PIRAMAL HOUSING FINANCE LTD KNOW YOUR CUSTOMER POLICY (KYC) & ANTI MONEY LAUNDERING MEASURES

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1 PIRAMAL HOUSING FINANCE LTD KNOW YOUR CUSTOMER POLICY (KYC) & ANTI MONEY LAUNDERING MEASURES Pursuant to the revised Guidelines on Know Your Customer and Anti money Laundering Measures issued by the National Housing Bank (NHB) vide its notification/ circular no. NHB/ND/DRS/Pol-No.33/ dated October 11, , the Board of Directors of the Company in its meeting held on 8 th September 2017 has approved and adopted the Know Your Customer (KYC) & Anti Money Laundering Measure to know/understand their customers and their financial dealings better which in turn help them manage their risks prudently and prevent HFCs from being used, intentionally or unintentionally, by criminal elements for money laundering activities. As per NHB guidelines on KYC policy, (Name of the Lender) is required to have its KYC policy for its lending / credit operations / financial dealings in line with extant guidelines framed therein. This KYC policy is framed keeping in mind the same. The policy has the following four key elements: (i) (ii) (iii) (iv) Customer Acceptance Policy; Customer Identification Procedures; Monitoring of Transactions; and Risk management. CUSTOMER ACCEPTANCE POLICY For the purpose of this policy, a customer means any person, as defined in the NHB s Guidelines on Know Your Customer and Anti-Money Laundering Measures, as amended from time to time. The guidelines for Customer Acceptance Policy (CAP) for the Company are as given below: The Company shall not open any account on fictitious/ benami name(s). The Company shall have in place a standard customer identification procedure and the same should be adhered to before opening an account. The Company should ensure that documents and other information is obtained from the customer depending on perceived risk and keeping in mind the requirements of 1

2 Prevention of Money Laundering (PML) Act, 2002 and guidelines issued by NHB from time to time The Company shall have in place a risk strategy. Each customer should be classified in to the appropriate risk category after considering the background of the customer, the nature of his business, the location of his business, the locations from where majority of his business, financial / social standing of the customer, amount involved in the financial transaction etc. the based on risk categorization; containing information on the customer s identity, nature of business activity. The Company should ensure that proper profiling is done with respect to the customers The Company should ensure that the identity of the customer does not match with any person with known criminal background or with banned entities such as individual terrorists or terrorist organizations etc. Identification of class of customers under various risk categories: Low Risk: Following accounts shall be categorized as Low Risk Profile: Salaried employees whose salary structures are well defined, people belonging to lower economic strata of the society whose accounts show small balances and low turnover, Government departments & Government owned companies. People working with Public Sector Units. Regulators and statutory bodies. Residential individuals. People working with reputed Public Limited companies & Multinational Companies. Medium Risk: Following accounts shall be categorized as Medium Risk Profile: Salaried applicants with variable income/unstructured income receiving salary in cheque. Salaried applicants working with Private limited companies. Self Employed customers with sound business and profitable track record for a reasonable period. high net worth individuals track record more than 90 days. High Risk: that are likely to pose a higher than average risk to us may be categorized high risk customers depending on customer's background, nature and location of activity, country of origin, sources of funds

3 and his client profile, etc. The Company will examine the case in details based on the risk assessment as per our credit risk policy and guidelines of operations manual. Examples of high risk customers requiring higher due diligence may include: Non-resident customers. High net worth individuals, without an occupational track record of more than 3 years. Trusts, charities, NGOs and organizations receiving donations. Companies having close family shareholding or beneficial ownership. Firms with 'sleeping partners. Politically exposed persons (PEPs) of foreign origin. Non-face to face customers. Those with dubious reputation as per available public information, etc politically exposed persons (PEPs) of foreign origin, Firms with sleeping partners High net worth individuals without any occupational track record of more than 2 years Non-face to face customers those with dubious reputation as per public information available, etc. CUSTOMER IDENTIFICATION POLICY Customer identification policy means identifying the customer, verifying his/ her identity using reliable sources of data and information. Proof of Identity/ Address/ Principal place of business (in case of non-individuals) The documents for establishing the identity and address proof of a person may include: Type of Customer Identity Proof Address Proof (at least one of the following) Individual Companies Partnership Firms Trusts & Foundations

4 Unincorporated association or a body of individuals Proprietorship Concerns MONITORING OF TRANSACTIONS Monitoring the ongoing transactions is an essential element of effective KYC procedures. The extent of monitoring needs to be conducted taking into consideration the risk sensitivity of the customer. The following activities may form part of the monitoring function: The account of the Customer after signing of the contract to be closely monitored for the signs of any unusual dealings; All suspicious cash transactions are required to be reported under Prevention of Money laundering Act ( PMLA ), 2002; Constant review of accounts must be ensured; High-risk accounts shall be subjected to intensified monitoring; The Company should maintain a record of all transactions and take steps to preserve the same. RISK MANAGEMENT The company should have in place a risk strategy and should ensure that the customers are categorized properly based on perceived risks. The customers can be classified under the following categories High Risk Medium Risk Low Risk The Company should also have a proper Internal Control system in place, which is capable of identifying and evaluating risks and mitigating them by way of reviewing and reporting such risks. CUSTOMER EDUCATION Implementation of KYC procedures can sometimes lead to a lot of questioning by the customer as to the motive and purpose of collecting such information. Therefore, the Company will

5 prepare brochures or pamphlets etc. so as to educate the customer of the objectives of the KYC programme. The front desk staff needs to be specially trained to handle such situations while dealing with customers. APPOINTMENT OF PRINCIPAL OFFICER Ms. Sampada Shivdikar GM legal is proposed to be appointed as the Principal Officer in compliance of Rule 2 (f) of the Maintenance of Record Rules of the PMLA. The Principal Officer under the supervision and guidance of the Designated Director shall be responsible to ensure overall compliance specified under the Act and the Rules/ Regulations thereunder. APPONTMENT OF DESIGNATED DIRECTOR Managing Director of the Company Mr. Khushru Jijina is proposed to be appointed as the Designated Director in compliance of Rule 2 (ba) of the Maintenance of Record Rules of the PMLA. The Designated Director shall be responsible to ensure overall compliance specified under the Act and the Rules/ Regulations thereunder. REPOTING OF TRANSACTIONS UNDER KYC NORMS TO FIU-IND The Company shall maintain the record of all transactions including, the record of: all cash transactions of the value of more than rupees ten lakh or its equivalent in foreign currency; all series of cash transactions integrally connected to each other which have been valued below rupees ten lakh or its equivalent in foreign currency where such series of transactions have taken place within a month and the aggregate value of such transactions exceeds rupees ten lakh; all transactions involving receipts by non-profit organizations of rupees ten lakhs or its equivalent in foreign currency;

6 all cash transactions where forged or counterfeit currency notes or bank notes have been used as genuine and where any forgery of a valuable security or a document has taken place facilitating the transactions; and all suspicious transactions whether or not made in cash and by way of as mentioned in the Rule 3(1) (D). The Company will maintain proper record of all transaction as prescribed under Rule 3, of the Prevention of Money-Laundering (Maintenance of records of the nature and value of transactions, the procedure and manner of maintaining and time for furnishing information and verification and maintenance of records of the identity of the clients of the (Banking Companies, Financial Institutions and Intermediaries) Rules, 2005). YEARLY RENEWAL OF KYC The Company shall renew the KYC on annual basis and shall ensure that all borrowers comply with the same.