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| What are the obligations for maintenance of records under PMLA 2002? |
In terms of section 12 of the Prevention of Money Laundering Act, 2002, every banking company, financial institution and intermediary shall maintain a record of all transactions, the nature and value of which may be prescribed, whether such transactions comprise of a single transaction or a series of transactions integrally connected to each other, and where such series of transactions take place within a month.
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| Which notification lays down the procedure and the manner of maintenance of records? |
Rules 3, 4, 5 and 6 of the Rules notified by Notification No. 9/2005 dated 1st July 2005 as amended by Notification No.15/2005 dated 13th Dec 2005 specify the procedure and manner for maintenance and retention of records.
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| Which records need to be maintained as per PMLA 2002? |
As per Rule 3 of the Rules notified by Notification No. 9/2005 every banking company, financial institution and intermediary shall maintain a record of, -
- all cash transactions of the value of more than rupees ten lakhs or its equivalent in foreign currency;
- all series of cash transactions integrally connected to each other which have been valued below rupees ten lakhs or its equivalent in foreign currency where such series of transactions have taken place within a month;
- all cash transactions where forged
or counterfeit currency notes or bank notes have been
used as genuine or where any forgery of a valuable
security or a document has taken place facilitating the
transactions;
- all suspicious transactions whether or not made in cash
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| What constitutes a suspicious transaction under PMLA 2002? |
Suspicions transaction means a transaction whether or not made in cash which, to a person acting in good faith -
- gives rise to a reasonable ground of suspicion 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 bonafide purpose; or
- gives rise to a reasonable
ground of suspicion that it may involve financing
of the activities relating to terrorism.
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| Whether a transaction can be reported both through CTR and STR |
| Yes, in case it is a cash transaction falling within the prescribed rules and has also an element of suspicious
transaction. |
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| How does PMLA, 2002 define records? |
Records include the records maintained in the form of books or stored in a computer or such other form as may be prescribed.
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| In what form is the information on transaction required to be maintained? |
Rule 5 contained in Notification No. 9/2005 read with Notification No.15/2005 specify that the banking companies, financial institutions and intermediary shall maintain transactions with their clients both in hard and soft copies in accordance with the procedure and manner as may be specified by the Reserve Bank of India or the Securities and Exchange Board of India or the Insurance Regulatory and Development Authority, as the case may be.
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| For how long should the record of transactions be retained? |
The records of all transactions referred to in Rule 3 contained in Notification No.9/2005 dated 1/7/2005 are required to be maintained by every banking company, financial institution and intermediary for a period of ten years from the date of cessation of the transactions with their clients.
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| Can a banking company, financial institution or an intermediary be penalised for not complying with the obligations of maintenance of records under PMLA, 2002? |
Yes, under section 13 of the Prevention of Money Laundering Act, 2002. If the Director, FIU-IND finds that any banking company, financial institution or intermediary has failed to comply with the obligations of maintenance of records, then, he may levy a fine from ten thousand rupees upto one lakh rupees for each failure.
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