Kyc Project Report.docx

Name:- Anam Mohammed Iqbal Kazi Course: - Master of Management Studies. (MMS) Institute: - Maratha Mandir’s Babasaheb Gawde Institute of Management Studies. Academic year: 2017-2019 Topic: - Aspects of financial services and role of operation in KYC. Company: - SMC Global Securities Ltd. Internship Duration: 2nd May 2018- 30th June 2018 (2 months)

INTRODUCTION OF SMC GLOBAL SECURITIES

SMC Global securities Ltd. is a leading and award winning stock broker in India having a good track record in the financial services industry. Established in 1990, SMC is a well-diversified financial services company in India offering services across brokerage (across the asset classes of equities (cash and derivatives), commodities and currency), investment banking, wealth management, distribution of third party financial products, research, financing, depository services, insurance broking (Life & non- Life), clearing services, mortgage advisory , alternate investment fund (AIF) and real estate advisory services to corporate, institutional, high net worth individuals and other retail clients. SMC has workforce of 3000+ employees and presence in 500+ cities with 98 branches & around 2400+ sub-brokers with overseas offices in Dubai, New York, Atlanta & Orlando. SMC has over 13,000+ independent distributors for third party product distribution with total customer base of 16 lakh + across India. SMC is a leading online stock broker and is having a tie-up with Punjab National Bank for providing share trading facility to its clients.

Key Persons:1. Mr. S C Aggarwal Chairman & Managing Director, SMC Group 2. Mr. Mahesh C Gupta Vice Chairman & Managing Director, SMC Group

SERVICES PROVIDED

1. Broking 

Equities and Derivatives

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Currency

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Commodities

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Depository

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Institutional Broking

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Clearing Services

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NRI

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FPI

2. Mutual Funds & IPOs 3. Online Trading 4. Wealth Management 5. Investment Management 6. Insurance 7. Real Estate 8. Research 9. NBFC

DIFFERENT DEPARTMENTS 1. Real Estate 2. Marketing 3. Client Registration Forms 4. DP 5. Trading

6. Risk Management 7. HR 8. Administrators 9. IT 10. Arbitragers 11. Wealth Management Profile: Opening up De-mat A/c and trading A/c Client Registration forms Process: 1. KYC 2. EKYC 3. CKYC 4. Modifications 5. FATCA (Foreign Account Tax Compliance Act) 6. Mobile Trading 7. Odin diet 8. Group Shifting 9. Account Re-activation (Suspense account reactivation)

INTRODUCTION

Know your customer (KYC) is the due diligence and bank regulation that financial institutions and other regulated companies must perform to identify their clients and ascertain relevant information pertinent to doing financial business with them. Know your customer policies have becoming increasingly important globally to prevent identity theft fraud, money laundering and terrorist financing. In a simple form these rules may equate to answering twelve questions, but this is the tip of the iceberg and regulators now expect much more. KYC should not be thought of as a form to be filled - it is a process to be undergone from the start of a customer relationship to the end. One aspect of KYC checking is to verify that the customer is not on any list of known fraudsters, terrorists or money launderers, such as the Office of Foreign Assets Control's Specially Designated Nationals list. Beyond name matching, a key aspect of KYC controls is to monitor transactions of a customer against their recorded profile, history on the customer’s account(s) and with peers.

Know Your Customer processes are also employed by regular companies of all sizes, for the purpose of ensuring their proposed agents', consultants' or distributors' anti-bribery compliance. Banks, insurers and export credit agencies are increasingly demanding that customers provide detailed anti-corruption due diligence information, to verify their probity and integrity.

With effect from 1st Feb 2008, KYC is mandatory. Till the time, one gets the KYC reference number; one cannot invest 50k or more in the Indian mutual funds.

Account Opening Process- Client Registration Forms. Types of Accounts. 

Individual Account.

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Hindu Undivided Family (HUF).

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Partnership.

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Corporates.

Types of Segments. 1. Equity

Cash.

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Future and Option.

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Currency.

2. Demat. 3. PNB Forms.

Required Documents for Account Opening. 

Proof of identity : PAN Card (Mandatory)

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Proof of address

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Bank Proof

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Income proof of six months (in case of F&O and Currency Segment activation)

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IN PERSON VERIFICATION Stamp on all supported documents.

Most Picked Schemes for Individual Account Opening: Equity scheme: Rs 500 for the first year + Account maintenance charges of Rs. 350+GST

AMC lifetime Equity: Rs. 999 (condition: minimum one trading in a quarter or else charges of Rs 75+GST applied)

One time Scheme: Rs 1680

Free Account: Account opening charges will be reversed.

Margin Scheme: Rs. 50000, Odin diet activation is free for the first year. Account opening charges will be reversed once the client generates twice the amount of the account opening charges in the duration of three months. AMC charges (350+GST) will be levied.

Refundable deposit security: Account opening charges is of Rs. 3000. Reversible during the time of account closure.

Processes: Receiving forms: forms are received either through couriers or in hand from Sub brokers and franchise and is entered in the system with a mention of proper date, form number and series.

Checking: Received forms are checked as per the requirement criteria. Those which fail to meet the requirements are marked as rejected forms and are sent for solving, the rest correct forms are processed for the other step.

Call Verification: It is mandatory to verify whether the details which are provided by the client are correct and is not forged. The call is recorded by time, date and the person attending it. If the verification is failed, the reason behind it is entered in the system with the help of management information system.

Punching: The Missing and the other details such as bank details, phone number, email address, address as per proof, scheme code are punched in the system.

System verification and code generation: It is important for the details to be checked twice as a properly punched data before the code generation. Code generated only for the new forms.

File upload in DP (Depository Participants.)

DP Id: CDSL or NDSL is activated and the DP Id is generated.

Franking: It is the physical application and presence of postage stamps, or any other markings recognized and accepted by the postal system or systems providing service, which indicate the

payment of sufficient fees for the class of service which the item of mail is to be or had been afforded.

KNOW YOUR CUSTOMER – WHAT YOU MUST KNOW Know Your Customer - KYC enables banks to know/ understand their customers and their financial dealings to be able to serve them better

Meaning of Customer For the purpose of KYC Policy, a ‘Customer’ is defined as: 

A person or entity that maintains an account and/or has a business relationship with the Bank;

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One on whose behalf the account is maintained (i.e. the beneficial owner);

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Beneficiaries of transactions conducted by professional intermediaries, such as Stock Brokers, Chartered Accountants, Solicitors, etc. as permitted under the law, and Any person or entity connected with a financial transaction, which can pose significant reputation or other risks to the Bank, say, a wire transfer or issue of a high value demand draft as a single transaction.

FACTOR THAT REQUIRE THE NEED FOR IDENTITY AND ADDRESS PROOF The identification of a customer is a very critical process with a view to protect the customer interests by preventing from fraudsters who may use the name, address and forge signature to

undertake illegal business activities, encashment of stolen drafts, cheques, dividend warrants, etc. This also helps to safeguard banks from unwittingly used for the transfer of deposit of funds derived from criminal activity or for financing terrorism. Identification of customers will also help to control financial frauds, identify money laundering and suspicious activities, and for scrutiny / monitoring of large value cash transactions.

EVOLUTION OF KYC REQUIREMENTS No, KYC requirements have always been in place and Banks have been taking KYC documents in accordance with the guidelines issued by RBI from time to time. RBI has revisited the KYC guidelines in the context of recommendations made by the Financial Action Task Force (FATF) on Anti Money Laundering standards and on Combating Financing of Terrorism and enhanced the KYC standards in line with international benchmarks

REGULATORY AND LEAGL REQUIREMNTS ABOUT KYC Regulatory: In terms of the guidelines issued by the Reserve Bank of India (RBI) on November 29, 2004 on Know Your Customer [KYC] Standards – Anti Money Laundering [AML] Measures, all banks are required to put in place a comprehensive policy framework covering KYC Standards and AML Measures.

Legal: The Prevention of Money Laundering Act, 2002 (PMLA) which came into force from July 1, 2005 (after “rules” under the Act were formulated and published in the Official Gazette) also requires Banks, Financial Institutions and Intermediaries to ensure that they follow certain minimum standards of KYC and AML as laid down in the Act and the “rules” framed there under

APPLICATION OF KYC KYC will be carried out at the following stages: • Opening a new account • Opening a subsequent account where documents as per current KYC standards not been submitted while opening the initial account • Opening a Locker Facility where these documents are not available with the bank for all the Locker facility holders • When the bank feels it necessary to obtain additional information from existing customers based on conduct of the account • When there are changes to signatories, mandate holders, beneficial owners etc. KYC will also be carried out in respect of non-account holders approaching the bank for high value one-off transactions.

Do You Know what risks do we take if we do not adhere to KYC – AML 

Reputation Risk : We always need the confidence of Depositors and the Market

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Operational Risk : Loss on account of failed process \ people \ systems \ external events

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Legal Risk: Loss due to any legal action against the bank and its staff.

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Compliance Risk: Loss due to failure of compliances

Role of Operations in KYC: 

Operation is defined as managing work efficiently and effectively in a given period of time.

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Optimal Strategy- OR isn't just about math and stats- game theory is also a huge part as well. What is the best course of actions for a company? What about after you add in certain constraints, such as legal problems, funding problems, internal problems, etc.

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Maximum optimization of resources such as employees is also a strategy.

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Major constraints in this given sector is time, it is expected to minimize the time of account opening and serve the client better.

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Proper information including code and details should be provide to the client without any error.

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Queries should be handled politely and efficiently.

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Maximize the quality of service for which client satisfaction is the top most priority.

CONCLUSION

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KYC policies help in creating healthy financial system in the economy.

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KYC policies help in tracking the customers and identify the source of funds.