With reference to the guidelines regarding ‘Know Your Customer’ norms issued by the National Housing Bank (“NHB”) in terms of its Circulars No. (1) NHB(ND)/DRS/POL-No-02/2004-05 dated August 25, 2004, (2) NHB(ND)/DRS/POL-No-05/2004-05 dated September 23, 2004, (3) NHB(ND)/DRS/POL-No-08/2004-05 dated March 31, 2005, (4) NHB(ND)/DRS/POL-No-32/2009- 10 dated March 16, 2010 and (5) NHB/ND/DRS/POL-No-33/2010-11 dated October 11, 2010 wherein Housing Finance Companies(HFCs) were advised to follow certain customer identification procedure for opening of accounts and monitoring transactions of suspicious nature for the purpose of reporting it to appropriate authority, Ummeed Housing Finance Pvt. Ltd. has adhered to the guidelines of National Housing Bank.
The Recommendations made by the Financial Action Task Force (FATF) on Anti Money Laundering (AML) standards and on Combating Financing of Terrorism (CFT) standards have become the international benchmark for framing Anti Money Laundering and combating financing of terrorism policies by the regulatory authorities. Compliance with these standards both by the banks/financial institutions, including HFCs, has become necessary for international financial relationships. The Reserve Bank of India(RBI) has issued revised set of comprehensive ‘Know Your Customer' Guidelines to all Non-Banking Financial Companies (NBFCs), Miscellaneous Non-Banking Companies and Residuary Non-Banking Companies in the context of the recommendations made by the Financial Action Task Force(FATF) and Anti Money Laundering (AML) standards and combating financing of terrorism policies by the regulatory authorities and advised all NBFCs to adopt the same with suitable modifications depending on the activity undertaken by them and ensure that a proper policy framework on KYC and AML measures are formulated and put in place with the approval of their respective Boards. The ‘Know Your Customer' Guidelines issued by the National Housing Bank for HFCs have been drafted and issued in the above context.
The Know Your Customer and Anti-Money Laundering (the Policy) applies to Ummeed Housing Finance (UHF or the Company). The Policy also applies to any third parties relied upon or used by the Company to perform any of the requirements of its Anti-Money Laundering (AML) Program. This policy will be reviewed annually or on the basis of any material change in the regulatory requirements or business operations of the Company.
The said policy & measures will enable the company to know and understand its customers and their financial dealings better which in turn will help it manage risks prudently. The policy and measures will further help in preventing the company being used, intentionally or unintentionally by unscrupulous and criminal elements for money laundering activities.
This Policy establishes minimum requirements for the Company to establish, implement, and maintain an AML Program that is reasonably designed to(a) implement this Policy and (b) to ensure compliance with applicable AML laws, rules and regulations.
The Company has evolved a Customer Acceptance Policy (CAP) which lays down the criteria for the acceptance of Customers. In line with the NHB guidelines on “Know Your Customer Guidelines & Anti Money Laundering Standards”, the Company has formulated Customer Acceptance Policy (CAP) which lays down the broad criteria for acceptance of customers which forms an integral part of the Group AML Policy.
The aspects mentioned in the CAP would be reckoned while evolving the KYC/AML procedures for various customers/products. However, while developing the KYC/CDD procedures, the Company shall ensure that its procedures do not become too restrictive or pose significant difficulties in availing its services by deserving general public, especially the financially and socially disadvantaged sections of society.
It is important to bear in mind that the adoption of Customer Acceptance Policy and its implementation will not result in denial of COMPANY’s services to the general public, especially to those who are financially or socially disadvantaged.
Where COMPANY is unable to apply appropriate KYC measures due to non-furnishing of information and /or non-cooperation by the customer, COMPANY may consider closing the account or terminating the business relationship after issuing due notice to the customer explaining the reasons for taking such a decision.
Ongoing monitoring is an essential element of effective KYC procedures. COMPANY can effectively control and reduce its risk only if it has an understanding of the normal and reasonable activity of the customer so that it can identify transactions that fall outside the regular pattern. However, the extent of monitoring will depend on the risk sensitivity of the account. Since COMPANY will not have any deposit accounts, this situation will hardly arise, but COMPANY will in any case pay special attention to all complex, unusually large transactions and all unusual patterns which have no apparent economic or visible lawful purpose, or transactions that involve large amounts of cash inconsistent with the normal and expected activity of the customer. COMPANY will put in place a system of periodical review of risk categorization of accounts and the need for applying enhanced due diligence measures. COMPANY will ensure that a record of transactions in the accounts is preserved and maintained as required in terms of section 12 of the PML Act, 2002 (and the Amended Act, 2009). It will also ensure that transactions of suspicious nature and/or any other type of transaction notified under section 12 of the PML Act, 2002 (and the Amended Act, 2009), is reported to the appropriate law enforcement authority.
The Board of Directors of COMPANY has ensured that an effective KYC program is in place and has established appropriate procedures and is overseeing its effective implementation. The program covers proper management oversight, systems and controls, segregation of duties, training and other related matters. Responsibility has been explicitly allocated within COMPANY to ensure that COMPANY’s policies and procedures are implemented effectively. The Board of COMPANY is aware that while all customers will be of low risk profile given the nature of its business, unless belonging to a higher risk profile listed under #5 above and approved as an exception, it will apply various Anti Money Laundering measures keeping in view the risks involved in a transaction, account or business relationship.
COMPANY's Board -through its Audit Committee will directly evaluate and ensure adherence to the KYC policies and procedures, including legal and regulatory requirements.
COMPANY has already ensured that its front line staff and credit staff are aware that no loan accounts will be created unless the KYC procedures are adhered to completely.
The implementation of KYC procedures requires COMPANY to demand certain information from customers, which may be of personal nature, or which has hitherto never been called for. This can sometimes lead to a lot of questioning by the customer as to the motive and purpose of collecting such information. COMPANY’s front line staff will therefore personally discuss this with customers and if required, COMPANY will also prepare specific literature/ pamphlets, etc. so as to educate the customer on the objectives of the KYC program.
COMPANY will pay special attention to any money laundering threats that may arise from new or developing technologies including on-line transactions that might favour anonymity, and take measures, if needed, to prevent its use in money laundering schemes.
COMPANY has appointed Shariq Khan to be designated as ‘Principal Officer'. Per the NHB guidelines, the Principal Officer will be located at the corporate office and will be responsible for monitoring and reporting of all transactions and sharing of information as required under the law. He will maintain close liaison with enforcement agencies, other HFCs and any other institution which are involved in the fight against money laundering and combating financing of terrorism.
COMPANY has a system for proper maintenance and preservation of account information in a manner that allows data to be retrieved easily and quickly whenever required or when requested by the competent authorities. COMPANY will maintain for at least ten years from the date of cessation of transaction between the bank and the client, all necessary records of transactions, both domestic or international, which will permit reconstruction of individual transactions (including the amounts and types of currency involved if any) so as to provide, if necessary, evidence for prosecution of persons involved in criminal activity.
COMPANY will also ensure that records pertaining to the identification of the customer and his / her address (e.g. copies of documents like passports, identity cards, driving licenses, PAN, utility bills etc.) obtained while opening the account and during the course of business relationship, are properly preserved for at least ten years after the business relationship is ended. The identification records and transaction data will be made available to the competent authorities upon request.
In terms of the PMLA rules, COMPANY will report information relating to cash and suspicious transactions to the Director, Financial Intelligence Unit-India (FIU-IND) at the following address:
Financial Intelligence Unit-India,
6 th Floor, Hotel Samrat,
COMPANY will ensure that the provisions of PMLA Rules framed and the Foreign Contribution and Regulation Act, 1976, wherever applicable, are adhered to strictly.