​It was decided that from 1 April 2016 all Reporting Entities (RE's) will be required to submit the digitally signed report. Accordingly modification in RVU has been done and the latest version of the utility is version 2.8. Following changes are made in version 2.8:-

1)        DIGITAL SIGNATURE: The digital signature for signing the XML has been made mandatory.

This DSC should be in the name of Principal Officer attached to the RE's FIUREID. DSC should be Class 2 type and can be obtained from TCS, E-Mudhra, Safescript, IDRBT, etc. 
 
2)      RE CATEGORY:  Six New RE Categories (FIIBR, INCEX, INPFR, REGSR, FIPST and INSTX) have been added, along with the old ones.

* A welcome addition has been FIPST (Dept. of Posts, GoI) 

If you want to know in detail, please check the following link

fintelektaml.com/tag/money-laundering-risk/
 
 In addition following changes done in RVU version 2.7 has been fine-tuned based on inputs received from RE:
 
1)      PAN NUMBER should be of the format XXXXX9999X (that means first FIVE ALPHABETs followed by FOUR NUMERIC and ONE ALPHABET). If PAN is Present with incorrect format the system will automatically run validation and Schema Validation will be failed.
 
2)      FIUREID should be of the format XXXXX99999 (FIVE ALPHABET followed by FIVE NUMERIC value). If FIUREID is Present with incorrect format, Schema Validation will be failed on validation.
 
3)      RECATEGORY should be of FIVE ALPHABET. If RECATEGORY is present with incorrect format and check fails, Schema Validation will be failed.
 
4)      MOBILE NUMBER (for both INP and LPE) should be of minimum 10 digits (i.e. 9999999999). If MOBILE NUMBER is Present with incorrect format and check fails, Schema Validation will be failed.
 
5)      TELEPHONE (for both INP and LPE) should be of minimum 11 digits. If Telephone no. is Present with incorrect format and check fails, Schema Validation will be failed.
 
6)      ADDRESS Field Length (Minimum) has been increased from 10 to 15 Characters.



A SMALL GUIDE FOR UPLOADING RETURNS ON THE FINNET GATEWAY:

1. The version of RGU- Report Generation Utility has not changed. Version 2.7 only has to be used to generate XML file of return. 

2. The new version i.e 2.8 of RVU is available under "Resources" section utility of the FINNET gateway. The format is .7z, so you need to extract the RVU folder first by downloading a .7z extractor. Once extracted, the RVU would be ready for use. 

3. The process of RVU is the same, except for the last step where; after hashing you will need to attach DSC. 

4. The token library file is in a format called .dll, this would be found 
C drive> Windows>System 32 folder and then selecting the particular .dll file as per your vendor 

5. The hashed and digitally signed file only has to be uploaded after ensuring no fatal errors exist. 

IMPORTANT:

Before you upload the return, please ensure that the DSC file of Principal Officer is exported to .cer format first and the .cer file is uploaded under "profile" category> Upload certificate. This process is like registering the DSC of Principal Officer on the gateway for ONCE only. 

Recently FIU IND vide its Helpdesk reported on that the version of RGU and RVU will be upgraded to 2.7 from the existing 2.6.

The text of Advisory is reproduced:

Subject:-  Release of latest version of RGU & RVU (2.7 version)
 
Due to change in the Validation process at FIU-IND, the Report Generation and Report Validation Utility has been modified.
 
This change will be effective from 1st November 2015.
 
Note: Use of earlier versions of the utilities will result in failure of upload.
 
The latest versions of the utilities are as follows:
·         RGU- version 2.7
·         RVU- version 2.7
 
 
List of changes done under Report Generation Utility and Report Validation Utility are as follows:-
 
1) PAN no. should be of the format XXXXX9999X (that means first FIVE ALPHABETs followed by FOUR NUMERIC and ONE ALPHABET). If PAN is Present with incorrect format the system will automatically run validation and Schema Validation will be failed.

2) FIUREID should be of the format XXXXX99999 (FIVE ALPHABET followed by FIVE NUMERIC value). If FIUREID is Present with incorrect format, Schema Validation will be failed on validation.

3) RECATEGORY should be of FIVE ALPHABET. If RECATEGORY is Present with incorrect format and check fails, Schema Validation will be failed.

4) MOBILE NUMBER (for both INP and LPE) should be of minimum 10 digits (i.e. 9999999999). If MOBILE NUMBER is Present with incorrect format and check fails, Schema Validation will be failed.

5) TELEPHONE (for both INP and LPE) should be of minimum 11 digits. If Telephone no. is Present with incorrect format and check fails, Schema Validation will be failed.

6) ADDRESS Field Length has been increased from 10 to 15 Characters.
 

SOME DIFFICULTIES:

Reportedly, there was some bug issue with the same and FIU IND and it posted the following

Due to various issues are received in RGU and RVU, the effective date has been extended from 1 to 16 Nov 2015 . Hence you may use RGU& RVU (2.6) till 15 Nov 2015 and the new utilities will be applicable from 16 Nov 2015 onwards.

FINAL STATUS:

So as it stands today, post November 16th, all reports (CTR, STR, NTR, CCR, CBWTR) have to be generated in .xml as well as validated in Version 2.7 only.

Even replacements to earlier reports or filing report for any month previous to November 2015, Version 2.7 of RGU and RVU shall be used, else the reports filed in FINNET Gateway be rejected.

HOW TO DOWNLOAD VERSION 2.7 OF RGU & RVU:

1. Log in to https://finnet.gov.in

2. Access the gateway by relevant user credentials and OTP.

3. Go to Resources Section and click on Utilities.

4. Download the zip files of RGU & RVU 2.7

Install the same on your devices.

In case you have issues, like windows console not showing after clicking BAT file of either RGU or RVU, please download the latest version of JDK (Java Development KIt) from the following link

http://www.oracle.com/technetwork/java/javase/downloads/index.html

This is for information and awareness for all compliance people in reporting entities for FIU IND.

Happy reporting....!!!

Amit Retharekar.

As you are aware, Money Laundering is a global menace and a victimless crime. The nations throughout the world have made a joint consortium to fight this menace. Accordingly various forums, MoU’s have been signed between nations. 

This write up is only on the AML jurisdiction in India. 

 















The above diagram is self explanatory. Therefore for the world at large, India is a FATF (Financial Action Task Force) member, i.e a Co-operative member and committed to combating AML/CFT.

Most of the FATF guidelines have been incorporated or as I can say, adopted by Indian Government and enforcement infrastructure ; accordingly mechanism has been put in place.


AML ENFORCEMENT AGENCY INDIA:


FIU IND, Financial Intelligence Unit: India is the enforcement and primary nodal agency for FATF purposes facilitating information sharing and ensuring Indian RE’s comply with the distinct and robust FATF mechanism of combating money laundering.

FIU IND operates under Department of Revenue, Ministry of Finance, Government of India. They are situated at 6th Floor, Hotel Samrat, Chanakyapuri, New Delhi: 110021. 

The primary objective of FIU IND is;

·         Collection, analysis and sharing of information.

·         Acting as Central Repository and creating a centralised database.

·         Co-ordinating between different global agencies.

The organisation structure and strength has been commensurate with the amount of data collected and assimilated.

FIU IND, is headed by a Director who has been given powers under Prevention of Money Laundering Act,2002. There are no instances as of now where any reporting entity, has been prosecuted by the Director.Usually, the regulator of the industry to which the RE belongs, will be the nodal agency, like in case of banking-RBI.

The Indian FIU IND is similar in functions with the FINCEN in United States of America.

TYPES OF RETURNS UNDER AML SCENARIO INDIA: FIU IND

Mandatory reports prescribed by FIU IND are:
1. Cash Transaction Report: CTR
2. Suspicious Transaction Report: STR
3. Counterfeit Currency Report: CCR
4. Non Profit Organization Transaction Report: NTR
5. Cross Border Wire Transfer Report: CBWTR
6. Report on sale/purchase of immovable property: IPR

This blog is dedicated to CTR. 

CASH TRANSACTION REPORT: CTR

With this article this is a small attempt to understand logic of CTR, how it works, what is to be reported and mainly, HOW it is to be reported?

Basically, most of the RE’s as per FIU IND will be having an all integrated software called as CBS, which will be recording, processing and reporting transactions, however in this article we will try to disseminate information on how information can be extracted as well as reported.

Position of India vis-à-vis other countries:

The Indian position with respect to basic returns is the name; the only difference is with respect to, Currency and nomenclature of name of returns.

The CTR return under Indian Scenario stands for Cash Transaction Report whereas RE’s in USA call it as Currency Transaction Report. The limit for Indian CTR is INR 10 lakhs, whereas Currency Transaction Report of US, limit is $10,000.

 CTR:

MEANS: Cash Transaction Report

FREQUENCY:  Monthly 

CONTAINS: Information related to;
(a) All cash transactions of the value of more than rupees ten lakhs or its equivalent in foreign currency;

(b) All series of cash transactions integrally connected to each other which have been valued below rupees ten lakhs or its equivalent in foreign currency where such series of transactions have taken place within a month.

DUE DATE: CTR  of a month must be submitted within 15th of the succeeding month 

BASIS: It is mandatory. Even when there are no such transactions, a NIL report shall be filed.

It is a TIME BASED report and has to be filed monthly. 

FILING:
FIU IND has made it mandatory after October,2012, CTR shall be compulsorily filed electronically in XML format on the FINNET Gateway.  


WHAT IS EXACTLY CTR?

To explain it in more concise manner, let us take hypothetical cases;

Account no: 1001005067160

Type: SB

Name: AXXXX ZZZZZZZ

Address: XXXXXX, MMMMMM, India

Date of opening: 01.01.2012

Risk Category: Medium

PAN: XXXXXXXXXX

For CTR, we just have to take the “CASH SUMMATIONS” into account, since the CTR is a monthly report, cash cumulative will be from the beginning of the month to the last day of the month.

Therefore, transactions by cheque (clearing: both inward as well as outward) and internal transfer (either to deposit account or to some other account within the bank on specific written instruction) will NOT be covered.

Another aspect is although, ALL cash transactions will be counted for CTR purposes, while reporting only, transactions above INR 50,000/- will be reported.

Therefore, in this case, since the cash summations on the credit (cash deposits) have exceeded INR 10 LAKHS (1,75,000+8,50,000=10,25,000), it is covered under the definition of CTR.

On the debit side, the cash transaction amounts only to INR 4,00,000.00 which is below the limit of INR 10 lakhs, however, this transaction being in cash shall still be reported in CTR. 

However, the transaction in 21.02.2013 is below the limit of INR 50,000/- hence would not be reported. 

WHAT IS EXACTLY REPORTED IN CTR?

With the same example, qualifying for CTR, the following would be reported under different files mandated by FIU IND scheme.

FIU IND has two different schemes for reporting:

1.   ACCOUNT BASED FORMAT: ARF

2.   TRANSACTION BASED FORMAT: TRF

Widely used format is ARF; hence all the explanations shall be construed with reference to ARF format only. 


1. ARFBAT: BATCH FILE contains:
Basic info

Report type, name of RE:Reporting entity, its FIUREID: Unique Id given by FIU, name of PO, his details and month and year of report.

2. ARFRPT: REPORT FILE
Basically used for STR

Contains alert type, basis, ground of suspicion.  


3. ARFBRC: BRANCH FILE
Descriptive information of the reporting branch.

Branch reference type, name, location, city, state, country, pin code, e-mail id, phone number.


4. ARFACC: ACCOUNT FILE
Account file.

From our example, the following would be reported:

·         Branch ref no to which it pertains

·         Account no: 1001005067160

·         Account type: SB

·         Holder name: XXXXXX

·         Holder type: individual/legal person

·         Status of account: operative or dormant

·         Date of opening: 01.01.2012

·         Risk rating: medium


5. ARFTRN: TRANSACTION FILE
For one respective account reported in ACC file, with specific account no matching ACC file;
The details of transaction like, date of transaction, mode, debit/credit, amount, currency is reported.


6. ARFINP: INDIVIDUAL PERSON FILE
Descriptive information of individual person, reported in ACC file

Name, relation flag(signatory),address of customer, city, phone number, PAN, Gender and identification document like Election Card, UIN: Aadhar Card.

Note: for Legal person the authorized signatory shall be construed as INP: Individual and accordingly reported. For eg: Pvt Ltd co or Partnership firm, details of individual Directors/Partners will be reported in INP file.

7. ARFLPE: LEGAL PERSON FILE
Descriptive information of LEGAL person, reported in ACC file

Account no, trade name on which account opened, address, phone number, email id, legal person PAN, and Constitution type: Prop, Partnership, Company, Trust, etc.


WHAT TYPE OF ACCOUNTS ARE REPORTED IN CTR?


Basically, definition is all type of accounts but primarily, following accounts will be reported;

·         Savings account

·         Current account

·         Cash credit/ Overdraft

Term deposits can also be reported, but the banking convention and prevailing tax rules, make it impossible to open a term deposit in cash exceeding INR 20,000/-, therefore it will not be covered. Any RE opening Term deposit by direct cash influx without routing it through, SB/CA account stands in violation of prevalent guidelines.

Loan accounts of all types, Term Loan/Vehicle/Gold loan,etc are also covered under CTR, however, usually there would be limited inflow of cash in LOAN account compared to ADVANCE account. Loan amount repayment being in monthly schedules and usually paid by transfer through SB/CA account, chances of they getting covered are minimal. As a general banking practice, loan account repayments will be through transfer entries and any such cash entry would be viewed seriously from window dressing/NPA point of view.

WHAT HAPPENS AFTER ACCOUNT IS REPORTED IN CTR?

As evident from the chart, the information gathered from CTR returns is assimilated in the servers of FIU IND. The same is then disseminated to various Govt agencies for their use; monitoring, enforcement, evidence gathering, cash economy statistics, etc.  

Therefore any RE’s:Banks/Insurance Cos/NBFC’s/SEBI registered market intermediaries reporting any account as CTR are not complaining/reporting adverse/investigating, particular account. They are just performing their duties as RE’s. They have no role in any matters after reporting. Therefore, the only statutory duty of RE’s is to check whether cash transaction in any account qualifies under CTR and report accordingly.

What happens after that is left to enforcement agencies. In any case, if a particular customer is apprehensive about his account being reported in CTR is a case of unreported income/income not through genuine sources or act of smurfing.       

Therefore, please ..!!!

We are custodians of thousands of customers, no need to think of a specific customer, HNI/Large exposure borrower or otherwise, if he has nothing to hide, even if his account is reported in CTR, he should CHILL.

I remember the jingle of Indian Income Tax Department, they say

“Pay TAX, karo RELAX”

 
* PERTINENT QUESTION?

Why should GoI shift the burden of transaction detection/reporting on RE?  

YES, Valid. But that is how GoI can better regulate the flow of these transactions. Understand, GoI has not banned/prohibited/investigated/punished any one for performing cash transactions. They never will. They just seek a record of cash transactions after specified limit, so that, trails can be established in case of unforeseen events and accountability be reposed in event of lapses.

In any case, this is not the first time GoI has shifted reporting burden on us. We are aware of the tedious TDS(Tax Deducted at Source: Pay as you earn scheme). The tax collection and enforcement of TDS lies with GoI only, but as agents we are supposed to deduct tax and remit them directly. In case of CTR, we are only reporting, not deducting nor conducting any further formalities. 

HOW TO FILE CTR?

After checking the logic of CTR is the important part of filing CTR.

It is not absolutely necessary that your CBS/ Banking software gives you readymade CTR processed and you just, pick it up attach and file CTR.

NOT necessary. You can file CTR on your own, just that voluminous data will be time consuming.

FIU IND: Govt of India has given various tools for all your needs.

All you need is an internet connection.

Log on to http://fiuindia.gov.in

 Download:

1.   Reporting structure version 2.0.

2.   Excel based beta file in ARF: Account based reporting format.

3.   Go to https://finnet.gov.in, with your user id and password, download from the Resources section:

a)   RGU: Report Generation Utility version 2.6 latest

b)   RVU: Report Validation Utility version 2.6 latest.

4.   To run these utilities you would require a JDK: Java Development Kit, you can download the same from Sun Microsystems website.

 

Steps:

OFFLINE MODE:

1.   After you have detected which accounts have to be reported as CTR, prepare a list of the same and ensure their KYC is in order and mandatory information like, PAN, risk profile is updated.

2.   Fill up all the information in the 7 files; BAT-RPT-BRC-ACC-TRN-INP-LPE using the Reporting structure version 2.0. What has to be filled is respective columns is given.

3.   Using the macro utility convert the Excel files into .txt format.

4.   Consolidate all the 7 .txt files in one single .xml file in RGU. Any errors will be shown, eliminate them and error free .xml is ready.

5.   Perform schema validations in RVU on the .xml file. Check the DQR: Data Quality Report, if there are no “fatal” reports, all is well.

6.   Hash the .xml file and if possible digitally sign using only Class 2 DSC of Principal Officer.

ONLINE MODE:

7.   Log on to https://finnet.gov.in

8.   Log in using user id and password. An OTP: One time password will be sent to the registered mobile number only after that, the Gateway will open.

9.   Under REPORTS category, file the hashed & digitally signed .xml file.

10. The moment it is filed, you will receive a Batch Id. The status would be “SUBMITTED”.

11. After processing, the status would be “VALIDATED AC” or “VALIDATED”. NOTE: If DSC is not used in RVU, the status would be Validated AC: Awaiting Confirmation, and in such cases, RUC: Report Upload Confirmation would have to be downloaded, signed by PO and sent to FIU IND, New Delhi within 10 days from date of upload.

12. Keep checking the FINNET Gateway, in case any additional information is sought by FIU IND.

Hoping, happy compliance of CTR for all.

This is just the start of series of articles on AML Scenario India. This article has focused only on CTR as of now, since a lot of people had basic queries of the same and needed understanding manually how it operates. 

Will be posting about the other returns and procedures about AML: KYC : CFT very soon.

I would be happy to seek any suggestions/feedback. 

Amit Retharekar

"Two roads diverged into woods, 
I took the one less travelled by,

That has made all the difference..."