The objective of KYC and AML policy of HXPM is to prevent HXPM from being used, intentionally or unintentionally, by criminal elements for money laundering activities. KYC and AML procedures will also enable HXPM to know/understand HXPM’s customers and their financial dealings better, which in turn help HXPM to manage their risks prudently.
(i) Customer Identification Procedure;
(ii) Customer Acceptance Policy;
(iii) Monitoring of Transactions; and
(iv) Risk management.(i) Customer Identification Procedure
Customer identification means identifying the customer and verifying his/ her/ its identity by using reliable, independent source documents, data or information. The Company must obtain the necessary information to establish the identity of each new customer, whether regular or occasional and the purpose of the intended nature of relationship. The Company must carry out the identification procedure at different stages, i.e. while establishing a relationship; carrying out a financial transaction or when the Company has a doubt about the authenticity/veracity or the adequacy of the previously obtained customer identification data. The company should verify:
1. At the time of commencement of an account–based relationship, identify its clients, verify their identity and obtain information on the purpose and intended nature of the business relationship, and
2. In all other cases, verify identity while carrying out :
3. Transaction of an amount equal to or exceeding USD 5,000, whether conducted as a single transaction or several transactions that appear to be connected, or(ii) Customer Acceptance Policy:
HXPM will ensure that elaborate standard procedures are in place on the following aspects of customer relationships in HXPM.
• No account is opened in anonymous or fictitious/benami name(s)
• Obtaining comprehensive information depending on the perceived risk and in accordance with all the applicable laws and regulations regarding new customers at the initial stage
• Ascertaining the volume of turnover, social and financial status, etc. to enable categorization of customers into low, medium and high risk
• Collecting information and documents in respect of different categories of customers depending on perceived risk and keeping in mind the requirements of all applicable anti-money laundering related laws and guidelines. The Company may apply enhanced due diligence measures based on the risk assessment, thereby requiring intensive ‘due diligence’ for higher risk customers, especially those for whom the sources of funds are not clear. Examples of customers requiring higher due diligence may include :
1. Non-resident customers,
2. High net worth individuals,
3. Trusts, charities, NGOs and organisations receiving donations,
4. Companies having close family shareholding or beneficial ownership,
5. Firms with 'sleeping partners',
6. Politically exposed persons (PEPs) of foreign origin,
7. Non-face to face customers, and
8. Those with dubious reputation as per public information available, etc.
• Taking appropriate steps to verify the identity and /or obtain documents required as per the risk categorization. The Company must refuse to open an account where the prospective customer does not co-operate with the Company in obtaining these details or where the Company is not sure about the reliability of the data furnished by the prospective customer.
• Taking adequate steps to ensure that the identity of the customer does not match with any person with known criminal background or with banned entities such as individual terrorists or terrorist organisations, etc.
• Preparation of a profile for new and existing customers based on risk categorization. The customer profile must contain information relating to the customer’s identity, social/financial status, nature of business activity, information about his clients’ business and their location, etc. The nature and extent of due diligence will depend on the risk perceived by the company. However, the seeking of such information must not be intrusive and the Company must not use such confidential information cross selling or any other purposes.
• If the HXPM is unable to apply appropriate KYC measures due to non-furnishing of information and /or non-cooperation by the customer, HXPM may consider closing the account or terminating the business relationship after issuing due notice to the customer explaining the reasons for taking such a decision. Such decisions need to be taken at a reasonably senior level after consulting the Principal Officer.
HXPM will undertake adequate steps to ensure that the implementation of this policy must not become too restrictive and must not result in denial of the Company’s services to general public, especially to those, who are financially or socially disadvantaged.
HXPM shall monitor and also maintain a record of a transaction of the deposit where there has been a payment in exceeding USD 5,000 per transaction; and also monitor and maintain record of deposits where there has been a series of cash transactions from the same customer during a month exceeding USD100,000.
HXPM is required to maintain proper record of transactions, of the Prevention of Money-Laundering (Maintenance of records of the nature and value of transactions, the procedure and manner of maintaining and time for furnishing information and verification and maintenance of records of the identity of the clients of the (Banking Companies, Financial Institutions and Intermediaries).HXPM shall accordingly maintain records of:
1. All transactions of the value of more than USD5,000 or its equivalent in foreign currency;
In addition to the above, HXPM would maintain for at least six years from the date of cessation of transaction between HXPM and the customer, all necessary records of the transactions, both domestic or international, which will permit reconstruction of individual transactions so as to provide, if necessary, evidence for prosecution of persons involved in criminal activity.
HXPM would also ensure that records pertaining to the identification of the customer and his address obtained while opening the account and during the course of business relationship, are properly preserved for at least six years after the business relationship is ended. The identification records and transaction data will be made available to the competent authorities upon request.
The information available from the customers to prove their identity will determine the risk perception. However, for proper risk assessment of business relationship with customers the customers will be broadly classified as Low risk, Medium Risk and High Risk, based on the risk perceived.
For medium and high risk customers, HXPM shall draw up additional precautions to be taken while dealing with such customers. The Principal Officer shall formulate a procedure for the risk assessment of such medium and high risk customers.(v) Responsibilities assigned to the personnel:
With a view to implement the KYC policies and procedures effectively and also to fix accountability for lapses and intentional circumvention of the prescribed procedures and guidelines, the responsibilities will be delegated across the organisation. The Principal Officer shall formulate a procedure to fix accountability for lapses and the guidelines to be followed.(vi) Education on KYC Norms:
HXPM would issue pamphlets / literature on the KYC norms to educate the customers on the need to collect such information. HXPM would print literatures/pamphlets explaining the KYC norms, the procedures involved and the details to be collected from different category of customers to be used for educating the customers on the KYC norms. The literatures/pamphlets will be updated to incorporate the changes in the KYC guidelines from time to time.(vii) Review of policy:
HXPM's Board will review the policy adopted for KYC and AML from time to time and recommend incorporation of suitable modifications / changes. Modifications in the policies as a result of the change of applicable laws will be incorporated as required under by law. All such changes /modifications will be reported to the Board for approval.(viii) Training to employees:
HXPM shall impart training to employees to fully understand the need for implementation of all applicable KYC related laws, guidelines and policy with a view that they can comply with the regulatory requirements.(ix) Procedures Manuals:
HXPM shall formulate business/product specific risk profile of the customer and procedure manuals for compliance of this policy.