PMLA -FAQ


Navia is committed to comply with the various applicable acts, rules, regulations and guidelines pertaining to Know Your Client (KYC) norms, Anti Money Laundering (AML), Client Due Diligence (CDD) and Combating Financing of Terrorism (CFT). These Frequently Asked Questions (FAQ) have been designed as an endeavor to provide with investors and clients some insight about KYC, AML and CFT standards. SEBI master circular –SEBI/HO/MRSD/DOS3/CIR/P/2018/104.


Q.1. what is Money Laundering & Terrorist Financing.

Money laundering is the process by which the illegal origin of wealth is disguised to avoid suspicion of law enforcement authorities and to wipe the trail of incriminating evidence. Hence the Government had recognized the corrosive dangers that money laundering poses to their economic and political systems and has prescribed acts, rules and regulation for prevention of money laundering.


Q.2 What is PMLA & what is its Object? 

PMLA refers to the Prevention of the Money Laundering Act, 2002. PMLA has been enacted to prevent Money Laundering and to provide for confiscation of property derived from, or involved in Money Laundering.


Q.3 what is to be done to comply with the PMLA Act,

The clients has to disclose the entire details at the time of opening the account (KYC) client due diligence (CDD) and to declare the annual income correctly in the KYC document. Further, if at any time if the annual income changes, it has to informed to the intermediary and updated in the KYC.


Q.4, what is the necessity of updating the annual income after opening the trading account?

Trading is an ongoing process, and the client has to transfer funds for the purchase and sale of shares in the account. But, as per the PMLA requirement,  if the client has transferred more than the annual income declared at the time of account opening or if the client’s present annual income is more than the amount provided in the KYC, then latest annual income has to be updated in the trading account.


Q.5, what are the monitoring actions of Navia under the provisions of the PMLA Act?

Navia shall open the trading account as per the KYC provided by the client and allow the client to transact in shares and securities. But, Navia always shall monitor the transactions, i.e the funds transferred to the trading account for the transacting in shares and securities. Navia shall monitor, the unusually large transactions, transactions which appear to have no economic purpose and the transactions which exceed the clients set limits. Further if at any time if the clients total funds transferred are more than the annual income declared by the client, then this will be taken with the client and if there are violations, it will be reported to the FIU.


Q.6. what are the nature of the suspicious transactions?

The suspicious monitoring transactions are, large transactions, dormant account unusual transactions, transactions exceeds internal thresh hold risk limits, and any other transaction where the beneficial owner is different or the clients identity verification seems difficult.


Q.7, what are the actions taken on the suspicious transactions?

Any suspicious transaction is identified the intermediary ( Navia ) shall collect the necessary documents and report to the Financial Intelligence Unit India ( FIU)


Q.8, what are the obligations of Navia in acting as the intermediary in the capital market.

Navia as an intermediary has to maintain a record of all transactions, that carried out through Navia,  the nature and value of which may be prescribed, whether such transactions comprise a single transaction or a series of transactions integrally connected to each other and furnish such information to the Director within such time as prescribed. They are also to verify and maintain the records of the identity of all its clients, in prescribed manner.


Q. 9, what is the period under the PMLA requirement to preserve and maintain the records or transactions?

As per PMLA act, the records are to be maintained and preserved for a period of five ( 5 ) years from the date of transactions between the client and Navia.


Q.10, what is the offence of Money Laundering? 

If at any time, if the intermediary find a client who is directly or indirectly attempts to indulge or knowingly assists or become a party/ connected to the  with money laundering or TFT activities, shall be found as guilty of offence of money-laundering.(Section 3 of PMLA).