FIU-IND Policies & Procedures related to AML/CFT/CPF/DD/PO

FIU-IND-related Policies & Procedures related to AML / CFT / CPF/ Designated Director and Principal Officer, 

Appointment of Designated Director (DD)

• Role of Designated Director : Person designated under Rule 2(1)(ba) of Prevention of Money Laundering (Maintenance of Records) Rules 2005, responsible for overall compliance with Chapter IV of the Prevention of Money Laundering Act 2002 and related rules. Key Responsibilities Appointment of Designated Director

• • Record Maintenance & Information Management : Ensure proper maintenance of CDD records, transaction records, and document retention as per Rule 5.
  • Regulatory Reporting to Financial Intelligence Unit – India : Establish systems for furnishing information as per Rule 7.
  • Timely Submission of Reports: Submit prescribed transaction reports under Rule 3, additional FIU-IND reports, and respond to Section 12A requests.
  • Risk Assessment : Conduct ML/TF/PF risk assessment under Rule 9(13) and implement mitigation measures.
  • Oversight & Compliance Culture : Ensure adherence to record-keeping, CDD, transaction monitoring, and reporting obligations. Provide adequate resources, controls, systems, and training for AML/CFT/CPF compliance.

Appointment of Principal Officer (PO)

• Role of Principal Officer : Officer at management level (preferably Head – Audit/Compliance/Risk) responsible for operational compliance under Chapter IV of Prevention of Money Laundering Act 2002 and PMLR.
• Minimum Requirements & Qualifications of Principal Officer

a) Exclusive Engagement: Full-time, no concurrent roles.
b) Authority & Independence: Seniority to act without interference.
c) Experience & Competence: Minimum 3 years relevant experience. Strong knowledge of AML/CFT/CPF laws and enforcement.
d) Sectoral Risk Knowledge: Understanding of ML/TF risks in VDA sector and emerging typologies.
e) Risk Governance Participation: Permanent invitee to risk committees.
f) Adequate Resources: Support staff, technical tools, and access to KYC/CDD/transaction data.
g) Information Access & Responsiveness: Ability to call for info promptly for the Financial Intelligence Unit – India or regulators.
h) Board Reporting: Quarterly AML/CFT/CPF status report to Board or Board-level committee.
i) Location Requirement: Must be based in India.
j) Conflict of Interest: No involvement in business operations.
k) Separation of Roles: PO and DD must be different individuals.
l) Intimation to FIU-IND: Details of DD and PO to be updated on FINGate portal as per Rule 7(1).

Roles and Responsibilities of the Principal Officer

a) The Principal Officer (PO) shall be responsible for ensuring overall compliance with the PMLA and PMLR, including monitoring of transactions and sharing and reporting information to Financial Intelligence Unit – India, as required under law.

b) As per Rule 7(2) of the PMLR, the PO shall furnish information relating to transactions specified under Rule 3(1) of the PMLR to FIU-IND, based on information available with the Reporting Entity. A copy of such information shall be retained for official records.

c) As per Rule 8(2) of the Prevention of Money Laundering (Maintenance of Records) Rules 2005, where the PO is satisfied that a transaction or a series of transactions is suspicious, the PO shall promptly report such transaction(s) to the Financial Intelligence Unit—India.

d) The PO shall establish and implement an internal mechanism, in line with directions and guidelines issued by Financial Intelligence Unit – India, for identifying, examining, and reporting transactions under Rule 3(1) of the Prevention of Money-laundering (Maintenance of Records) Rules 2005. Special attention shall be given to Complex transactions, Unusually large transactions, and Unusual transaction patterns having no apparent economic or lawful purpose. The PO shall ensure that:

• The background and purpose of such transactions are examined;
• All relevant documents, records, and memorandums are reviewed; and
• Findings and conclusions are properly recorded at the PO level.

Such records and documents shall be made available to competent authorities, as required, and shall be preserved for a period of five years, in accordance with the Prevention of Money Laundering Act 2002.

e) While the analysis of alerts and preparation of documents may be delegated to the AML compliance team, the final analysis, decision-making, and accountability shall rest with the PO.
All records verified by the PO and documents related to such decisions shall be properly recorded and retained for audit and inspection.

f) The PO shall clearly record reasons for treating any transaction or series of transactions as suspicious. It shall be ensured that there is no undue delay in arriving at a conclusion once a transaction is escalated to the PO.

g) Where the PO concludes that a transaction is not reportable, the decision to close the alert shall be taken by the PO, and the reasons for non-reporting shall be clearly documented.

h) The PO shall periodically review The list of alerts; and The overall transaction monitoring and reporting approach to ensure that the reporting mechanism is complete and aligned with regulatory expectations.

The PO shall also conduct surprise checks and sample-based reviews of transactions monitored by the AML compliance unit to ensure that no unusual or potentially suspicious transactions are missed.

i) The PO and the staff assisting in the implementation of AML/CFT/CPF guidelines shall have timely and unhindered access to Customer identification data, KYC records, and Transaction and related records.

j) The PO appointed for AML/CFT/CPF compliance shall report directly to the Board of Directors or a designated Board-level Committee of the Reporting Entity.

k) The PO shall, on a periodic basis and at least once in a year, or at such frequency as determined by the Board, place before the Board or its Committee a report covering, at a minimum, the following:

• Assessment of the effectiveness of the AML/CFT/CPF compliance program;
• Identified risks or vulnerabilities in the compliance framework;
• Summary of Suspicious Transaction Reports (STRs) and other reports submitted to Financial Intelligence Unit—India;
• Updates on instructions, red-flag indicators, typologies, or guidance issued by Financial Intelligence Unit—India and their implementation status; and
• Any proposed changes to the AML/CFT/CPF policy of the Reporting Entity.

AML / CFT / CPF Policies and Procedures

Policy Framework: In accordance with Rule 9(14)(ii) and (iii) of the Prevention of Money Laundering (Maintenance of Records) Rules 2005, every Reporting Entity (RE) shall formulate, implement, and maintain AML/CFT/CPF Policies and Procedures to prevent and detect Money laundering, Terrorist financing, Proliferation financing, and Other related serious crimes.

Further, as per Rule 7(3) of the Prevention of Money Laundering (Maintenance of Records) Rules 2005, every RE shall establish an internal mechanism to Identify transactions specified under Rule 3 of the Prevention of Money Laundering (Maintenance of Records) Rules 2005, and Furnish information relating to such transactions to FIU-IND.

Responsibility for Compliance under PMLA

It shall be the responsibility of the reporting entity. The Designated Director, the Principal Officer,  and all officers and employees are to strictly follow the procedure and manner of maintaining records and furnishing information as prescribed under Rule 5 and Rule 7 of the Prevention of Money Laundering (Maintenance of Records) Rules 2005.

Statutory Compliance and Policy Requirements

To comply with obligations under Chapter IV of the Prevention of Money Laundering Act 2002,  every Reporting Entity shall establish robust AML/CFT/CPF Policies and ensure their effective implementation in line with applicable laws and regulations. Accordingly, the Reporting Entity shall:

a) Group-Level Policy Statement : Issue a written statement of AML/CFT/CPF Policies, on a Group basis where applicable, in accordance with Rule 3A of the PMLR, addressing ML, TF, and PF risks. The term “Group” shall have the same meaning as defined under Rule 2(1)(cba) of the PMLR.

b) Communication and Awareness : Ensure that the Policies and the spirit of these Guidelines are properly communicated and understood by:

• The Board and senior management,
• Officers, and
• All employees of the Reporting Entity.

c) Independent Review of Policies: Conduct an independent annual review of the AML/CFT/CPF Policies to assess their continued adequacy and effectiveness.
Such review shall be conducted by persons independent of those involved in framing or implementing the Policies.

d) Client Acceptance and Due Diligence: Adopt Client Acceptance Policies and implement risk-based Client Due Diligence (CDD) measures, taking into account Nature of the client, Business relationship, Transaction behaviour, Geographic risk & Products and services offered.

e) Transaction Monitoring and Reporting: Put in place systems and procedures for:

• Identifying and monitoring suspicious transactions,
• Reporting threshold-based transactions and ML/TF/PF typologies, and
• Timely submission of prescribed reports to Financial Intelligence Unit – India.

f) Furnishing Information to FIU-IND : Establish internal mechanisms to furnish records and information to Financial Intelligence Unit – India within the time and manner specified u/s 12A of the Prevention of Money Laundering Act 2002.

g) Cooperation with Law Enforcement Agencies: Ensure effective cooperation with law enforcement and regulatory authorities, including timely disclosure of information as legally required.

h) Third-Party and Jurisdictional Risk Management: Ensure that products or services of any third party based in known high-risk jurisdictions are not used or availed, unless permitted under applicable laws and risk mitigation measures.

Public Disclosure of Policies under PMLA

Every Reporting Entity shall ensure that a clear, comprehensive, and concise summary of its AML/CFT/CPF policies is prominently displayed and Easily accessible on its official website and/or mobile application used for customer onboarding and login.

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