AML AND KYC

Done by
Prasana Kumar N R E
Money Laundering

It is the process used by

criminals through which they
make “dirty” money appear
“clean”
 Money Laundering as per section 3 of the
Prevention Money Laundering Act:
“Whosoever directly or indirectly attempts to indulge or
knowingly assists or knowingly is a party or is actually
involved in any process or activity connected with the
proceeds of crime and projecting it as untainted property
shall be guilt of offence of money laundering,”
As Per Sub-Committee on Narcotics and
Terrorism of US senate Foreign Relations
Committee:
“Money Laundering is the conversion of profits from illegal
activities into financial assets which appear to have
legitimate origins”.
Anti-Money Laundering
Anti-Money Laundering(AML) is a set of policies,
procedures, and technologies that prevents money
laundering.
There are three major steps in money laundering
(placement, layering and integration), and various
controls are put in place to monitor suspicious activity
that could be involved in money laundering.
Some Anti-Money Laundering controls include
knowing your customers, software filtering, and
implementing holding periods.
Major steps in money laundering
 Objective of Anti-Money Laundering
Policy
To prevent banks from being used, intentionally or
unintentionally, by criminals for Money Laundering
activities or terrorist activities.
To enable banks to know or understand their customer
and their financial dealing better.
To put in place a proper control mechanism for detecting
and reporting suspicious transaction.
It will also enhance fraud Prevention
To ensure compliance with guidelines issued by the
regulators including FIU-IND (Financial Intelligence
Unit) & RBI.
Some of the Popular Places from where
Money is laundered through..

Stock Markets
Property Market
Creating Bogus(false) Companies
Showing Loans
False Export Import Invoices
Agricultural Products (as there is no income tax and
mostly the transactions are on cash basis)
Security process
KYC

KYC or “Know Your Customer” can be defined as the

process of verifying a customer’s identity. In KYC, each
client is required to provide credentials such as ID
documents in order to use a company’s service.
For example, investors must be verified before they
participate in an ICO (initial coin offering) and people
before opening a bank account.
What is KYC means
Making reasonable efforts to determine the true
identity and beneficial ownership of accounts.
Sources of funds
Nature of customer`s business
What constitutes reasonable account activity
Who your customer`s customer are?
Knowing your customer means
Seeking evidence of identity and address and
independently confirming that evidence at the start of a
business relationship with the Bank.
Seeking information regarding the nature of the
Business that the customer expects to conduct with the
Bank, establishing sources of income and expected
patterns of transactions, and keeping that information
up to date, to show what might be regarded as normal
activity for that customer.
Advantages of KYC
Sound KYC procedures have particular relevance to
the safety and soundness of banks, in that

They help to protect banks reputation and integrity of

banking system by reducing likely hood of banks
becoming a vehicle for or a victim of financial crime
and suffering consequential reputational damage.
They provide an essential part of sound risk
management system.
Core elements of KYC
Customer acceptance policy
Customer identification procedure-customer profile
Risk classification of accounts-risk based approach
Risk management
Ongoing monitoring of account activity
Reporting of cash and suspicious transactions
Thank you