Financial Intelligence Unit in India

The Financial Intelligence Unit (FIU) in India monitors and analyzes financial transactions to combat money laundering and terrorist financing, ensuring compliance for NBFCs.

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An Overview of Financial Intelligence Unit Registration

India joined the global war on money laundering and terrorism financing by enacting the Prevention of Money Laundering Act, 2002 (PMLA) in 2003. The Act came into force from 1st July, 2005.

Financial Intelligence Unit- India (FIU-India) was set up as an independent specialized agency in 2004, to play a decisive role in India’s fight against the menace of money laundering and terrorism financing.

Headed by a senior civil servant of the rank of Additional Secretary to the Government of India, FIU-India is primarily entrusted with the responsibility to generate actionable financial intelligence and all other relevant information from banking companies, financial institutions, capital market intermediaries and designated non-financial businesses and professions (DNFBPs). It supports India’s law enforcement, police, intelligence, national security agencies and financial sector regulators, in initiating and conducting investigations.

Core functions of FIU-IND

Intelligence Management

Maintaining national database of Cash Transaction Reports (CTRs), Suspicious Transaction Reports (STRs), Counterfeit Currency Reports (CCRs), NPO Sector Transaction Report (NTR) and Cross Border Wire Transfer Report (CBTR) received from the reporting entities under the provisions of the Prevention of Money Laundering Act, 2002 (PMLA).

Conducting operational and strategic analysis of the statutory reports received.

Screening and processing requests for information from domestic law enforcement & intelligence agencies and from foreign FIUs.

Disseminating actionable intelligence to domestic law enforcement & intelligence agencies and to foreign FIUs.

Strategic Management

Reviewing operational and regulatory issues and suggesting policy changes to counter money-laundering, associated predicate offences and terrorist financing.

Promoting awareness on issues relating to money laundering and terrorist financing.

Building capacities in the financial sector for effective identification and reporting of prescribed transactions.

Prevention of Money Laundering Act

The Prevention of Money Laundering Act, 2002 (PMLA) is the principal legislation by which the legal and institutional framework for combating money laundering and terrorist financing has been created. PMLA and the Rules notified thereunder came into force w.e.f. 1st July, 2005.
Under section 3 of the PMLA, attempting or knowingly indulging in any process or activity connected with proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property is chargeable with the offence of money-laundering.

Reporting Entities

Banking Companies

  • Nationalized banks
  • State Bank of India and its Associates
  • Private Indian Banks and Private Foreign Banks
  • Primary, District and State Co-operative Banks
  • Regional Rural Banks

Financial Institutions

  • Financial I institutions as defined in Section 45-1 of the RBI Act
  • Insurance Companies
  • Hire-Purchase Companies
  • Chit Fund Companies
  • Housing Finance Companies
  • Non-Banking Financial Companies
  • Payment System Operators (Credit Cards)
  • Authorized persons (Money changers)
  • India Post

 Intermediaries

  • All entities registered under section 12 of the SEBI Act

Understanding the Importance of FIU-IND Registration

FIU-IND registration is a crucial step for any organization that falls under the purview of the PMLA. It ensures that your organization is:

  • Compliant with the Law: Adhering to PMLA regulations is mandatory. Non-compliance can result in severe penalties, including fines and even imprisonment.
  • Protecting Your Reputation: Demonstrating compliance with anti-money laundering (AML) regulations enhances your organization’s reputation and builds trust with customers, partners, and regulators.
  • Mitigating Risks: By implementing robust AML/CFT (Combating the Financing of Terrorism) measures, you can effectively mitigate the risks associated with money laundering and terrorist financing within your organization.
  • Facilitating Business Operations: Timely registration and compliance can streamline your business operations and avoid potential disruptions caused by regulatory scrutiny.

The FIU IND Registration Process

The registration process with FIU IND typically involves the following steps:

  1. Online Application:
    • Access the official FIU-IND website and locate the online registration portal.
    • Fill out the online application form with accurate and complete information about your organization.
    • Ensure that all mandatory fields are filled correctly.
  2. Documentation Upload:
    • Upload the necessary supporting documents as per the requirements specified in the application form.
    • Common documents may include:
      • Certificate of Incorporation/Registration
      • PAN card details
      • Bank account details
      • KYC documents of key personnel
      • AML/CFT policy and procedures
      • Internal control mechanisms
  3. Application Review:
    • FIU-IND will review your application and the documents you submitted.
    • The review process may take some time depending on the complexity of your organization and the completeness of your application.
  4. Registration Approval/Rejection:
    • Upon successful review, FIU-IND will grant your organization a registration number.
    • Your application may be rejected if there are any discrepancies or missing information. You will be notified of the reasons for rejection and given an opportunity to rectify the issues.

Reports are to be Submitted under the FIU-lndia

Under the PMLA and respective rules, different forms of reports must be submitted by the reporting entities. The following are the types of reports which have to be submitted under FIU-lndia:

  1. Cash Transaction Report (CTR)
  2. Suspicious Transaction Report (STR)
  3. Counterfeit Currency Report (CCR)
  4. Cross-Border Wire Transfer Report (CBWTR)
  5. Report on sale/purchase of immovable property

Timeline For Financial Intelligence Unit Registration

The timeline for obtaining a registration from the Financial Intelligence Unit India is around 8 to 9 months.

FAQ's

Some of the main functions of the FIU-IND include Carrying out supervisory functions, acting as a Central Repository, and Coordinating with other centers.

Any entity formed under the provisions of the Banking Regulation Act of 1949 is called a banking entity or a banking company under the financial intelligence unit India. Hence, banking companies are considered reporting entities.

Yes, both NBFC and Housing Finance Companies are reporting entity under the Financial Intelligence Unit India.

Yes, if a transaction falls within a particular threshold, it must be furnished. The transactions that have to be reported are present under the Prevention of Money Laundering Act, 2002, and the respective rules.

The FIU India registration online is initiated by visiting the official website and by clicking the register new user on the login place.

The role of FIU-IND is to receive an illegal or suspected transactions reports from the financial institutions in India and to analyse and disseminate the suspected information to the concerned government authority.

The principal officer of an entity is the main officer who constitutes reporting carried out by the entity. If the transaction is suspicious, it must be reported within seven working days.

Yes, the time limit for submitting transactions would be the 15th day of the succeeding month.

One can register with FIU India by visiting the official FIU-IND registration portal for registering as a reporting entity, as such the reporting entity has to meet the FIU-IND compliance registration mandatory requirements.

A FIU-IND AML registration is a mandatory registration a financial institution needs to obtain in order to comply with AML regulations. This includes FIU-IND registration for reporting suspicious transactions.

FIU license is a license that is granted by the government of India under Financial Intelligence unit India or FIU-IND to a financial institution stating that they are comply with the AML or PMLA laws and regulations.


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