technologies
TRADEUCARE shall proactively identify and assess ML/TF risks associated with new products, services, business practices, and technologies. This includes:
- Comprehensive ML/TF risk assessment prior to launch of new offerings
- Risk-based approach with Enhanced Due Diligence measures
- Robust transaction monitoring systems
- Proper documentation integrated into the risk management framework
14. Customer Education
TRADEUCARE shall ensure transparency in KYC procedures by:
- Making informational leaflets and pamphlets available at all branches
- Training front desk staff to manage customer interactions professionally
- Maintaining adequate stock of KYC awareness materials
15. Hiring of Employees and Employee Training
A. Employee Training
Training objectives include:
- Understanding policies and procedures to prevent money laundering
- Identifying suspicious transactions
- Training new joiners within 30 days of joining
- Annual training requirement for all staff
B. Employee Hiring
All appointments are contingent upon satisfactory references and background verification covering character, integrity, and accuracy of personal particulars.
16. Record Management
TRADEUCARE shall maintain records as per PMLA requirements:
- Transaction records maintained for minimum 5 years from transaction date
- Customer identification records preserved for 5 years after termination of business relationship
- Records available to competent authorities upon request
- System for easy and quick retrieval of data
- Records maintained in both hard and soft formats
17. Reporting to Financial Intelligence Unit-India
The Principal Officer shall furnish required information to FIU-IND including:
- Suspicious Transaction Reports (STR)
- Cash Transaction Reports (CTR)
- Non-Profit Organization Transaction Reports (NTR)
Confidentiality: The Principal Officer must maintain STR confidentiality ensuring no tipping off occurs at any level.
18. What is an 'Unusual' or 'Suspicious' Transaction?
A Suspicious Transaction refers to any transaction that raises reasonable grounds of suspicion:
Proceeds of Crime
May involve proceeds of an offence under PMLA Schedule
Unusual Complexity
Made under unjustified complexity suggesting illegitimacy
No Economic Rationale
Lacks legitimate economic purpose
Terrorism Financing
May involve financing of terrorism-related activities
19. Identifying 'Unusual' or 'Suspicious' Transactions
Indicators that may raise suspicion include:
General Indicators
- Customer details match known criminals
- Customer has been subject of law enforcement inquiry
- Transaction involving high-risk jurisdictions
- Unnecessarily complex transactions
Behavioral Indicators
- Customer is hurried, nervous, or evasive
- Reluctant to provide identification
- Provides minimal or inconsistent information
- Tries to convince staff to avoid reporting
Money Transfer Indicators
- Unrelated sender/receiver
- Multiple transfers to/from same individual
- Customer knows little about remitter/beneficiary
- Wire transfers in small amounts to avoid reporting
Important: Under no circumstances should the customer be made aware that a Suspicious Transaction Report (STR) is being completed. Disclosing this constitutes 'tipping off', which is a criminal offense.
20. Reporting of Suspicious Activity
- Pre-Transaction Reporting: Report to Principal Officer in writing before undertaking suspicious transactions
- Post-Transaction Reporting: Full details of all suspicious transactions must be reported immediately in writing
- Prior Approval: Suspicious transactions require prior written approval from Principal Officer
- Escalation: If satisfied that money laundering has occurred, report to FIU-IND within prescribed time
21. Audit/Compliance
- Monthly Review: Concurrent Auditor reviews all transactions for AML/KYC/CFT compliance
- Reporting Lapses: Compliance lapses reported to Board for review and action
- Annual Certification: Statutory Auditor provides certificate confirming KYC/AML/CFT compliance
22. Compliance of KYC/AML/CFT Policy
- Senior Management: Designated Director and Principal Officer constitute senior management for KYC compliance
- Compliance Team: Responsible for effective implementation of KYC/AML/CFT policies
- Independent Evaluation: Independent Auditor evaluates compliance functions every two years
- Monthly Verification: Concurrent Auditors verify compliance at branches monthly
- Quarterly Reporting: Audit Team submits quarterly notes and updates to Board