India's Financial Intelligence Unit (FIU) has launched a series of new 'alerts' for capital markets, insurance companies, online payment gateway intermediaries and virtual currency service providers to effectively check suspicious transactions within the channel. “Indicators'' were published. Anti-money laundering and counter-terrorist financing regime.
These new guidelines will be issued during the financial year 2022-23 under the provisions of the Prevention of Money Laundering Act (PMLA) and were made public in a recently released report accessed by PTI.
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This is part of the fight against anti-money laundering (AML) and financing of terrorism (CFT) regimes, in which the country requires financial institutions and intermediaries to share suspicious transaction reports (STRs) with the FIU. It is mandatory and the FIU will then conduct an analysis. Share them and share them for action with various investigative and intelligence agencies.
The Federal Financial Data Mining Authority's charter states that the FIU actively collaborates with financial sector regulators and reporting bodies to understand emerging risks and take immediate mitigation measures.
In the case of capital markets, these supplementary guidelines have resulted in a “strategic change in the way FIUs receive information on securities market transactions,” the report said.
These “warning indicators” are based on market infrastructure institutions (MIIs), i.e., “emerging risks” at stock exchanges and depositories (synchronized and manipulative trading practices, order spoofing, misuse of customer funds by stock brokers, (such as suspicious transactions).・Market transactions, etc.
The paper said MII's role will be “important” in making AML/CFT architectures more robust given the increase in transaction volumes.
MII has been sending suspicious transaction reports (STRs) to the FIU for years, but the lack of “MII-specific” warning indicators leaves much room for improvement in the quality of reporting. The report states that there are. Said.
The supplementary guidelines specify clear areas of focus for the MII, which are expected to “significantly improve” the quality of reporting, and ensure that the FIU will be able to provide meaningful information to law enforcement agencies such as the income tax department. will be useful for generating. It said ED, CBI, DRI, etc.
The new warning indicators were announced by a working group of market regulators SEBI, FIU, stock exchanges, depositories and other institutions to “comprehensively'' revise these guidelines so that only stock brokers and depository participants can It was issued after the FIU decided to change the system for reporting STRs. It was the first point of contact for customers to access capital markets.
For stock exchanges, the Fresh Alert Index takes into account cases in which securities companies are suspected of misusing customer funds, such as fraud, and “serious anomalies'' have been observed from the perspective of money laundering and terrorist financing. Case analysis is also required. The report described the process of inspection and auditing of stockbrokers.
For depositories, new alert metrics for generating STRs require them to address the identification of suspicious off-market transfers, which are methods of transferring shares directly between two accounts without going through an exchange platform. Masu.
A similar working group, including insurance regulator IRDAI, will consider issues related to the insurance sector during the financial year 2022-23 and the revised guidelines will issue a warning in case of fraud experienced by insurance companies. These were analyzed with “special emphasis” on. Reports will be submitted to the FIU where appropriate from an AML/CFT perspective, the report said.
In the case of online payment gateways, a working group comprising banking regulator RBI and National Payments Corporation of India (NPCI) has said that these technology-enabled financial services companies will 'extensively' researched business models. Respect for the transparency of parties involved in transactions facilitated by them and the relative speed with which such transactions are completed leads to the emergence of AML/CFT risks.
The agency also issued a variety of warning indicators for virtual digital asset (VDA) and cryptocurrency service providers, ranging from instructions to register with the FIU to conducting “enhanced due diligence for implementation of the Travel Rule.” .
The Travel Rule requires cryptocurrency service providers to share sender and recipient data with each other during transactions.
For credit rating agencies (CRAs), the new guidelines will ensure timely reporting of STRs to FIUs, help identify serious corporate fraud affecting AML/CFT at an early stage, and help law enforcement agencies acts in a timely manner based on the following criteria: This financial information will prevent delinquent issuers from siphoning off funds.
A similar set of warning indicators will be issued to bond trustees, requiring bond issuers to “regularly report” and ensuring that in the event of a breach of the trust deed or the law, prompt action is taken to ensure the benefit of bondholders. were instructed to take appropriate measures. The FIU has stated that these violations may have implications from an AML/CFT perspective, but please be careful.
The FIU also shared new warning indicator guidelines for STR reporting with real estate agents classified as Designated Non-Financial Businesses and Professionals (DNFBP) under the PMLA.
