FINANCIAL CONSULTING & SERVICES

FIU-IND REPORTING

What is FIU-IND?

• FIU-IND stands for Financial Intelligence Unit of India and is the central national agency, responsible for collecting intelligence related to potential financial crime-related transactions in India.
• FIU-IND functions solely to safeguard India’s financial system from the adverse impact of money laundering, terrorist financing and other economic crimes.

What are the core functions of FIU-IND?

• Collection of Information from reporting entities
• Analysis of Information to uncover ML/TF
• Sharing of Information with law enforcement and foreign FIUs
• Act as a Central Repository
• Coordinate the fight against ML/TF
• Research and Analysis for ML/TF trends and typologies

What is FIU-IND Reporting?

• Entities registered in India under the prevailing laws, which have direct and indirect potential of being abused or exploited by money launderers or other financial criminals are required by FUI-IND to report information and data pertaining to their financial transactions. This process is called FIU-IND Reporting.
• A framework for reporting has been set up by FIU-IND to monitor such entities.
• This framework ensures existence of resilient and productive Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) policies and processes to prevent, deter and detect any misuse or abuse of the Indian Financial System.

For whom FIU-IND Reporting is mandatory?

• Banking Companies – Public Sector, Private Indian and Foreign Banks, Cooperative and Regional Banks
• Financial Service Institutions – NBFCs, Payment system operators, Payment aggregators, Hire Purchase, Chit Funds, Housing Finance, India Post, Insurance Companies, etc.
• Financial Intermediaries – Recognized Stock Exchange, Depositories, Stock Brokers, Depository Participants, Mutual Funds, Credit Rating Agencies, Debenture Trustees, Share Transfer Agents, Registrar to Issue, Portfolio Managers, Underwriters, Investment Advisors, Custodian of Securities, Foreign Institutional Investors, Alternate Investment Funds, Intermediaries regulated by PFRDA, Insurance Brokers, etc.
• Designated Non-Financial Businesses and Professions (DNFBPs) – Casinos, Inspector General of Registration, Real Estate Agents, Dealers in Precious Metals and Stones, Professionals with a Certificate of Practice from ICAI, ICSI or ICMAI, etc.
• Virtual Digital Assets Service Providers (VASPs)

Where to submit Reports mandated by FIU-IND?

• FIU-IND has created Financial Intelligence Network 2.0 (FINNet 2.0) as the primary platform within the reporting framework.
• The front end of the reporting framework under FINNet 2.0 is FINGate 2.0, a web-based portal developed for reporting suspicious financial transactions and other information related to potential money laundering and financing of terrorism activities.

What are the reports that need to be submitted by Banks on FINGate 2.0 Portal?

• As Banks are a vital component of the economy, they are more prone to Money Laundering and Terrorist Financing risks. Banks undertake various financial activities and provide a plethora of financial services and products. They also deal in cash and thus, are required to submit the following to the FIU-IND:
  • Cash transaction Report (CTR)
  • Suspicious Transaction Report (STR)
  • Cross Border Wire Transfer Report (CBWTR)
  • Counterfeit Currency Report (CCR)
  • Non-Profit Organization Transaction Report (NTR)

What are the reports that need to be submitted by Insurance Companies on FINGate 2.0 Portal?

• Paying premiums in cash and then terminating the insurance policy just before the end of the pre-look period is a common way of money laundering used by criminals. Proceeds of such termination of policies are deposited in the bank accounts of such criminals and they further invest it into the legitimate economy through various channels.
• PMLA mandates the insurance companies to submit the following reports:
  • Cash Transaction Report (CTR)
  • Counterfeit Currency Report (CCR)
  • Cross Border Wire Transfer Report (CBWTR)
  • Non-Profit Organization Transaction Report (NTR)
  • Suspicious Transaction Reports (STR)

What are the reports that need to be submitted by Mutual Funds on FINGate 2.0 Portal?

• A mutual fund is a fund created by multiple investors to be invested in various assets like stocks, bonds and money market instruments.
• Mutual funds are required to submit the following reports to FIU-IND:
  • Cross Border Wire Transfer Reports (CBWTR)
  • Suspicious Transaction Report (STR)
  • Non-Profit Organization Transaction Report (NTR)

What are the reports that need to be submitted by Card System Operators on FINGate 2.0 Portal?

• Card System Operators (CSOs) manage the infrastructure and operations behind various types of payment cards. CSOs are required to submit the following reports to the FIU-IND:
  • Suspicious Transaction Report (STR)
  • Cross Border Wire Transfer Report (CBWTR)
  • Cash Transaction Report (CTR)

What are the reports that need to be submitted by Casinos on FINGate 2.0 Portal?

• A casino is a facility undertaking gambling and offers games of chance. As it is a cash-intensive business, it is highly vulnerable to money laundering and terrorist financing.
• The following reports need to be submitted by casinos to FIU-IND:
  • Suspicious Transaction Report (STR)
  • Cross Border Wire Transfer Report (CBWTR)
  • Cash Transaction Report (CTR)

What are the reports that need to be submitted by Real Estate Agents on FINGate 2.0 Portal?

• Real Estate Agents facilitate transactions related to immovable property and this involvement of such agents in high-value transactions, make them vulnerable to money laundering and terrorism financing. They need to submit the following reports to FIU-IND:
  • Suspicious Transaction Report (STR)
  • Cash Transaction Report (CTR)
  • Counterfeit Currency Report (CCR)

What are the reports that need to be submitted by FI/NBFCs/ Money Transfer Services/Others on FINGate 2.0 Portal?

• FIs/NBFCs/Money Transfer Services and other entities that offer similar services are mandated to submit the following reports:
  • Cash Transaction Report (CTR)
  • Suspicious Transaction Report (STR)

Conclusion

FIU-IND Reporting broadly depends on the nature of activities undertaken by an entity and the level of vulnerability such entity has to be used as a facilitator in money laundering and terrorism financing. The list of reports mentioned above are not exhaustive and depends on the specific activities undertaken by the entity. Any entity undertaking activities that are usually undertaken by another type of entity need to comply with the requirements of reporting for both such entities. For example, if an NBFC also provides its services as a real estate agent, it will have to submit the reports required to be submitted by NBFCs as well as Real Estate Agents.

DISCLAIMER:      

i)This opinion/clarification note is based on the facts provided to us and the same is being issued without any knowledge of intent, prejudice, non-disclosure, misrepresentation, or concealment of facts if any.    

 ii)We have not done investigation of correctness of facts and the limited opinion represents our understanding of the provisions of the law on the matter. The compliance mentioned above  is not exhaustive and other compliance may also be involved depending on case to case basis.   

 iii)The conclusions reached and views expressed are matters of opinion based on our understanding of the related laws, rules, notifications, Citations, circulars, etc.   

iv)Pranav Kumar & Associates, Company Secretaries, its partners, associates, employees or staff shall not be held liable for any action/ consequence arising out of any contrary view(s) taken by any other party or statutory authority