If you frequently operate your bank lockers or prepay bank loans in cash, don't forget that an invisible eye is watching you. Financial Intelligence Unit (FIU) and Indian Banks' Association (IBA) have prepared a list of transactions which are termed as suspicious. Banks would be required to track them closely and report such transactions to FIU. Recently, IBA advised banks to include more parameters to their monitoring systems for more effective tracking.

You see, the prevention of Money Laundering Act, 2002 requires every bank to provide details of suspicious transactions to FIU irrespective whether they are performed in cash. A transaction is called suspicious if:
 

• It leaves scope for any doubt that it may involve proceeds of crime
• Seems to be performed under unusual circumstances
• Involves unjustified complexity
• Lacks economic rational and bonafide purpose
   

The role of FIU...

FIU was set up by the Government of India in 2004 as a national agency to curb money laundering practices and related crimes. FIU is an independent body reporting directly to the Economic Intelligence Council (EIC) headed by the Finance Minister. FIU receives, processes, analyses and disseminates information pertaining to suspicious financial transactions.

Banks submit four types of reports to FIU which include:
 

• Cash transactions
• Suspicious transactions
• Counterfeit currency
• Receipts of Non-Profit Organisations (NPOs)
   

Banks have their internal systems to follow and monitor transactions. The alert is generated when a particular transaction which is not suited to the profile of a client is performed. It will be identified as a suspicious transaction. Banks have all your details which they collect under Know-your-clients (KYC). If your account suddenly registers a greater frequency of transactions than otherwise experienced, it will draw the attention of your banker. Similarly, unusually high value transactions on individual as well as in the accounts of NGOs are also closely tracked. Some transactions can be easily identified while others may require active tracking.

PersonalFN is of the view that, it is important for every citizen in the country to operate their bank accounts, locker facility and do financial transactions with morality and transparency. Concealment of material information and indulging in suspicious activity could soon land you in trouble as vigilance is heightened. You see, paying taxes is fundamental duty to abide by and should be discharged with moral responsibility.

In our view stacking black money usually prevents economic progress of the country. Country not only loses on tax revenue, but it is also possible that the money may be used for malicious purpose such as terrorism and other crimes. Recognising the atrocities of this, the Indian Government has been urging Swiss banks to share data of accounts of Indians who are suspected to have parked black money with them. It is estimated that Indians hold about Rs 14,000 crore in Swiss banks. Black money is a global problem and efforts are being made to fight against it. FIU is a part of that effort. If not tracked closely, money laundering activities can destabilize financial system.

PersonalFN believes, including more parameters to the active tracking system of banks for identifying and reporting suspicious transactions is a welcome move. It is noteworthy that, while reporting suspicious transactions, banks also report details of the other party to the transaction wherever possible and as many details as available. Therefore, it is important for you to be clean as there's someone who is keeping a watch on you.

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