The Department of Non-Banking Supervision regulates a number of financial institutions in India, and these institutions are required to register themselves under the Financial Intelligence Unit – India (FIU-IND). All non-banking financial companies must conform to the compliances regarding registration.
The notifications that lays down the manner as well as procedures for submission of information are Notification No. 9/2005’s Rule 7 and Rule 8 of the Rules. The notification was issued on July 1, 2005 and the rules must be read with Notification No. 12/2013 issued on August 17, 2013, Notification No. 4/2007 which was issued on May 24, 2007, Notification No.15/2005 which was issued on December 13, 2005, Notification. These rules and notifications contain the manner and the procedure for submitting information to the Financial Intelligence Unit – India.
What kind of information must be submitted under the Prevention of Money Laundering Act?
All financial institutions, banking companies, as well as intermediaries are required to submit details regarding the following:
- Every cash transaction of which the value exceeds Rs.10 lakh in Indian rupees or foreign currency.
- Every series of cash transactions that are related to one another if the value of such transactions is under Rs.10 lakh, where said transactions occur within the space of a month.
- Every cash transaction where counterfeit or forged bank notes or currency notes were used as real, or in case forgery of a valuable document or security took place to facilitate cash transactions.
- Every suspicious transaction that was made in cash or any other mode of payment.
- Every overseas wire transfer if the value of such a transfer is more than Rs.5 lakh in Indian rupees or foreign currency where the destination or the origin of the funds is traced to India.
- Every sale or purchase of immovable property of which the value is Rs.50 lakh or more.
Format for submitting information to the Financial Intelligence Unit – India
All reporting entities that are mandatorily required to submit details to the Director of the Financial Intelligence Unit – India will have to follow a standard procedure that is specified by the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI), the Insurance Regulatory and Development Authority of India (IRDAI), or any other regulator as applicable. To do so, the reporting entity will have to register with the Financial Intelligence Unit – India through https://finnet.gov.in.
Who is responsible for submitting information to the Financial Intelligence Unit – India?
All reporting entities have to submit information to the Financial Intelligence Unit – India under Rule 7 of the Rules specified by Notification No.9/2005 issued on July 1, 2005. The reporting entities will have to designate a Principal Officer who will be responsible to submit the information mentioned in Rule 3 of the Rules. The Principal Officer will have to submit the information to the Director of the Financial Intelligence Unit – India. The officer will be designated by the reporting entity in keeping with Section 12 of the Prevention of Money Laundering Act, 2002. Under Rule 7, all reporting entities are required to communicate to the Director of the Financial Intelligence Unit – India the name of the officer along with his designation and address. The Principal Officer will also have to retain a copy of the information submitted to the Financial Intelligence Unit.
Time frame for submitting information to the Director of the Financial Intelligence Unit
Under Rule 8, the time limit set for the submission of information to the Director of the Financial Intelligence Unit is the fifteenth day of the following month, for both cash transactions as well as integrally related cash transactions.
All reports regarding cash transactions, NGO transactions, counterfeit currency as well as overseas wire transfers must be filed by the fifteenth day of the following month. For suspicious transactions, the information must be submitted to the Director of the Financial Intelligence Unit by 7 working days.