Brokers asked to give suspicious trade reports online to FIU

To check any possible laundering of money through stock markets, brokers and other market entities were asked today to directly furnish all Suspicious Transaction Reports to the government's Financial Intelligence Unit (FIU-IND) through an online gateway.
The directive follows a meeting of the exchanges and depositories last week with FIU-IND, the agency responsible for receiving, processing and analysing financial transactions and disseminating information relating to suspect transactions to various intelligence and enforcement agencies.
Pursuant to the meeting, leading bourse BSE said in a circular to all its member brokers that they need to "get themselves registered with FIU India through the FINnet Gateway (FINgate) Portal", which acts as a comprehensive interface between the reporting entities and the FIU-IND.

"Further, the reporting entity are advised to furnish Cash Transaction reports (CTRs) and Suspicious Transaction Reports (STRs) etc, observed under the Prevention of Money laundering Act, 2002 and the Rules there under, to FIU India through FINgate," BSE said.
These reports help the enforcement agencies check manipulative practices, fraud and scams, among others. The FIU-IND was set up by the government to coordinate and strengthen collection and sharing of financial intelligence through national, regional and global networks to combat money laundering and related crimes.
The regulations framed by capital markets regulator Sebi also requires all entities under its jurisdiction to submit suspicious transaction reports (STRs) electronically to the FIU. However, some brokers and other market entities were found to be lax in furnishing these reports.

Some financial sector entities are also required to submit Counterfeit Currency Reports (CCRs) electronically to the FIU. Earlier, all such reports used to be furnished physically, but the online gateway, which was first rolled out in 2012, has made these processes much simpler and faster.

The information required to be furnished to the FIU includes all cash transactions worth over Rs 10 lakh, all suspicious transactions whether or not made in cash and all series of cash transactions below Rs 10 lakh but connected to each other and having taken place within a month.
Besides, all transactions over Rs 10 lakh involving receipts by non-profit organisations and transactions where counterfeit currency or forged security or documents have been used, are also required to be reported to FIU.

Suspicious transactions are those that give rise to a reasonable ground for suspicion of involvement of proceeds of an offence, appear to be made in circumstances of unusual or unjustified complexity, appear to have no economic rationale or bonafide purpose and those giving rise to suspicion about financing of terrorism-related activities.
FIU initiated its project FINnet (Financial Intelligence Network) in 2007 with the objective to "adopt industry best practices and appropriate technology to collect, analyze and disseminate valuable financial information for combating money laundering and related crimes".