KYC, ANTI-MONEY LAUNDERING & SURVEILLANCE POLICY

1 PREFACE

WHAT IS MONEY LAUNDERING?

Money Laundering can be defined as engaging in financial transactions that involve income derived from criminal activity, transactions designed to conceal the true origin of criminally derived proceeds which are made to appear to have been received through legitimate sources/origins.

BACKGROUND

The Prevention of Money Laundering Act, 2002 (PML Act 2002) mandate every reporting entity (which includes intermediaries registered under section 12 of the Securities and Exchange Board of India Act, 1992), to adhere to client account opening procedures, maintenance of records and reporting of such transactions as prescribed therein to the relevant authorities. PML Act 2022 inter alia provides that violating the prohibitions on manipulative and deceptive devices, insider trading and substantial acquisition of securities or control as provided in Section 12A read with Section 24 of the SEBI Act will be treated as a scheduled offence under schedule B of the PML Act 2022.

The Prevention of Money-Laundering (Maintenance of Records) Rules, 2005 (PML Rules 2005) inter alia, empower SEBI to specify the information required to be maintained by the intermediaries and the procedure, manner and the form in which such information is to be maintained. It also mandates the reporting entities to evolve an internal mechanism for detecting transactions as specified and for furnishing information in such form as directed by SEBI.

SEBI has issued ‘Guidelines on Anti Money Laundering (AML) Standards & Combating the Financing of Terrorism (CFT) /Obligations of Securities Market Intermediaries under the Prevention of Money Laundering Act, 2002 and Rules framed there under’ vide Master Circular No. SEBI/HO/MIRSD/MIRSD-SEC-5/P/CIR/2023/022 dated 3rd February 2023 (AML-CFT Guidelines) that stipulate the essential principles for combating Money Laundering (ML) and Terrorist Financing (TF) and provides detailed procedures and obligations to be followed and complied with by all the registered intermediaries.

OBJECTIVES OF KYC, AML & SURVEILLANCE POLICY

MARKETWOLF SECURITIES PRIVATE LIMITED (“MARKETWOLF”) has adopted this Policy to implement measures to actively prevent money laundering and any activity that facilitates money laundering or the funding of terrorist or criminal activities or flow of illegal money or hiding money to avoid paying taxes by putting in place a robust framework to verify identity of clients, maintain records and detect & report suspicious transactions. This Policy is reviewed and updated from time to time.

Objectives. The objectives of the Policy include:

to put in place appropriate controls for detection and reporting of suspicious activities by implementing proper Client Due Diligence (CDD) measures;
to take necessary steps to ensure that concerned staff are adequately trained in KYC/AML procedures;
to determine and document true identity of the clients who establish relationships, open accounts or conduct transactions and obtain required verification and background information on clients to assess & monitor money-laundering risks posed by clients’ use of MARKETWOLF services;
to protect MARKETWOLF from the risks of doing business with any individual or entity whose identity cannot be determined or who refuses to provide information, or who have provided information that contains significant inconsistencies which cannot be resolved after due investigation;
to maintain and preserve records under applicable laws and for reporting to FIU-IND;
to assist law enforcement agencies in their effort to investigate and track money laundering activities.

FINANCIAL INTELLIGENT UNIT – INDIA

The Government of India has set up Financial Intelligent Unit – India (FIU - IND) as an independent body to report directly to the Economic Intelligence council (EIC) headed by the Finance Minister. FIU-IND has been established as the central national agency responsible for receiving, processing, analyzing and disseminating information relating to suspicious financial transactions.

POLICIES & PROCEDURES TO COMBAT MONEY-LAUNDERING & TERRORIST FINANCING

Global measures taken to combat drug trafficking, terrorism and other organized and serious crimes have all emphasized the need for financial institutions, including securities market intermediaries, to establish internal procedures that effectively serve to prevent and impede money laundering and terrorist financing. PML Act 2022 mandates all registered intermediaries to ensure fulfilment of such obligations.

MARKETWOLF is fully committed to establishing appropriate Policies & Procedures for prevention of money-laundering (ML) and terror-financing (TF) and ensuring their effectiveness and compliance with all relevant legal and regulatory requirements. MARKETWOLF shall:

ensure that the content of these Directives are understood by all staff members;
regularly review the policies & procedures on prevention of ML and TF to ensure their effectiveness. Further, in order to ensure the effectiveness of policies and procedures, the person doing such a review shall be different from the one who has framed such policies and procedures;
adopt client acceptance policies and procedures which are sensitive to the risk of ML and TF;
undertake CDD measures to the extent that is sensitive to risk of ML and TF depending on the type of client, business relationship or transaction;
have a system in place for identifying, monitoring and reporting suspected ML or TF transactions to the law enforcement authorities;
develop staff members’ awareness and vigilance to guard against ML and TF

Our policies and procedures to combat ML and TF cover:

communication relating to prevention of ML and TF to all management and relevant staff that handle account information, securities transactions, money and client records etc. whether in branches, departments or subsidiaries;
Client Acceptance Policy and Client Due Diligence measures, including requirements for proper identification;
maintenance of records; compliance with relevant statutory and regulatory requirements; co-operation with the relevant law enforcement authorities, including the timely disclosure of information; and
role of internal audit or compliance function to ensure compliance with the policies, procedures, and controls relating to the prevention of ML and TF, including the testing of the system for detecting suspected money laundering transactions, evaluating and checking the adequacy of exception reports generated on large and/or irregular transactions, the quality of reporting of suspicious transactions and the level of awareness of front line staff, of their responsibilities in this regard. internal audit function shall be independent, adequately resourced and commensurate with the size of the business and operations, organization structure, number of clients and other such factors.

CUSTOMER DUE DILIGENCE (CDD)

MARKETWOLF exercises due diligence in client acceptance and subsequent continuation of relationship with the clients. Such procedures inter alia include four specific parameters which are related to overall Client Due Diligence process:

CUSTOMER ACCEPTANCE POLICY
CLIENT IDENTIFICATION PROCEDURE
RISK MANAGEMENT
MONITORING OF TRANSACTIONS

Client Due Diligence (CDD) measures shall include:

verifying the client’s identity by using reliable, independent source documents, data or information by applying the uniform Know Your Client (KYC) requirements prescribed by SEBI which have to followed scrupulously for customer identification and acceptance;
identifying beneficial ownership and control, i.e., determine which individual(s) ultimately own(s) or control(s) the client and/or the person on whose behalf a transaction is being conducted by applying the ‘Guidelines on Identification of Beneficial Ownership’ as set out at ANNEXURE 1 hereto;
verifying the identity of the beneficial owner of the client and/or the person on whose behalf a transaction is being conducted, corroborating the information provided as above;
understanding the ownership and control structure of the client;
conducting ongoing due diligence and scrutiny, i.e., perform ongoing scrutiny of transactions and account throughout the course of the business relationship to ensure that transactions being conducted are consistent with client’s background, business and risk profile, taking into account, where necessary, the client’s source of funds;
reviewing CDD measures including verifying again the identity of the client and obtaining information on the purpose and intended nature of the business relationship, as the case may be, when there are suspicions of money laundering or financing of the activities relating to terrorism or where there are doubts about the adequacy or veracity of previously obtained client identification data;
for all clients applying for trading rights in the futures and options segments, further details as regards their proof of income and source of funds would be required;
periodically updating all documents, data or information of all clients and beneficial owners collected under the CDD process.

CUSTOMER ACCEPTANCE POLICY

MARKETWOLF implements client acceptance policies and procedures that aim to identify the types of clients that are likely to pose a higher than average risk of ML or TF. By establishing such policies and procedures, MARKETWOLF aims to be in a better position to apply Client Due Diligence on risk sensitive basis depending on type of client business relationship or transaction. MARKETWOLF implements following safeguards while accepting clients.

In-Person Verification. In person verification (IPV) shall be mandatory for all clients. Accounts shall be opened only for those persons whose IPV has been done in compliance with rules and regulations of SEBI/Stock Exchange/Depositary framed in this regard.

KYC Procedures. MARKETWOLF shall accept only such clients in respect of whom complete KYC procedures have been completed. MARKETWOLF shall not open account in case client fails to submit required documents s per the Client Identification Procedure.

No Benami Accounts. MARKETWOLF does not allow opening of or keeping any anonymous account or account in fictitious names or account on behalf of other persons whose identity has not been disclosed or cannot be verified.

Risk Based Approach. MARKETWOLF applies the parameters of risk perception having regard to clients’ location, nature of business activity, trading turnover, social & financial status etc. and manner of making payment for transactions undertaken etc. which shall be captured at account opening stage to enable categorization of clients into LOW, MEDIUM and HIGH RISK. Indicative categories of clients which would fall into LOW, MEDIUM or HIGH RISK categories is at ANNEXURE 2 hereto.v

Clients of Special Category. MARKETWOLF applies enhanced Client Due Diligence measures to Special Category clients, which, if necessary, may be classified even higher, requiring higher degree of due diligence and regular update of Know Your Client (KYC) profile. While, an illustrative list of which is set out below, MARKETWOLF shall exercise independent judgement to ascertain whether any new client should be classified as CSC or not;

Clients of Special Category (CSC)
Non-Resident Clients (NRIs)
High Net-Worth Clients (HNIs)
Trust, Charities, Non-Governmental Organizations (NGOs) and organizations receiving donations
Companies having close family shareholdings or beneficial ownership
Politically Exposed Persons, family members & close relatives
Clients from High Risk Countries or geographic areas: (i) where existence or effectiveness of action against money laundering or terror financing is suspect; or (ii) which do not or insufficiently apply FAFT standards
Non Face to Face clients, subject to clarification that video based Client Identification Process is treated as face-to-face onboarding
Clients with dubious reputation as per public information available etc.

Designated Individuals/Entities. An updated list of individuals and entities which are subject to various sanction measures such as freezing of assets/accounts, denial of financial services etc. as approved by the United Nations Security Council Resolutions which can be accessed at https://www.un.org/securitycouncil/sanctions/1267/press-releases & www.un.org/securitycouncil/sanctions/1718/press-releases. MARKETWOLF shall ensure that accounts are not opened in the name of anyone whose name appears in said lists.

Verification in case third party operates client account. In case a client account is opened wherein a POA to operate the account is provided to another person, then such accounts will be categorized as HIGH RISK. The circumstances under which a client is permitted to act on behalf of another person/entity shall be clearly laid down. It shall be specified in what manner the account shall be operated, transaction limits for the operation, additional authority required for transactions exceeding a specified quantity/value and other appropriate details. Further the rights and responsibilities of both the persons i.e. the agent- client registered with MARKETWOLF, as well as the person on whose behalf the agent is acting shall be clearly laid down. Adequate verification of a person’s authority to act on behalf of the client shall also be carried out

No Account can be opened without Client Due Diligence. No account can be opened where MARKETWOLF is unable to apply appropriate Client Due Diligence measures, i.e., where it is not possible to ascertain identity of the client, or the information provided is suspected to be non-genuine, or identify cannot be verified as per the risk-category or due to non- co-operation of the client in providing full and complete information. MARKETWOLF shall not continue to do business with such a person and file a suspicious activity report. MARKETWOLF shall also evaluate whether there is suspicious trading in determining whether to freeze or close the account. MARKETWOLF shall be cautious to ensure that it does not return securities or money that may be from suspicious trades. However, MARKETWOLF shall consult the relevant authorities in determining what action it shall take when it suspects suspicious trading. CDD process shall necessarily be revisited when there are suspicions of ML and TF.

Background Checks. MARKETWOLF shall carry out checks to ascertain that identify of client does not match with any person having known criminal background or is not banned in any other manner, whether in terms of criminal or civil proceedings by any enforcement agency worldwide.

Additional Segment Activation. For all clients applying for trading rights in the futures & options segments, further details/documents substantiating ownership of assets shall be required. Illustrative list is as follows:

copy of ITR acknowledgement
in case of salary income – salary slip, copy of Form 16
copy of demat account holding statement
networth certificate
bank account statement for last 6 months
self-declaration with relevant supporting documents.

CLIENT IDENTIFICATION PROCEDURE

Client Identification Procedure (CIP) means verifying the identity of client to be carried out at different stages, i.e., while establishing the intermediary-client relationship, while carrying out transactions for the client or when the intermediary has doubts regarding veracity or adequacy of previously obtained client identification data.

MARKETWOLF has implemented a comprehensive CIP mechanism which incorporates the requirements of the PML Rules 2005, which notifies rules for maintenance of records of the nature and value of transactions, the procedure and manner of maintaining and time for furnishing of information and verification of records of the identity of the clients. The various documents required for verification of records of the identity of the clients, which are listed as at ANNEXURE 3 hereto.

MARKETWOLF observes compliance with following requirements:

appropriate risk management systems are in place to determine whether a client or potential client or beneficial owner of such client is a Politically Exposed Person (PEP). Such procedures includes seeking relevant information from the client, referring to publicly available information or accessing the commercial electronic databases of PEPs;
no business relationship can be established with PEPs without approval from the Principal Officer. Where a client has been accepted and the client or beneficial owner is subsequently found to be, or subsequently becomes a PEP, approval from the Principal Officer is required to continue the business relationship;
reasonable measures are taken to verify the sources of funds as well as the wealth of clients and beneficial owners identified as PEP;
client is identified by using reliable source documents, data or information to satisfactorily establish the identity of each new client and the purpose of the intended nature of the relationship;
such information must be adequate enough to satisfy competent authorities (regulatory/enforcement authorities) in future that due diligence was observed based on the risk profile of the client in compliance with the extant guidelines in place. Each original document shall be seen prior to acceptance of a copy;
in case of failure by prospective client to provide satisfactory evidence of identity, financial status and purpose of intended nature of relationship, new account shall not be opened and the matter shall be reported to higher authorities.
ongoing due diligence shall be conducted if any inconsistencies in the information provided by a client is noticed. The underlying objective shall be to follow the requirements enshrined in the PML Act 2002, SEBI Act, 1992 and regulations, directives and circulars issued thereunder to have awareness of the clients on whose behalf we are dealing;
it is noted that while risk based approach may be adopted at the time of establishing business relationship with a client, no exemption from obtaining the minimum information/documents from clients as provided in the PML Rules 2005 is available to any class of investors with regard to verification of the records of the identity of clients;
there shall be no minimum investment threshold/ category-wise exemption available for carrying out CDD measures.

RELIANCE ON THIRD PARTY FOR CLIENT DUE DILIGENCE (CDD)

MARKETWOLF may rely on third parties for the purposes of: (i) identification & verification of the identity of a client; and (ii) determination of whether the client is acting on behalf of a beneficial owner, identification of the beneficial owner and verification of the identity of the beneficial owner. MARKETWOLF shall enquire and/or confirm that such third parties are regulated, supervised or monitored for, and have measures in place for compliance with CDD and record-keeping requirements in line with the obligations under the PML Act 2002.

Such reliance on third parties shall be subject to conditions specified in Rule 9 (2) of the PML Rules 2005 and circulars/ guidelines issued by SEBI from time to time:

MARKETWOLF shall obtain necessary information of client due diligence carried out by the third party;
MARKETWOLF shall take adequate steps to satisfy itself that copies of identification data and other relevant document relating to the client due diligence requirement will be made available from the third party upon request without delay;
MARKETWOLF shall be satisfied that such third party is regulated, supervised or monitored for, and has measure in place for compliance with client due diligence and record keeping requirements in line with the requirements and obligations under the PML Act 2002;
the third party is not based in a country or jurisdiction assessed as high risk; and
MARKETWOLF shall be ultimately responsible for client due diligence and undertaking enhanced due diligence measures, as applicable.

RISK MANAGEMENT

RISK BASED APPROACH

It is generally recognized that certain clients may be of a higher or lower risk category depending on their circumstances such as – background, type of business relationship or transaction etc.

While accepting and executing a new client relationship, MARKETWOLF implements Risk Based Approach to identify the types of clients that are likely to pose a higher than average risk of money-laundering or terror-financing. The type and amount of identification information and documents to be obtained depends on risk based categorization of a client. For the purposes of risk categorization:

clients whose identity and source of wealth can be easily identified and transactions in whose accounts by and large conform to their known profile shall be categorized as LOW RISK, for ex.:

salaried employees whose salary structures are well defined;
government departments and government owned companies;
regulators and statutory bodies etc.

clients that are likely to pose a higher than average risk depending on background, nature and location of activity, country of origin, source of funds, client profile etc. shall be categorized as MEDIUM RISK or HIGH RISK;
clients who have defaulted in the past or who have suspicious background or financial status shall be categorized as HIGH RISK.

We adopt an enhanced Client Due Diligence process for HIGH RISK categories, requiring intensive ‘due diligence’, especially those for whom sources of funds are not clear. Conversely, a simplified Client Due Diligence process is adopted for LOW RISK categories of clients. LOW RISK provisions shall not apply when there are suspicions of ML and TF or when other factors give rise to a belief that the client does not in fact pose a low risk.

While the profile of the client is captured in the account opening form, a client profile sheet is also prepared at account opening stage for all accounts (individua/non-individual). Client Profile Sheet is an addendum to the account opening form and captures in further detail, the profile of the client, expected transaction pattern of the client etc.

RISK ASSESSMENT

MARKETWOLF shall carry out risk assessment to identify, assess and take effective measures to mitigate ML and TF risk with respect to clients, countries or geographical areas, nature and volume of transactions, payment methods used by clients. Risk assessment considers all the relevant risk factors before determining the level of overall risk and the appropriate level and type of mitigation to be applied. The assessment shall be documented, updated regularly and made available to competent authorities and self-regulating bodies, as and when required.

Risk assessment shall also take into account any country specific information that is circulated by the Government of India and SEBI from time to time, as well as, the updated list of individuals and entities who are subjected to sanction measures as required under the various United Nations' Security Council resolutions.

MONITORING OF TRANSACTIONS

Regular monitoring of transactions is vital for ensuring effectiveness of the AML procedures. MARKETWOLF can effectively control and mitigate risk only with an understanding of the normal and reasonable activity of the client so that it can identify deviations in transactions/activities.

MARKETWOLF shall pay special attention to all complex unusually large transactions/patterns which appear to have no economic purpose. MARKETWOLF shall specify internal threshold limits for each class of client accounts and pay special attention to transactions which exceeds these limits. The background including all documents/office records/memorandums/clarifications sought pertaining to such transactions and purpose thereof shall also be examined carefully and findings shall be recorded in writing. Further such findings, records and related documents shall be made available to auditors and also to SEBI/stock exchanges/FIU-IND/ other relevant authorities during audit or inspection or as required.

MARKETWOLF shall apply client due diligence measures also to existing clients on the basis of materiality and risk, and conduct due diligence on such existing relationships appropriately. The extent of monitoring shall be aligned with the risk category of the client.

MARKETWOLF shall ensure a record of the transactions is preserved and maintained in terms of Section 12 of the PML Act 2002 and that transactions of a suspicious nature or any other transactions notified under Section 12 of the Act are reported to the Director, FIU-IND. Suspicious transactions shall also be regularly reported to the senior management of MARKETWOLF. Further, the compliance cell of MARKETWOLF shall randomly examine a selection of transactions undertaken by clients to comment on their nature i.e. whether they are in the nature of suspicious transactions or not.

MARKETWOLF has put in place strong transaction alerts to generate proactive signals on suspicious transactions and possible money laundering. An indicative list of such alerts is set out at ANNEXURE 4 hereto. AML monitoring team shall endeavour to update the list based on current understanding of the market scenario and trading patterns followed by clients. In addition to the alerts from internal sources, the Surveillance team shall also monitor the alerts provided by the exchanges per their circular NSE/INVG/22908 dated March 7, 2013. Details relating to the compliance with respect to the said circular are elaborated in ANNEXURE 4.

SUSPICIOUS TRANSACTION MONITORING & REPORTING

MARKETWOLF shall ensure that appropriate steps are taken to enable suspicious transaction to be recognized and appropriate procedures are adopted for reporting suspicious. While determining suspicious transactions, MARKETWOLF shall be guided by the definition of a suspicious transaction contained in PML Rules 2005. Whether a particular transaction is suspicious or not will depend upon the background, details of the transactions and other facts and circumstances. An illustrative list of circumstances which may be in the nature of suspicious transactions is set below:

clients whose identity verification seems difficult or clients that appear not to cooperate;
asset management services for clients where the source of the funds is not clear or not in keeping with clients’ apparent standing /business activity;
clients based in high risk jurisdictions;
substantial increases in business without apparent cause;
clients transferring large sums of money to or from overseas locations with instructions for payment in cash;
attempted transfer of investment proceeds to apparently unrelated third parties;
unusual transactions by CSCs and businesses undertaken by offshore banks/financial services.

Any suspicious transaction shall be immediately notified to the Designated Director or Principal Officer. The notification may be done in the form of a detailed report with specific reference to the clients, transactions and the nature /reason of suspicion. However, it shall be ensured that there is continuity in dealing with the client as normal until told otherwise and the client shall not be told of the report/ suspicion. In exceptional circumstances, consent may not be given to continue to operate the account, and transactions may be suspended, in one or more jurisdictions concerned in the transaction, or other action taken. The Designated/ Principal Officer and other appropriate compliance, risk management and related staff members shall have timely access to client identification data and CDD information, transaction records and other relevant information.

It is likely that in some cases transactions are abandoned or aborted by clients on being asked to give some details or to provide documents. MARKETWOLF shall report all such attempted transactions in STRs, even if not completed by clients, irrespective of the amount of the transaction.

Client of high-risk countries including countries where existence and effectiveness of money laundering controls is suspect or which do not or insufficiently apply FAFT standards shall also be subject to appropriate counter measures. These measures may include a further enhanced scrutiny of transactions, enhanced relevant reporting mechanisms or systematic reporting of financial transactions, and applying enhanced due diligence while expanding business relationships with the identified country or persons in that country etc.

RECORD MANAGEMENT

INFORMATION TO BE MAINTAINED

MARKETWOLF shall maintain and preserve the following information in respect of transactions referred to in Rule 3 of the PML Rules 2005:

the nature of the transactions;
the amount of the transaction and the currency in which it was denominated;
the date on which the transaction was conducted; and
the parties to the transaction.

RECORD KEEPING

MARKETWOLF shall ensure compliance with the record keeping requirements contained in the SEBI Act, 1992 & PML Act 2002 as well as other relevant legislation, rules, regulations, exchange bye-laws and circulars. MARKETWOLF shall ensure that all client and transaction records and information are available on a timely basis to the competent investigating authorities. Where required by the investigating authority, MARKETWOLF shall retain certain records, e.g. client identification, account files, and business correspondence, for periods which may exceed those required under the SEBI Act, 1992 & PML Act 2002 as well as other relevant legislation, rules, regulations, exchange bye-laws and circulars.

MARKETWOLF shall maintain such records as are sufficient to permit reconstruction of individual transactions (including the amounts and types of currencies involved, if any) so as to provide, if necessary, evidence for prosecution of criminal behaviour.

In case of any suspected drug related or other laundered money or terrorist property, the competent investigating authorities would need to trace through the audit trail for reconstructing a financial profile of the suspect account. To enable this reconstruction, MARKETWOLF SHALL retain the following information for the accounts of their clients in order to maintain a satisfactory audit trail:

the beneficial owner of the account;
the volume of the funds flowing through the account; and
for selected transactions: (i) the origin of the funds; (ii) the form in which the funds were offered or withdrawn, e.g., cash, cheques, etc.; (iii) the identity of the person undertaking the transaction; (iv) the destination of the funds; and (v) the form of instruction and authority.

MARKETWOLF shall put in place a system of maintaining proper record of the nature and value of transactions which has been prescribed under Rule 3 of PML Rules 2005 as mentioned below:

all cash transactions of the value of more than Rs. Ten Lakhs or its equivalent in foreign currency;
all series of cash transactions integrally connected to each other which have been individually valued below Rs. Ten Lakhs or its equivalent in foreign currency where such series of transactions have taken place within a month and the monthly aggregate exceeds an amount of Rs. Ten Lakhs or its equivalent in foreign currency. It may, however, be clarified that for the purpose of suspicious transactions reporting, apart from ‘transactions integrally connected’, ‘transactions remotely connected or related’ shall also be considered;
all transactions involving receipts by non-profit organizations of value more than Rs. Ten Lakhs or its equivalent in foreign currency;
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 and including, inter-alia, credits or debits into or from any non-monetary account such as demat account, security account maintained by the registered intermediary. “Suspicious transactions” means a transaction whether or not made in cash which to a person acting in good faith – (i) gives rise to a reasonable ground of suspicion that it may involve the proceeds of crime; or (ii) appears to be made in circumstances of unusual or unjustified complexity; or (iii) appears to have no economic rationale or bonafide purpose.

RETENTION OF RECORDS

MARKETWOLF implements an internal mechanism for proper maintenance and preservation of such records and information in a manner that allows easy and quick retrieval of data as and when requested by the competent authorities. Records mentioned in Rule 3 of PML Rules 2005 have to be maintained and preserved for a period of five years from the date of transactions with the client.

Records evidencing the identity of clients and beneficial owners (e.g. copies or records of official identification documents like passports, identity cards, driving licenses, PAN, card, utility bills etc.) obtained while opening the account as well as account files and business correspondence shall be maintained and preserved for a period of five years after the business relationship with a client has ended or the account has been closed, whichever is later.

In situations where records relate to on-going investigations or transactions, which have been the subject of a suspicious transaction reporting, they should be retained until it is confirmed that the case has been closed. MARKETWOLF shall maintain and preserve the records of information related to transactions, whether attempted or executed, which are reported to the Director, FIU – IND, as required under Rules 7 and 8 of the PML Rules 2005, for a period of five years from the date of the transaction with the client or until is confirmed that the case has been closed.

FREEZING OF FUNDS, FINANCIAL ASSETS OR ECONOMIC RESOURCES OR RELATED SERVICES

Section 51 of the Unlawful Activities (Prevention) Act, 1967 (UAPA) relating to the purpose of prevention of, and for coping with terrorist activities was brought into effect through the UAPA Amendment Act, 2008. Under section 51A of UAPA, the Central Government is empowered to freeze, seize or attach funds and other financial assets or economic resources held by, on behalf of, or at the direction of the individuals or entities listed in the Schedule to the Order, or any other person engaged in or suspected to be engaged in terrorism. The Government is also further empowered to prohibit any individual or entity from making any funds, financial assets or economic resources or related services available for the benefit of the individuals or entities listed in the Schedule to the Order or any other person engaged in or suspected to be engaged in terrorism.

MARKETWOLF shall ensure that in terms of section 51A of UAPA and amendments thereto, there are no accounts in the name of individuals/entities appearing in the lists of individuals and entities, suspected of having terrorist links, which are approved by and periodically circulated by the United Nations Security Council (UNSC). In order to ensure expeditious and effective implementation of the provisions of section 51A of UAPA, the Government of India has outlined a procedure through an order dated February 02, 2021 (Annexure 1) for strict compliance. These guidelines have been further amended vide a Gazette Notification dated June 08, 2021 (Annexure 2).

LIST OF DESIGNATED INDIVIDUALS/ ENTITIES

An updated list of individuals and entities which are subject to various sanction measures such as freezing of assets/accounts, denial of financial services etc., as approved by the Security Council Committee established pursuant to various United Nations’ Security Council Resolutions (UNSCRs) can be accessed at its website at https://press.un.org/en/content/press-release. The details of the lists are as under:

The “ISIL (Da’esh) &Al-Qaida Sanctions List”, which includes names of individuals and entities associated with the Al-Qaida. The updated ISIL & Al-Qaida Sanctions List is available at: https://www.un.org/securitycouncil/sanctions/1267/press-releases;
The list issued by United Security Council Resolutions 1718 of designated Individuals and Entities linked to Democratic People's Republic of Korea www.un.org/securitycouncil/sanctions/1718/press-releases

MARKETWOLF shall ensure that accounts are not opened in the name of individuals or entities whose names appear on the said lists. MARKETWOLF shall rely on the list on the United Nations list. MARKETWOLF shall continuously 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 the Central [designated] Nodal Officer for the UAPA, at Fax No. 011-23092551 and also conveyed over telephone No. 011-23092548. The particulars apart from being sent by post shall necessarily be conveyed on email id: jsctcr-mha@gov.in

MARKETWOLF shall maintain updated designated lists in electronic form and run a check on the given parameters on a regular basis to verify whether the designated individuals/entities are holding any funds, financial assets or economic resources or related services held in the form of securities with them. MARKETWOLF shall also file a Suspicious Transaction Report (STR) with FIU-IND covering all transactions carried through or attempted in the accounts covered under the list of designated individuals/entities under Section 35 (1) and 51A of the Unlawful Activities Prevention Act, 1967.

JURISDICTIONS THAT DO NOT OR INSUFFICIENTLY APPLY THE FATF RECOMMENDATIONS

From time to time, the FATF Secretariat releases public statements and places jurisdictions under increased monitoring to address strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing risks. MARKETWOLF shall take into account the risks arising from the deficiencies in AML/CFT regime of the jurisdictions included in FATF Statement. In this regard, MARKETWOLF shall consider FATF Statements circulated by SEBI from time to time, and publicly available information, for identifying countries, which do not or insufficiently apply the FATF Recommendations. MARKETWOLF shall take into account the risks arising from the deficiencies in AML/CFT regime of the jurisdictions included in the FATF Statement. MARKETWOLF shall give special attention to business relationships and transactions with persons from or in countries that do not or insufficiently apply the FATF Recommendations and jurisdictions included in FATF Statements.

REPORTING TO FIU-IND

MARKETWOLF shall report information relating to cash and suspicious transactions to the Director, Financial Intelligence Unit-India (FIU-IND) in respect of transactions referred to in Rule 3 at the following address:
Director, FIU-IND,
Financial Intelligence Unit - India
6th Floor, Tower-2, Jeevan Bharati Building,
Connaught Place, New Delhi-110001, INDIA
Telephone : 91-11-23314429, 23314459
91-11-23319793 (Helpdesk) Email: helpdesk@fiuindia.gov.in
For FINnet and general queries)
ctrcell@fiuindia.gov.in
For Reporting Entity / Principal Officer registration related queries
complaints@fiuindia.gov.in
Website: http://fiuindia.gov.in

CTR/STR/NTR Reporting

Cash Transaction Reporting. Dealings in cash, if any, that requires reporting to the FIU IND will be done in the Cash Transaction Report (CTR) format for each month which shall be submitted to FIU-IND by 15th of the succeeding month or at such intervals as prescribed by the FIU IND.
Suspicious Transaction Reporting. Suspicious transactions, if any, that requires reporting to the FIU IND will be done in the Suspicious Transaction Report (STR) format within 7 days of arriving at a conclusion that any transaction, whether cash or non-cash, or a series of transactions integrally connected are of suspicious nature.
Non-Profit Organization Transaction Reporting. Non-Profit organization transactions, if any, that requires reporting to the FIU IND will be done in the Non-Profit Organization Transaction Report (NTR) format for each month which shall be submitted to FIU-IND by 15th of the succeeding month or at such intervals as prescribed by the FIU IND.
No NIL reporting needs to be made to FIU-IND in case there are no cash/ suspicious/non-profit organization transactions to be reported.

Principal Officer will be responsible for timely submission of CTR, STR and NTR to FIU-IND. Utmost confidentiality shall be maintained in filing of CTR, STR and NTR to FIU-IND. Principal Officer shall record reasons for treating any transaction or a series of transactions as suspicious. It shall be ensured that there is no undue delay in arriving at such a conclusion. Such report shall be made available to the competent authorities on request.

We shall ensure not to put any restrictions on operations in the accounts where an STR has been made except as permitted by the PML Act 2002 and rules thereof. MARKETWOLF and its directors, officers and employees (permanent and temporary) will be prohibited from disclosing (“tipping off”) the fact that a STR or related information is being reported or provided to the FIU-IND. This prohibition on tipping off extends not only to the filing of the STR and/ or related information but even before, during and after the submission of an STR. Thus, it shall be ensured that there is no tipping off to the client at any level.

Irrespective of the amount of transaction and/or the threshold limit envisaged for predicate offences specified in Part B of Schedule of PML Act 2002, we shall file STR if we have reasonable grounds to believe that the transactions involve proceeds of crime. It is clarified that "proceeds of crime" include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence.

HIRING & TRAINING OF EMPLOYEES, INVESTOR EDUCATION

Hiring of Employees. MARKETWOLF has implemented adequate screening procedures to ensure that employees taking up key positions are suitable and competent to perform their duties by having appropriate regard to risk of money laundering and terrorist financing and the size of the business. Further, client account of an employee is opened with MARKETWOLF subject to completion of KYC requirements.

Employee Training.

MARKETWOLF conducts employee training programs from time to time so that members of the staff are adequately trained in AML and CFT procedures and fully understand the rationale behind the KYC/AML policies and implement them consistently. Training programs ascribe specific focus for frontline staff, back office staff, compliance staff, risk management staff and staff dealing with new clients since it is very crucial that all those concerned fully understand the rationale behind AML Guidelines, obligations and requirements, implement them consistently and are sensitive to the risks of their systems being misused by unscrupulous elements.
Our employment training programs include, at a minimum: how to identify red flags and signs of money laundering that arise during the course of the employees’ duties; what to do once the risk is identified; what is the role of employees in our compliance efforts and how to perform them; our record retention policy; and the disciplinary consequences (including civil and criminal penalties) for noncompliance with the PML Act 2002.

Investor Education. As the implementation of AML / CFT measures being sensitive subject and requires us to demand and collect certain information from investors which may be of personal in nature or has hitherto never been called for, which information include documents evidencing source of funds / income tax returns / bank records etc. and can sometimes lead to raising of questions by the client with regard to the motive and purpose of collecting such information. Therefore, there is a need for us to sensitize the clients about these requirements, as the ones emanating from AML and CFT framework. We shall prepare and circulate specific literature/ pamphlets etc. so as to educate the client of the objectives of the AML/CFT program. We shall emphasize on the same in the Investor Awareness Programme conducted by us from time to time. The importance of the same is also made known to them at the time of opening the account.

DESIGNATED DIRECTOR & PRINCIPAL OFFICER

Designated Director – Designation & Duties. MARKETWOLF has designated Mr. Thomas Joseph, Director as the Designated Director to ensure overall compliance with the obligations imposed under chapter IV of PML Act 2002 and rules thereunder.

Principal Officer – Designation & Duties. MARKETWOLF has designated Ms. Ekta Shah, Senior Executive - Compliance as the Principal Officer for due compliance of its anti-money laundering policies. Principal Officer will act as a central reference point in facilitating onward reporting of suspicious transactions and for playing an active role in the identification and assessment of potentially suspicious transactions and shall have access to and be able to report to senior management at the next reporting level or the Board of Directors. MARKETWOLF has provided the FIU – IND with contact information of the Principal Officer and will promptly notify FIU – IND of any change in this information.

REVIEW

This KYC, ANTI-MONEY LAUNDERING & SURVEILLANCE POLICY has been adopted by the Board of Directors in its meeting held on February 15, 2023 and is subject to periodic review and assessment by the Board of Directors from time to time. Further, in order to ensure the effectiveness of policy and procedures, the person doing such review shall be different from the one who has framed such policy and procedures.

ANNEXURE 1 | GUIDELINES ON IDENTIFICATION OF BENEFICIAL OWNERSHIP

1. SEBI Master Circular No. CIR/ISD/AML/3/2010 dated December 31, 2010 has mandated all registered intermediaries to obtain, as part of their Client Due Diligence policy, sufficient information from their clients in order to identify and verify the identity of persons who beneficially own or control the securities account. For this purpose, “Beneficial Owner” is defined as “the natural person or persons who ultimately own, control or influence a client and/or persons on whose behalf a transaction is being conducted, and includes a person who exercises ultimate effective control over a legal person or arrangement”.

2. Further, the Government of India in consultation with the regulators has specified a uniform approach to be followed towards determination of beneficial ownership as set out below:

For Clients other than Individuals or Trusts. Where the client is a person other than an individual or trust, viz., company, partnership or unincorporated association/body of individuals, the intermediary shall identify the beneficial owners of the client and take reasonable measures to verify the identity of such persons, through the following information
- (a) Identity of the natural person, who, whether acting alone or together, or through one or more juridical person, exercises control through ownership or who ultimately has controlling ownership interest. “Controlling ownership” interest means owner-ship of/ entitlement to:
  - i) more than 25% of shares or capital or profits of the juridical person, where the juridical person is a company;
  - ii) more than 15% of the capital or profits of the juridical person, where the juridical person is a partnership; or
  - iii)more than 15% of the property or capital or profits of the juridical person, where the juridical person is an unincorporated association or body of individuals.
- (b) In cases where there exists doubt under clause above as to whether the person with the controlling ownership interest is the beneficial owner or where no natural person exerts control through ownership interests, the identity of the natural person exercising control over the juridical person through other means. “Control” through other means can be exercised through voting rights, agreement, arrangements or in any other manner.
- (c) Where no natural person is identified under clauses (aa) or (bb) above, the identity of the relevant natural person who holds the position of senior managing official.
For Client which is a Trust. Where the client is a trust, the intermediary shall identify the beneficial owners of the client and take reasonable measures to verify the identity of such persons, through the identity of the author of the trust, the trustee, the protector, the beneficiaries with 15% or more interest in the trust and any other natural person exercising ultimate effective control over the trust through a chain of control or ownership.
Exemption for Listed Companies. Where the client or the owner of the controlling interest is a company listed on a stock exchange, or is a majority owned subsidiary of such a company, it is not necessary to identify and verify the identity of any shareholder or beneficial owner of such companies.
Applicability for Foreign Investors. Registered intermediaries dealing with foreign investors’ may be guided by SEBI Master Circular SEBI/HO/AFD-2/CIR/P/2022/175 dated December 19, 2022 and amendments thereto, if any, for the purpose of identification of beneficial ownership of the client.

ANNEXURE 2 | INDICATIVE RISK CATEGORIES

RISK CATEGORISATION | INDIVIDUAL ACCOUNTS

TYPE	RISK CATEGORY	RISK PERCEPTION
Salaried	LOW RISK	Fixed or known sources of funds, pattern of entries in the account can be correlated with known sources of income/funds
Senior Citizens	LOW RISK	Fixed or known sources of funds, pattern of entries in the account can be correlated with known sources of income/funds unless sources of funds, pattern of entries in the account cannot be clearly correlated with known sources of income in which case the account shall be categorized as MEDIUM/HIGH RISK
Housewife	LOW RISK	Fixed or known sources of funds, pattern of entries in the account can be correlated with known sources of income/funds unless sources of funds, pattern of entries in the account cannot be clearly correlated with known sources of income in which case the account shall be categorized as MEDIUM/HIGH RISK.
Self-Employed Professionals Businessmen	LOW RISK	Accounts maintained by Chartered Accountants, Architects, Doctors, Lawyers, Sportsmen, etc.
Non-Resident Individuals	LOW/MEDIUM RISK	Transactions are regulated through AD and the accounts are opened only after IPV. In case an IPV is not performed and we have relied on documentation submitted by the client, the account would be categorized as MEDIUM RISK
Politically Exposed Persons (PEP) Family & Close Relatives of PEPs	HIGH RISK	PEP are individuals who are or have been entrusted with prominent public functions in a foreign country, e.g., Heads of States or of Governments, senior politicians, senior government/judicial/military officers, senior executives of state-owned corporations, important political party officials

RISK CATEGORISATION | NON-INDIVIDUAL ACCOUNTS

Risk categorization of Non-Individual clients can be done basis:

A. Type of Entity
B. Industry
C. Country of Domicile

(A) TYPE OF ENTITY	RISK CATEGORY	RISK PERCEPTION
Private/Public Company	LOW/MEDIUM/HIGH RISK	Depending on clarity of shareholding structure and nature of operations
Partnership Firm	LOW/MEDIUM/HIGH RISK	Depending on clarity of ownership structure and nature of operations
Hindu Undivided Family (HUF)	MEDIUM RISK	Unregistered entities where pattern of transactions may not be correlated with sources of income/funds
Societies Associations Clubs	HIGH RISK	Not highly regulated entities and where pattern of transactions may not be correlated with sources of income/funds
Trusts - Public Charitable Trusts	MEDIUM/HIGH RISK	Depending on clarity of beneficial ownership and nature of operations
Trusts - Private Trusts	HIGH RISK	May be unregistered trusts and pattern of entries in the account may not be correlated with sources of income/funds
Local Authorities/Public Bodies	LOW RISK	They are constituted under Special Acts. Operations are governed by such Acts/ Rules
Public Sector Undertakings/Govt. Department/Statutory Corporation	LOW RISK	These entities are governed by specific Acts, Notifications etc. framed by the Central/State Governments and are controlled and run by the government authorities
Mutual Funds/Scheduled Commercial Banks/Insurance Companies/Financial Institutions	LOW RISK	Highly regulated entities by their respective regulators
Co-operative Banks	HIGH RISK	Not highly regulated entities
Clients of Special Category	HIGH RISK

RISK CATEGORY	(B) INDUSTRY	(C) COUNTRY OF DOMICILE
HIGH RISK	The Risk categorisation is dependent on industries which are inherently High Risk or may exhibit high cash intensity, as below: Arms Dealer Money Changer Exchange Houses Gems/Jewellery /Precious metals/Bullion dealers (including sub-dealers) Real Estate Agents Construction Offshore Corporation Art/antique dealers Restaurant/Bar/Casino/Night Club Import/Export agents (traders; goods not used for own manufacturing/retailing) Share & Stock broker Finance Companies (NBFC) Transport Operators Auto dealers (used/ reconditioned vehicles/motorcycles) Scrap metal dealers Liquor distributorship Commodities middlemen Co-operative Banks Car/Boat/Plane dealerships/brokers Multi-Level Marketing (MLM) Firms	Depending on clarity of shareholding structure and nature of operations
MEDIUM RISK	NONE	NA
LOW RISK	All Other Industries	NA

NOTES

Higher Risk Categorization derived from either A or B or C shall be the applicable Risk Categorization for the account.
Lowering of risk classification shall be carried out by the Compliance Officer. This shall be done only where adequate justifications can be provided and the same are mentioned along with the account opening form.
Such justifications shall be reviewed 3 months from the date of account opening/first transaction in order to ensure that the classification is proper.
Based on the above categorization the transaction review process will take place.
Additionally, if any of the above accounts are operated by a Power of Attorney (POA) holder/mandate holder, then the account will be categorized as HIGH RISK.

ANNEXURE 3 | LIST OF ACCEPTABLE KYC DOCUMENTS

1. List of acceptable documents to be obtained from Individual clients are set out below.

TYPE	DESCRIPTION
Proof of Identity	List of Documents admissible as Proof of Identity PAN card with photograph. This is a mandatory requirement for all applicants except those who are specifically exempt from obtaining PAN (listed in Section D). Unique Identification Number (UID) (Aadhaar) / Passport / Voter ID card / Driving license. Identity card/ document with applicant’s Photo, issued by any of the following: Central/State Government and its Departments, Statutory/Regulatory Authorities, Public Sector Undertakings, Scheduled Commercial Banks, Public Financial Institutions, Colleges affiliated to Universities, Professional Bodies such as ICAI, ICWAI, ICSI, Bar Council etc., to their Members; and Credit cards/Debit cards issued by Bank
Proof of Address	List of Documents admissible as Proof of Address (*Documents having an expiry date should be valid on date of submission) Passport/Voters Identity Card/Ration Card/Registered Lease or Sale Agreement of Residence/Driving License/Flat Maintenance bill/Insurance Copy. Utility bills like Telephone Bill (only land line), Electricity bill or Gas bill Not more than 3 months old. Bank Account Statement/Passbook - Not more than 3 months old. Self-declaration by High Court and Supreme Court judges, giving the new address in respect of their own accounts. Proof of address issued by any of the following: Bank Managers of Scheduled Commercial Banks/ Scheduled Co-Operative Bank/ Multinational Foreign Banks/ Gazetted Officer/Notary public/ Elected representatives to the Legislative Assembly/ Parliament/ Documents issued by any Govt. or Statutory Authority. Identity card/document with address, issued by any of the following: Central/State Government and its Departments, Statutory/Regulatory Authorities, Public Sector Undertakings, Scheduled Commercial Banks, Public Financial Institutions, Colleges affiliated to Universities and Professional Bodies such as ICAI, ICWAI, ICSI, Bar Council etc., to their members. For FII/sub account, Power of Attorney given by FM/sub-account to the Custodians (which are duly notarized and/or apostilled or consularised) that gives the registered address should be taken. The proof of address in the name of the spouse may be accepted.
Exemptions/Clarifications to PAN	*Sufficient documentary evidence in support of each claim to be collected: In case of transactions undertaken on behalf of Central Government and/or State Government and by officials appointed by Courts e.g. Official liquidator, Court receiver etc. Investors residing in the state of Sikkim. UN entities/multilateral agencies exempt from paying taxes/filing tax returns in India. SIP of Mutual Funds upto Rs 50,000/- p.a. In case of institutional clients, namely, Flls, Mfs, VCFs, FVCIs, Scheduled Commercial Banks, Multilateral and Bilateral Development Financial Institutions, State Industrial Development Corporations, Insurance Companies registered with IRDA and Public Financial Institution as defined under section 4A of the Companies Act, 1956, Custodians shall verify the PAN card details with the original PAN card and provide duly certified copies of such verified PAN details to the intermediary.
List of People Authorised to Attest the Documents	List of Authorised People to Attest Documents: Notary Public, Gazetted Officer, Manager of a Scheduled Commercial/Co-operative Bank or Multinational Foreign Banks (Name, Designation & Seal should be affixed on the copy). In case of NRIs, authorized officials of overseas branches of Scheduled Commercial Banks registered in India, Notary Public, Court Magistrate, Judge, Indian Embassy /Consulate General in the country where the client resides are permitted to attest the documents.
Additional Documents For Trading In Derivatives Segments	List of Documents: Copy of ITR Acknowledgement Copy of Annual Accounts In case of Salary Income – Salary Slip, Copy of Form 16 Net Worth Certificate Copy of demat account holding statement Bank account statement for last 6 months Photocopy of the cancelled cheque having the name of the account holder where the cheque book is issued, (or) Photocopy of the Bank Statement having name and address of the BO Photocopy of the Passbook having name and address of the BO, (or) Letter from the Bank. Self-declaration with relevant supporting documents. Any other relevant documents substantiating ownership of Assets In case of options 7, 8, 9 and 10 above, MICR and IFSC code of the branch should be present / mentioned on the document.

2. List of acceptable documents to be obtained from Non-Individual clients are set out below.

TYPE	DESCRIPTION
Corporate	Copy of the balance sheets for the last 2 financial years (to be submitted every year). Copy of latest share holding pattern including list of all those holding control, either directly or indirectly, in the company in terms of SEBI takeover Regulations, duly certified by the company secretary/Whole time director/MD (to be submitted every year). Photograph, POI, POA, PAN and DIN numbers of whole time directors/two directors in charge of day to day operations. Photograph, POI, POA, PAN of individual promoters holding control - either directly or indirectly. Copies of the Memorandum and Articles of Association and certificate of incorporation. Copy of the Board Resolution for investment in securities market. Authorised signatories list with specimen signatures.
Partnership Firm	Copy of the balance sheets for the last 2 financial years (to be submitted every year). Certificate of registration (for registered partnership firms only). Copy of partnership deed. Authorised signatories list with specimen signatures. Photograph, POI, POA, PAN of Partners.
Trust	Copy of the balance sheets for the last 2 financial years (to be submitted every year). Certificate of registration (for registered trust only). Copy of Trust deed. List of trustees certified by managing trustees/CA. Photograph, POI, POA, PAN of Trustees.
HUF	PAN of HUF. Deed of declaration of HUF/ List of coparceners. Bank pass-book/bank statement in the name of HUF. Photograph, POI, POA, PAN of Karta.
Unincorporated association or a body of individuals	Proof of Existence/Constitution document. Resolution of the managing body & Power of Attorney granted to transact business on its behalf. Authorized signatories list with specimen signatures.
Banks/Institutional Investors	Copy of the constitution/registration or annual report/balance sheet for the last 2 financial years. Authorized signatories list with specimen signatures.
Foreign Institutional Investors (FII)	Copy of SEBI registration certificate Authorized signatories list with specimen signatures
Army/ Government Bodies	Self-certification on letterhead Authorized signatories list with specimen signatures
Registered Society	Copy of Registration Certificate under Societies Registration Act List of Managing Committee members Committee resolution for persons authorised to act as authorised signatories with specimen signatures True copy of Society Rules and Bye Laws certified by the Chairman/Secretary

ANNEXURE 4 | INDICATIVE LIST OF SUSPICIOUS ACTIVITIES

Whether a particular transaction is suspicious or not will depend upon the background details of the client, details of the transactions and other facts and circumstances. Followings are the circumstance, which may be in the nature of suspicious transactions:
- Clients whose identity verification seems difficult or clients appears not to co-operate
- Asset management services for clients where the source of the funds is not clear or not in keeping with clients apparent standing /business activity
- Clients in high-risk jurisdictions or clients introduced by banks or affiliates or other clients based in high risk jurisdictions
- Substantial increases in business volume without apparent cause
- Unusually large cash deposits made by an individual or business
- Clients transferring large sums of money to or from overseas locations with instructions for payment in cash
- Transfer of investment proceeds to apparently unrelated third parties
- Off market transactions in the DP account of the clients
- High trading activity in the relatively illiquid scrips
- Major trading activity in the Z and TtoT category scrips;
- Options trading / trading in illiquid scrips wherein client has booked unusual profit or loss which does not commensurate with the changes in the prices of underlying security in the cash segment
- High exposures taken by client as compared to income levels informed by clients
- Unusual transactions by “High risk status” and businesses undertaken by shell corporations offshore banks /financial services, businesses reported to be in the nature of export-import of small items
NSE has issued a circular NSE/INVG/22908 dated March 7, 2013. The circular lays down the guidelines to be followed to monitor surveillance related alerts provided by the NSE from time to time. In this regard process to be followed is provided below:
- All exchange alerts shall be reviewed by the surveillance team
- In case of any suspicious activity observed –
  - we may ask clients to provide KYC related information
  - further documentary evidence such as bank and depository account statements may be called for
  - post analyzing the documentation the results for the same would be recorded and in case of adverse remarks the same would be informed to the exchanges within 45 days from the alert date, unless suitable extension is taken from the Exchange
- Quarterly MIS of the number of alerts received, reviewed, pending and escalated would be reported to the Board in the Board Meeting. Reason for pendency beyond the closure date would be explained.
- The Internal Audit team would be responsible for independent oversight of the compliance with these requirements.