R&Ts monitor investors transactions in mutual funds and if found dubious report them to AMCs. Suspicious Transaction Report (STR) is shared with Financial Intelligence Unit (FIU) in order to prevent money laundering.
Suspicious transaction reports (STR) are prepared by registrar and transfer agents of fund houses. The transactions are monitored in order to comply with Pursuant to the Provisions of Prevention of Money Laundering Act, 2002 (PMLA). If the R&T comes across any suspicious transactions, it alerts the AMC. If the transactions are found dubious then AMCs report them to Financial Intelligence Unit (FIU), a government agency set up in 2004 which receives, processes, analyses and disseminating information relating to suspect financial transactions with regulators like RBI, SEBI and IRDA.
Following are some of the parameters through which R&Ts monitor transactions.
· Use of more than five different bank accounts for investments
· Large number of folios are opened with the same address
· For first time non-individuals, it is Rs 40 lakh or more through non-SIP mode.
· If an individual uses more than five bank accounts for transaction
· If an individual invests 10 times or more to their annual income. For non- resident individuals it is 40 times or more to their annual income.
· If a regular investor suddenly increases his/her investment capacity by 20 folds or more to his average yearly investments.
· If an individual suddenly invests Rs 10 lakh through a single transaction in a scheme. However, dividend reinvestment and systemic transaction values are excluded from this.
· If SIP redemptions (for more than Rs 50,000) are debited from more than 3 bank accounts in a period of one year.
AMFI and FIU also prescribed some non-financial activities to track suspicious transactions like change of address and other banks mandatory details within 12 months, failure of KYC for 2 or more times etc. The industry body also suggested the possibility of suspicious transactions if an investor uses multiple PAN in mutual fund investments.
If an investor purchases and redeems money worth Rs 25 lakh within a rolling period of 14 days in one scheme and in the same folio then it is flagged as suspicious transaction. For non-individual, the limit for such transaction is Rs 50 lakhs. Also the transaction is considered as suspicious if there are 10 or more transactions within a folio within a month ranges between Rs 1, 75,000 and Rs 1, 99,999.
NRI who makes payments of Rs 25 lakh or more towards his mutual fund investments other than NRE, NRO and FCNR account may come under the suspicious scanner.
