With reference to the Guidelines / Circulars issued by Reserve Bank of India regarding 'Know Your Customer and "Anti Money Laundering" norms, wherein Non Banking Financial Companies (NBFCs) were advised to follow certain customer identification procedure for opening of accounts and monitoring transactions of suspicious nature for the purpose of reporting it to appropriate authority, Moneywise Financial Services Pvt Ltd (“Moneywise”) has formulated the following KYC / AML policy. This policy comes into effect from the date of its approval in the Board Meeting held on 06 October 2006. The policy has been suitably amended from time to time as per the requirements of Moneywise in conformation with guidelines of RBI

Background: The Recommendations made by the Financial Action Task Force (FATF) on Anti Money Laundering (AML) standards and on Combating Financing of Terrorism (CFT) standards have become the international benchmark for framing Anti Money Laundering and combating financing of terrorism policies by the regulatory authorities. Compliance with these standards by the banks/ financial institutions, including NBFCs, has become necessary for international financial relationships. The RBI has issued comprehensive ‘Know Your Customer’ Guidelines to all Non-Banking Financial Companies (NBFCs) in the context of the recommendations made by the Financial Action Task Force (FATF) and Anti Money Laundering (AML) standards and combating financing of terrorism policies by the regulatory authorities and advised all NBFCs to adopt the same with suitable modifications depending on the activity undertaken by them and ensure that a proper policy framework on KYC and AML measures are formulated and put in place with the approval of their respective Boards.

Know Your Customer' Standards

1. The objective of KYC guidelines is to prevent NBFCs from being used, intentionally or unintentionally, by criminal elements for money laundering activities. KYC procedures also enable NBFCs to know/understand their customers and their financial dealings better which in turn help them manage their risks prudently. Moneywise has framed its KYC policy incorporating the following four key elements

• Customer Acceptance Policy (CAP);
• Customer Identification Procedures (CIP);
• Monitoring of Transactions (MT); and
• Risk management (RM)

1. For the purpose of the KYC policy, a 'Customer' is defined as:

a person or entity that maintains an account and/or has a business relationship with Moneywise; one on whose behalf the account is maintained (i.e. the beneficial owner); beneficiaries of transactions conducted by professional intermediaries, such as Stock Brokers, Chartered Accountants, Solicitors, etc. as permitted under the law, and any person or entity connected with a financial transaction which can pose significant reputational or other risks to Moneywise.

Customer Acceptance Policy (CAP)

3. Moneywise's Customer Acceptance Policy, which lays down explicit criteria for acceptance of customers, ensures the following aspects of the customer relationship: No account is opened in anonymous or fictitious/ benami name(s);
   Parameters of risk perception are clearly defined in terms of the location of customer, clients and mode of payments; Volume of turnover, social and financial status, etc. to enable categorization of customers into low, medium and high risk (these customers will require very high level of monitoring);
   Documentation requirements and other information collected in respect of different categories of customers depending on perceived risk and keeping in mind the requirements of PML Act, 2002 and guidelines issued from time to time;

3. Moneywise will not open an account where it is unable to apply appropriate customer due diligence measures, i.e. where Moneywise is unable to verify the identity and /or obtain documents required as per the risk categorisation due to non-co¬operation of the customer or non-reliability of the data/information furnished. However, Moneywise will have suitable built-in safeguards to avoid harassment of the customer. Circumstances, in which a customer is permitted to act on behalf of another person/entity, will be clearly spelt out in conformity with the established law and practice. However, Moneywise shall not open any account on behalf of a client by any Professional Intermediary.

4. Moneywise will prepare a profile for each new customer based on risk categorisation. The customer profile may contain information relating to the customer's identity, social/financial status, nature of business activity, information about his business and their location, etc. The nature and extent of due diligence will depend on the risk perceived by Moneywise. However, while preparing the customer profile, Moneywise will seek only such information from the customer which is relevant to the risk category and is not intrusive. The customer profile will be a confidential document and details contained therein will not be divulged for cross selling or any other purposes.

5. For the purpose of risk categorisation, individuals (other than High Net Worth) and entities whose identities and sources of wealth can be easily identified and transactions in whose accounts by and large confirm to the known profile, may be categorised as low risk. In such cases, the policy requires only the basic requirements of verifying the identity and location of the customer.

6. Customers that are likely to pose a higher than average risk to Moneywise may be categorized as medium or high risk depending on the customer's background, nature and location of activity, country of origin, sources of funds and his client profile, etc. Moneywise will 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. Moneywise may categorise those clients as "High" Risk clients the profile of whom would primarily categorise them as dealing in volatile segments of the Capital Market and other highly volatile segments. Moreover examples of customers requiring higher due diligence may include: non-resident customers, high net worth individuals, trusts, charities, NGOs and organizations receiving donations, companies having close family shareholding or beneficial ownership, firms with 'sleeping partners', politically exposed persons (PEPs) of foreign origin, non-face to face customers, and those with dubious reputation as per public information available, etc.

Customer Identification Procedure (CIP)

7. Moneywise has clearly spelt out the Customer Identification Procedure to be carried out at different stages, i.e. while establishing a relationship; carrying out a financial transaction or when Moneywise has a doubt about the authenticity/veracity or the adequacy of the previously obtained customer identification data. Customer identification means identifying the customer and verifying his/ her identity by using reliable, independent source documents, data or information. Moneywise will obtain sufficient information necessary to establish, to its satisfaction, the identity of each new customer, whether regular or occasional and the purpose of the intended nature of relationship. Being satisfied means that Moneywise must be able to satisfy the competent authorities that due diligence was observed based on the risk profile of the customer in compliance with the extant guidelines in place. Besides risk perception, the nature of information/documents required would also depend on the type of customer (individual, corporate etc). For customers that are natural persons, Moneywise will obtain sufficient identification data to verify the identity of the customer, his address/location, and also his recent photograph. For customers that are legal persons or entities, Moneywise will verify the legal status of the legal person/ entity through proper and relevant documents and will further verify that any person purporting to act on behalf of the legal person/entity is so authorized and identify and verify the identity of that person and understand the ownership and control structure of the customer and determine who are the natural persons who ultimately control the legal person. In this context, Permanent address at which a person usually resides and can be taken as the address as mentioned in a utility bill or any other document accepted by Moneywise for verification of the address of the customer.

Monitoring of Transactions (MT)

8. Ongoing monitoring is an essential element of effective AML check. Moneywise can effectively control and reduce its risk only if it has an understanding of the normal and reasonable activity of the customer so that it can identify transactions that fall outside the regular pattern. However, the extent of monitoring will depend on the risk sensitivity of the account. Since Moneywise will not have any deposit accounts, this situation will hardly arise, but Moneywise will in any case pay special attention to all complex, unusually large transactions and all unusual patterns which have no apparent economic or visible lawful purpose, or, transactions that involve large amounts of cash inconsistent with the normal and expected activity of the customer. Moneywise will put in place a system of periodical review of risk categorization of accounts and the need for applying enhanced due diligence measures.
   Moneywise will ensure that a record of transactions in the accounts is preserved and maintained as required in terms of section 12 of the PML Act, 2002. It will also ensure that transactions of suspicious nature and/or any other type of transaction notified under section 12 of the PML Act, 2002, is reported to the appropriate law enforcement authority.

Risk Management (RM)

9. Moneywise has ensured that an effective KYC program is in place and has established appropriate procedures to oversee its effective implementation. The program covers proper management oversight, systems and controls, segregation of duties, training and other related matters. Responsibility has been explicitly allocated within Moneywise to ensure that Moneywise's policies and procedures are implemented effectively. The Board of Moneywise has devised procedures for creating Risk Profiles of new customers and will apply various Anti Money Laundering measures keeping in view the risks involved in a transaction, account or business relationship.

10. Moneywise's internal committees have an important role in evaluating and ensuring adherence to the KYC policies and procedures. The compliance function will provide an independent evaluation of Moneywise's policies and procedures, including legal and regulatory requirements. Moneywise will ensure that it is staffed adequately with individuals who are well-versed with policies and procedures. The staff will, specifically check and verify the application of KYC procedures and comment on the lapses observed in this regard.

11. Moneywise will have an ongoing employee training programs so that members of the staff are trained in KYC procedures. The requirements will have different focuses on all aspects of effective KYC procedures.

Customer Education

12. The implementation of KYC procedures requires Moneywise to demand certain information from customers, which may be of personal nature, or which has hitherto never been called for. This can sometimes lead to a lot of questioning by the customer as to the motive and purpose of collecting such information. Moneywise's front line staff will therefore personally discuss this with customers and if required Moneywise will also prepare specific literature/ pamphlets etc. so as to educate the customer on the objectives of the KYC program.

Introduction of New Technologies

13. Moneywise will pay special attention to any money laundering threats that may arise from new or developing technologies including on-line transactions that might favour anonymity, and take measures, if needed, to prevent its use in money laundering schemes.

Appointment of Principal Officer

14. Moneywise has appointed a 'Principal Officer’ as per the RBI guidelines. The Principal Officer will be responsible for monitoring and reporting of all transactions and sharing of information as required under the law. He will maintain close liaison with enforcement agencies, other NBFCs and any other institution which are involved in the fight against money laundering and combating financing of terrorism.

Maintenance of records of transactions

15. As unlikely as it will be in Moneywise's case, due to its preference for non-cash transactions, Moneywise has a system of maintaining proper record of transactions prescribed under Rule 3, of the Prevention of Money-Laundering and value of transactions, the procedure and manner of maintaining and verification and maintenance of records of the identity of the clients of the Banking Companies, Financial Institutions and Intermediaries) Rules, 2005, mentioned below:
    • all cash transactions of the value of more than rupees ten lakh or its equivalent in foreign currency;
    • all series of cash transactions integrally connected to each other which have been valued below rupees ten lakh or its equivalent in foreign currency where such series of transactions have taken place within a month and the aggregate value of such transactions exceeds rupees ten lakh;
    • cash transactions where forged or counterfeit currency notes or bank notes have been used as genuine and where any forgery of a valuable security has taken place;
    • all suspicious transactions whether or not made in cash and by way of as mentioned in the Rules.

Information to be preserved

16. As per the RBI guidelines, Moneywise is required to maintain certain information in respect of transactions referred to in Rule 3, which it will note down and communicate to designated authority where required.

Maintenance and Preservation of records

17. Moneywise has a system for proper maintenance and preservation of account information in a manner that allows data to be retrieved easily and quickly whenever required or when requested by the competent authorities. Moneywise will preserve the data for the period as required by the Competent Authorities. Moneywise will also ensure that records pertaining to the identification of the customer and his / her address (e.g. copies of documents like passports, identity cards, driving licenses, PAN, utility bills etc.) obtained while opening the account and during the course of business relationship, are properly preserved for the time period as required by the Competent Authorities. The identification records and transaction data will be made available to the competent authorities upon request.

Reporting to Financial Intelligence Unit-India

18. In terms of the PMLA rules, Moneywise will report information relating to cash and suspicious transactions to the Director, Financial Intelligence Unit-India (FIU-IND) at the following address:

1. Director, FIU-IND,
   Financial Intelligence Unit-India,
   6 th Floor, Hotel Samrat,
   Kautilya Marg, Chanakyapuri,
   New Delhi-110021

• As advised, Moneywise before opening any new account shall ensure that the name/s of the proposed customer does not appear in the list of such individuals/entities can be accessed in the United Nations website at http://www.un.org/sc/committees/1267/consolist.shtml. Further, Moneywise shall scan all existing accounts to ensure that no account is held by or linked to any of the entities or individuals included in the list. Full details of accounts bearing resemblance with any of the individuals/entities in the list shall immediately be intimated to RBI and FIU-¬IND.
• It may be noted that NBFCs are not required to submit 'Nil' reports to Frauds Monitoring Cell/Regional Offices of Department of Non-Banking Supervision as per the guidelines issued by the RBI.

19. To ensure that criminals are not allowed to misuse the banking/financial channels, Moneywise shall ensure that adequate screening mechanism is put in place as an integral part of their recruitment/hiring process of personnel.

20. In the context of creating KYC/AML awareness among the staff and for generating alerts for suspicious transactions, Moneywise shall circulate the indicative list of suspicious activities contained in Annex-V of the CC No.126 dated August 05, 2008.

The Board of Directors of Moneywise Financial Services Pvt. Ltd. has framed these Internal Guidelines on KYC and AML, enhancing the scope of the guidelines issued by RBI in this respect without sacrificing the spirit of the guidelines. Moneywise shall abide by the Policy following the spirit of the Policy.

Any amendments in this policy shall not be carried out unless the same are authorized by any two Directors of the Moneywise existing on that date. Any such changes / amendments made in this policy may be put before the Board of Directors in the Board Meetings.