RMS & Margin Policy

Introduction

Margin in trading do excites us a lot to trade more and more. Actually margins are in accordance with the market dynamics and may change from time to time. Below mentioned are some of the points which depict the various margin policies of Ashlar. These will help you out while trading in various segments. Let’s have a look at them:

1. Equity Trading

ASHLAR provides you with an opportunity to trade in both NSE and BSE segment. These are the details for exposure in Intraday and Delivery trading:

• Intraday: Basically it involves opening and closing on the same day itself. In this segment, ASHLAR is providing leverage up to 60 times in Equity. Basically you need to place orders with the product types MIS/MISS/BO/CO. The leverages provided here are as per the brokerage plan selected by you and the segment of the stock you want to trade in.
• Delivery:
  • Delivery trading involves holding stocks overnight. Here in this section, you can expect to have leveraged up to 1 times in Equity.
  • The orders for delivery trades can also be placed in CNC/NRML with 1X leverage.
  • The leverages are provided as per the brokerage plan selected by you and the category of stock you are trading in.
  • You can have a look at our Margin Calculator for leverage in Equity segment here.

2. Future & Option Trading (Equity Stocks and Index)

• Intraday
  • ASHLAR is providing leverage up to 20 times in Future Contracts in Bracket Order (BO) and Cover Order (CO), and up to 30 times in Margin Intraday Square-Off (MIS)/MISS, depending upon the brokerage plan chosen by you.
  • Whereas, in Option Writing/Selling up to 30 times leverage is provided in Margin Intraday Square-Off (MIS)/MISS, depending upon the brokerage plan chosen by you.
  • In Option buying, up to 3 times leverage is available in Bracket Order (BO).
  • As you know, higher leverages for trading in any segment, especially in MIS/MISS (where pre-defined stop loss are not essentially to be placed) has to be used meticulously. Thus, by default up to 10 times leverage in MIS/MISS is being enabled on activation of account, as per the brokerage plan chosen. However, if you are an active trader and scalper, it can be increased further, subjected to consent for MTM Square-Off being sent along with welcome letter on account opening.
• Carry Forward
  • According to the various guidelines mentioned by the exchanges, the full margin, known as the span margin or initial margin plus exposure margin will be required to take overnight position or to carry forward the position till expiry. You need to maintain the stipulated margin as per the exchange on daily basis, to avoid any penalties for short fall.
  • The orders have to be placed in product type NRML.
  • You can check our Margin Calculator for leverage in Futures and Options segment here.

3. Future & Option Trading (Currency)

• Intraday
  • We are providing up to 5 times leverage in currency futures and option writing, as per the brokerage plan selected by the client.
  • The leverages will be available in the product type MIS/MISS.
• Carry Forward
  • As per exchange’s guidelines, the full margin, which is span margin or initial margin plus exposure margin will be required to take overnight position or to carry the position till expiry. The client needs to maintain the stipulated margin as per the exchange on daily basis, to avoid any penalties for short fall.
  • The orders have to be placed in product type NRML.
  • You can check our Margin Calculator for leverage Currency segment here.

4. Future & Option Trading (Commodity)

• Intraday
  • Here you will get leverage up to 5 times in commodity futures and option writing. The leverage basically depends on the brokerage plan selected by you.
  • You need to place orders with the product type as MIS/MISS, to avail the stipulated leverage.
  • However, we are providing leverage up to 6 times in BO/CO type only in Futures.
• Carry Forward
  • As per exchange’s guidelines, the full margin, which is span margin or initial margin plus exposure margin will be required to take overnight position or to carry the position till expiry. The client needs to maintain the stipulated margin as per the exchange on daily basis to avoid any penalties for short fall.
  • The orders have to be placed in product type NRML.
  • You can check our Margin Calculator for leverage Commodity segment here.

5. IMPORTANT

• The positions will be squared off at a MTM loss of 70%*, without the requirement of a margin call in case of volatile market. However margin / intimation call will be given 40% to 60% of total available margin. In case of a loss of 70% of your funds, the positions will be automatically squared off by our RMS Team.
• For this purpose, calls to be made on registered mobile no. / emails sent to the registered mail address.
• *On the subsequent market volatility margin call can be given after square off the outstanding position.
• In case of square off the positions best efforts to be made to leave open positions to the extent that could ordinarily be carried forward as per norms on the available free balance after setting aside the MTM Loss for the day till 3:00 pm.
• While closing out, the positions with highest margin / highest MTM Loss will be closed off first.
• *In case you get a special leverage, the positions will be squared off at 50-70% MTM Loss. This is done to reduce the risk of the client in cases of high volatility in the market. The market is uncertain. It’s better to play a safe game than repenting later on.
• In case of special leverages, separate consent for MTM will be required from you.
• The MIS/MISS/BO/CO trades need to be squared off on the same day, by you, by 3.15 p.m. In case, you have not squared off the position, the same will be done by the RMS Team after the mentioned time. In case of currency, it will be done at 4:45 pm whereas when commodity is concerned, the squaring off is done at 11:15 pm in winters and 11:40pm in summers.
• Thus, generally the squaring off is done at the time 15 minutes earlier than the market closing time.
• *Note: Intraday square off timings can change based on the discretion of our risk management department.
• Although, we square off all MIS/MISS trades automatically after 3:15 pm, the responsibility of squaring off the position lies with you. If the position is not squared off, the same will be converted from MIS/MISS to CNC/NRML. This will be squared off by the RMS Team on the next trading day, without the requirement of margin call, if the required fund is not available in the client’s account.
• Member may transfer the unpaid client securities from pool/unpaid securities Demat account to client’s Demat account in accordance with its Risk Management (RMS) Policy
• As the SEBI circular mandates liquidation of securities in case of non-payment within 5 days from the pay-out date, no pre-order confirmation is required.

Margin of Safety:

The positions cannot be carried forward, in case of loss of 30% of the client’s total fund.

Also, the client has to maintain Margin of Safety/upfront margin, in case of equity delivery. The non-maintenance of the same will lead to squaring off the position/holding automatically by the RMS Team, without the requirement of margin call.

The same is done to maintain risk in case of volatility in the market or in the particular stock taken by the client.

*Margin of safety = (Net Cash Available *100)/ Total Holdings

Net Cash Available = Value of shares after haircut – Debit in Ledger

Margin reporting and Margin Pledge

There are two major regulatory changes from Sep 1st, 2020:

• The method of pledging stocks, and
• Upfront margin requirements (Stocks and F&O on NSE, BSE, MCX)

New pledging system

Until now, when you pledged stocks as collateral to receive margins for trading, you had to move it from your Demat account to the broker and in turn to the clearing corporation. Going forward, the stock will continue to remain in your Demat account and can be directly pledged to the clearing corporation. In the new process of PLEDGE, you will get OTP SMS from NSDL/CDSL. The process of pledge will be completed only after confirming the OTP and only then the shares will be pledged and margin benefit against shares will be given.

And for releasing the shares you have to place a upfront request with broker before selling them so that releasing request can further be placed with CM/CC. if request is not placed on time and auction happens then you will have to bear the loss.

Holdings sold can be used to trade F&O

As it is now, you will be able to sell your stock holdings and use the proceeds to enter F&O trades immediately. This is again possible after the clarification from exchanges that Early Pay in (EPI) of stocks sold can be considered as margin, both for new stock and F&O trades.

Sale proceeds from holdings can be used to take new positions

If we debit shares from your Demat and make an early pay in to the exchange on the day it is sold you can continue using the full value of sale proceeds from your stock holdings as soon as you exit them to enter new positions — other stocks or F&O positions. Nothing will change for you as a client

T1 holdings

To sell T1 holdings (stocks bought the previous day and yet to be credited to your Demat) you need VAR, ELM, ADHOC margin. Credit for sell will not be available against T1 selling.

Intraday profits can be used for new positions only after it is settled

Currently, you can use intraday realized profits for taking new positions on the same trading day. Going forward, you will be able to use it only after 2 days (1day) in case of equity/stocks and the next day in case of F&O. This is because the settlement cycle for equity is 2 days and 1 day for F&O, which is when the profits get credited to your account from the exchange only then. So intraday equity profits earned on a Monday can be used to trade more only on Wednesday (Tuesday), and intraday F&O profits earned on Monday can be used to trade more only on Tuesday.

Option sell credit can be used only to buy options on the same trading day

When you exit your long/buy option positions or enter new write/short options, the proceeds or credit of option premium can be used for only new long/buy option trades on the same trading day and only within the same segment (proceeds from equity options can’t be used for currency or vice versa). You can use this proceeds or option credit for all other types of trades only from the next trading day.

Intraday leverages for now remain the way it was before.

Summary of the changes in the below table:

OTHER

• AP cheques will be treated as confirmed subject to 1 time of his security deposit.
• Defaulter List shall be reviewed on monthly basis and client may be removed from defaulter list on review by APs.
• Payment control Report for debit recovery from the clients is made on daily basis and follow-up for the payment on regular basis done by Concern department.
• All sticky client codes to be brought in the knowledge of management regularly.

*Note: Intraday square off timings can change based on the discretion of our risk management department.

A Call & Trade charge of ₹20 + GST will be applicable for all positions squared off by our RMS desk, including auto square off.

If any intraday position or an MIS trade is not squared off on the same day due to any link or system failure or any risks associated with internet/wireless based trading which may occur at the end of the Client, Ashlar or the respective Exchange, it shall be treated as a Cash and Carry ("CNC") or NRML position and carried forward to the next trading day. In case of such a situation arising, the onus of squaring off the position will be on the Client. Our RMS desk shall square off any such position, without the requirement of a margin call, if the necessary cash is not available in the Client's account.

(without the margin call)

• Positions which do not have sufficient funds can be cut any time at the discretion of our RMS desk. There will be no margin calls (with margin call)or intimation from our RMS desk.
• Any open positions can be squared off at the discretion of our RMS desk If the funds available in your account are short of exchange specified margins. There will be no margin call before the position is squared off. During times of extreme volatility, the loss could be more than the funds available in your account before the position is squared off. All resulting charges or debts that might occur from such square offs will have to be borne by the client.
• All BO, CO and MIS positions will automatically be squared off at the end of the each trading day.
• Fines levied by the exchange for (beyong b short margin will be payable by the client.

All information mentioned here is subject to change at the discretion of our Risk management team.

* Limits can be changed without any prior notice by risk management department in case of expected market volatility.

• Option Premium benefit is not provided until expiry for trading.
• Due diligence is being taken by the RMS Department in accordance to the risk of the client due to high leverages. However there is no guarantee or warranty that positions will be auto squared off in time, due to extreme volatility, any loss in such case have to be borne solely by the client.
• In case client request for pay-out and his/her position gets squared off due to auto squared off mode client will be responsible for his Loss.

Note

Risks pertaining to commodity options that devolves into futures on expiry:

• All open options contract will be devolved into futures on the expiry date of the options contract.
• The exchange blocks a margin equivalent to 25% of the margin required to hold the devolved future contract 2 days before expiry and 50% of the margin, 1 day before expiry.
• Failure to produce the margin in the trading account can lead to a square-off of open positions at the discretion of the RMS team.
• The margin block will be applicable for contracts part of the exchange’s sensitivity report.
• ASHLAR may also consider imposing additional margins apart from the ones described above from time to time.

If any intraday position or an MIS/MISS trade is not squared off on the same day due to any link or system failure or any risks associated with internet/wireless based trading which may occur at the end of the Client, Ashlar or the respective Exchange, it shall be treated as a Cash and Carry ("CNC") or NRML position and carried forward to the next trading day. In case of such a situation arising, the onus of squaring off the position will be on the Client. Our RMS desk shall square off any such position, without the requirement of a margin call, if the necessary cash is not available in the Client's account.

• An order placement charge of Rs.20 plus GST will be levied for all OFS, Buyback and Takeover orders placed through Ashlar.
• Option premium received from writing options will not be considered as Cash/Capital.
• BO/CO not available on currency options.
• BO/CO Order is not available for stock options.
• Positions which do not have sufficient funds can be cut any time at the discretion of our RMS desk. There will be no margin calls or intimation from our RMS desk.
• Any open positions can be squared off at the discretion of our RMS desk if the funds available in your account are short of exchange specified margins. There will be no margin call before the position is squared off. During times of extreme volatility, the loss could be more than the funds available in your account before the position is squared off. All resulting charges or debts that might occur from such square offs will have to be borne by the client.
• Collateral margin will not be considered for equity delivery positions.
• All BO, CO and MIS/MISS positions will automatically be squared off at the end of the each trading day.
• Trading in MCX contracts will be banned a day prior to the delivery intention period.
• Basket /Cover/MIS orders will only allowed in Future listed stocks.
• Fines levied by the exchange for short margin will be payable by the client.
• Clients will have to ensure all CO, MiS/MISS, and intraday products are closed by the EOD.
• Payments will only be accepted from the client’s registered bank account; cash and DD pay-in are not accepted.
• Commodities with staggered delivery will be closed 10 days prior to the delivery date in order to avoid physical delivery, also commodities with compulsory delivery will be closed a day before their respective delivery intention periods.
• On the start of the delivery intention period, clients will not be informed before closing any open positions to avoid compulsory delivery notice. Clients are advised to close their positions well in advance.
• For Commodities, on the start of delivery intention period, no contract will be available under MIS/MISS or CO product type.
• Physical Delivery of Commodities is not allowed.
• Collateral margins
• For all pledge requests placed before 4:00 PM, the collateral margin will be available to trade on T+1 day (next working day). All requests placed after 4:00 PM will be processed only on the next working day.
• Margins will be provided after the applicable haircut. A haircut of 20% would mean that if you pledged stocks worth Rs 1 lakh, Rs 80,000 (80% of 1 lakh) will be added as collateral margin to your trading account.
• You will be able to use this entire margin after haircut for taking intraday or overnight positions in Futures, and for writing Options of equities, indices, and currencies.
• Exchanges stipulate that for overnight F&O positions, 50% of the margin needs to compulsorily come in cash and the remaining 50% can be in terms of collateral margin. If you don’t have enough cash, your account will be in debit balance and delayed payment (interest) charges will be applicable on the debit amount. So, if you take a position that requires a margin of Rs 1 lakh, you will need at least Rs 50,000 in cash irrespective of how much collateral margin you have. Assuming you don’t have Rs 50,000, whatever you are short by will be the debit balance for the day, and delayed payment (interest) charges will be applicable for that amount.
• Reserves the right to liquidate any stock in case debit arises in the client's account and subsequent nonpayment of such debits.
• Option Premium benefit is not provided until expiry for trading.
• Due diligence is being taken by the RMS Department in accordance to the risk of the client due to high leverages. However there is no guarantee or warranty that positions will be auto squared off in time, due to extreme volatility, any loss in such case have to be borne solely by the client.
• In case client request for payout and his/her position gets squared off due to auto squared off mode client will be responsible for his Loss.

All information mentioned here is subject to change at the discretion of our Risk management team.

Surveillance Policy

Introduction

In accordance with BSE Notice No 20130307-21 dated March 07, 2013, NSE Circular No NSE/INVG/22908 dated March 07, 2013 and MCX-SX Circular No. MCX-SX/ID/1053/2013 dated March 08, 2013 trading members are required to frame surveillance policy for handling effective monitoring of trading activity of client. The company has laid down policy guidelines which have been framed in the light of above said circular, we are adopting and implementing this surveillance policy applicable to all clients of Ashlar Securities Pvt Ltd.

The policy has been approved by its Board of Directors in Board Meeting held on 18/04/2013 at the Registered Office of the company.

What is Surveillance?

Surveillance is the Process of collecting and analyzing information concerning markets in order to detect unfair transactions that may violate securities related laws, rules and regulations. In order to ensure investor protection and to safeguard the integrity of the markets. It is imperative to have in place an effective market surveillance mechanism. The main objective of surveillance function is to help maintain a fair and efficient market for securities.

Objective

• To establish a surveillance mechanisms and controls in the operations /trading activity of Ashlar Securities Pvt Ltd clients.
• To put in place appropriate controls for the detection and reporting of suspicious trading activities in accordance with applicable laws/laid down procedures.
• To comply with applicable laws and regulatory guidelines.

Policy

Duties and Responsibilities

This Surveillance policy is approved by the Board of Directors of Ashlar Securities Pvt Ltd and A quarterly MIS shall be put up to the Board on the number of alerts pending at the beginning of the quarter, generated during the quarter, disposed off during the quarter and pending at the end of the quarter. Further, reasons for pendency along with appropriate action taken to resolve them shall be discussed. Board shall be apprised of any exception noticed during the disposition of alerts.

Designated directors/ Compliance officer shall be the responsible for all surveillance activities carried out by Ashlar Securities Pvt Ltd, maintenance of record and reporting of such activities.

Internal auditor of Ashlar Securities Pvt Ltd shall review the surveillance policy, its implementation, effectiveness and the alerts generated during the period of audit. Internal auditor shall record the observation with respect to the same in their report.

Receipt of Transaction Alerts from Exchanges

In order to facilitate effective surveillance mechanisms, Ashlar Securities Pvt Ltd surveillance desk shall download Transactional alerts to effectively monitor the trading activity of Client(s) provided by the exchange.

Types of Transactional Alerts provided by Exchange are as follow:

The Exchanges provides transactional alerts through:

• BSE – Alerts can be downloaded by log-in into e-Boss Surveillance System.
• NSE – Alerts can be downloaded by log-in into NSE SURVEILLANCE BOARD.
• MCX-SX – Alerts can be downloaded through SFTP Root Path\Trading member ID\Data Folder

Suspicious /Manipulative activity identification and reporting process

Suspicious /Manipulative activity identification and reporting process include gathering of client activity, seeking documentary evidences of required, monitoring the trading activates, record maintenance and reporting.

Clients Due Diligence

Ashlar Securities Pvt Ltd shall carry out the Due Diligence of client(s) on a continuous basis and shall update all the KYC parameters as prescribed by SEBI and latest information of the client in Unique Client Code (UCC) database of the Exchange.

• Implementing Anti Money Laundering Policy Vis a Vis KYC standard for New Clients Acceptance and implementing high standard of due diligence process.
• Periodic updating of client database and having system to do continuous client due diligence.
• Identification of Beneficial Ownership
• Bank/Demat transaction details
• Identification of Multiple Accounts/common Accounts/ group of Clients
• Analyzing common emails, mobile numbers, address and other linkages
• Other publicly available information

Analysis Client Activity:

Client’s/ Group of Client(s) trading pattern or activity or scrips identified shall be analysed based on Alert received /generated through exchanges system.

• Ashlar Securities Pvt Ltd shall require explanation from such identified Client(s) / Group of Client(s) for entering into such transactions as enclosed the Format (Form No. - A).
• Ashlar Securities Pvt Ltd shall require documentary evidence such as bank statement / demat transaction statement or any other documents. In case of funds, Ashlar Securities Pvt Ltd shall require Bank statements of the Client(s) / Group of Client(s) from which funds pay-in have been met, to be sought. In case of securities, Ashlar Securities Pvt Ltd shall require demat account statements of the Client(s) / Group of Client(s) from which securities pay-in has been met, to be sought.
• Note*
  • The period for such statements may be at least +/- 15 days from the date of transactions to verify whether the funds / securities for the settlement of such trades actually belongs to the client for whom the trades were transacted.
• Ashlar Securities Pvt Ltd shall analyze the documentary evidences, including the bank / demat statement; Ashlar Securities Pvt Ltd shall record its observations for such identified transactions or Client(s) / Group of Client(s).
• In case adverse observations are recorded, Ashlar Securities Pvt Ltd shall report all such instances to the Exchange within 45 days of the alert generation, the alerts shall be disposed off, and in case of any delay in disposition, reason for the same shall be recorded.
• In case of extension is required, Ashlar Securities Pvt Ltd shall send a request to exchange for a period of extension.
• If explanation on the same shall not satisfactory / reply shall not receive within time period as above mentioned then Ashlar Securities Pvt Ltd suspend the client from trading / report the instance to Regulators (if suspicious).

(Form No. - A)

To,

Client Name :

Client Address :

Sub.: Alert received from (Exchange Name) in respect of your trading during the period from _________ to _________.

Dear Sir,

With reference to above, please note that we have received following alert form the exchange in respect of your trading activity during the period from___________ to _______________.

In this regard you are requested to clarify the following:

• Basis of Investment
• Objectives of Investment
• Source of funds used for making the Investment
• Whether such investment is based on any research report if so please provide the detail.
• Reason for sudden increase in turnover
• Whether you are related party to the Investee Company? If yes, please provide complete details of such relation.

Further you are requested to provide self-attested copy of Bank Account Statement and Demat Account Transaction Statement for the period from __________ to ____________ along with any other relevant document within seven days from the date of this letter.

Please note that your failure to submit reasonable explanation and required documentary evidence within above said time may lead to suspension of trading facility in your account.

POLICY FRAMEWORK FOR IMPLEMENTATION OF THE PROVISIONS OF PREVENTION AND MONEY LAUNDERING ACT (PMLA) 2002

Introduction

The Prevention of Money Laundering Act, 2002 (PMLA) came in force with effect from 1st July 2005.

As per the provisions of the PMLA, each market intermediary (Reporting Entity) (which includes a stockbroker, sub-broker, share transfer agent, banker to an issue, trustee to a trust deed, registrar to an issue, asset management company, depositary participant, merchant banker, underwriter, portfolio manager, investment adviser and any other intermediary associated with the securities market and registered under Section 12 of the Securities and Exchange Board of India Act, 1992 (SEBI Act) shall have to adhere to client account opening procedures and maintain records of such “transactions” as prescribed by the PMLA and Rules notified there under.

Obligations of a “Reporting Entity” includes:-

• to maintain a record of all transactions covered as per the nature and value of which may be prescribed, in such manner as to enable it to reconstruct individual transactions
• furnish to the Partner (FIU) within such time as may be prescribed information relating to such transactions, whether attempted or executed, the nature and value of which may be prescribed
• verify the identity of its clients in such manner and subject to such conditions as may be prescribed
• identify the beneficial owner, if any, of such of its clients, as may be prescribed
• maintain record of documents evidencing identity of its clients and beneficial owners, account files and business correspondence relating to its clients and information related to transactions for specified period.

For the purpose of PMLA, transactions include:

• all cash transactions of the value of more than Rs.10 Lakhs or its equivalent in foreign currency.
• all series of cash transactions integrally connected to each other, which have been valued below Rs.10 Lakhs or its equivalent in foreign currency, such series of transactions within one calendar month.
• all suspicious transactions (remotely / integrally connected or related), whether or not made in cash and including, inter-alia, credits or debits into from any non-monetary account such as Demat account, security account maintained by the registered intermediary.

Further, In case there is a variance in CDD/AML standards prescribed by SEBI and the regulators of the host country, branches/overseas subsidiaries of intermediaries are required to adopt the more stringent requirements of the two.

For the purpose “Suspicions Transaction” means a transaction whether or not ma de in cash which to a person acting in good faith:–

• gives rise to a reasonable ground of suspicion that it may involve proceeds of an offence specified in the Schedule to the Act, regardless of the value involved; or
• appears to be made in circumstances of unusual or unjustified complexity; or
• appears to have no economic rationale or bonafide purpose; or
• gives rise to a reasonable ground of suspicion that it may involve financing of the activities relating to terrorism;

The Anti-Money Laundering Guidelines provides a general background on the subjects of money laundering and terrorist financing in India and provides guidance on the practical implications of the PMLA. The PMLA Guidelines sets out the steps that a registered intermediary and any of its representatives, need to implement to identify and discourage any “Money Laundering” (ML) or “Terrorist Financing” activities.

SEBI has issued various directives vide circulars, from time to time, covering issues related to Know Your Client (KYC) norms, Anti- Money Laundering (AML), Client Due Diligence (CDD) and Combating Financing of Terrorism (CFT). The directives lay down the minimum requirements and it is emphasized that the intermediaries may, according to their requirements, specify additional disclosures to be made by clients to address concerns of money laundering and suspicious transactions undertaken by clients.

While it is recognized that a “one-size-fits-all” approach may not be appropriate for the securities industry in India, each registered intermediary is required to implement suggested measures and procedures considering the specific nature of its business, organizational structure, type of clients and transactions, etc. to ensure that they are effectively applied.

Global measures taken to combat drug trafficking, terrorism and other organized and serious crimes have all emphasized the need for financial institutions, including securities market intermediaries, to establish internal procedures that effectively serve to prevent and impede money laundering and terrorist financing.

To be in compliance with these obligations, the senior management of a registered intermediary shall be fully committed to establishing appropriate policies and procedures for the prevention of ML and TF and ensuring their effectiveness and compliance with all relevant legal and regulatory requirements.

The obligations of an intermediary under Prevention of Money Laundering Act, 2002 (PLMA) includes:-

• issuance and adoption of written policy statement, on a group basis(wherever applicable), for dealing with the risk of MF and TF within the framework of current statutory and regulatory requirements,
• ensuring that these directives and contents of policy is understood by all staff members,
• regular review of policy and procedures of prevention of ML & TF and to ensure that such reviews are conducted by the person other that the one framing the policy,
• adoption of client acceptance policies and procedures which are sensitive to the risk of MF & TF,
• undertaking client due diligence measures to an extent that is sensitive to the risk of ML & TF
• compliance with relevant statutory and regulatory requirements
• have system in place for identification, monitoring and reporting of suspected ML and TF transactions to concerned authorities
• co-operation with relevant law enforcement authorities and timely disclosure of information
• defining the role of internal auditors to ensure compliance of policies, procedures and control to prevent money laundering.

Accordingly, we have drafted this written policy framework (hereinafter called as “PMLA Policy”) for Ashlar Securities for policy which aims to have a system in place to identify, monitor and reporting the suspected money laundering or terrorist financing transactions to law enforcing authorities within the framework of current statutory and regulatory requirements.

All concerned are hereby advised to ensure that every possible measures are taken for the effective implementation of this Policy and that the measures taken are adequate, appropriate and abide by the spirit and requirements as enshrined in the PMLA.

Detailed PMLA Policy Framework

• Principal Officer:
  • To ensure effective discharge of our legal obligations to report suspicious transactions to the authorities, we hereby appoint the “Principal Officer” who would act as a central reference point for the identification and assessment of potentially suspicious transactions and in facilitating onward reporting of suspicious transactions to FIU.
  • Complete Details of Principle are as given below:-
    • Name : Ankit Garg
    • Designation : Director
    • Contact No : 0120-6633300
    • Email : ankit.garg@ashlarindia.com
  • Rights and Obligations of Principle Officer:
    • The principal office shall have all time access to customer identification data and other CDD information.
    • The principal officer shall have complete independence and authority to access and is able to report to Senior Management or his/her next reporting level or the Board of Partners.
  • Responsibilities:
    • The Principal Officer shall ensure that:
    • a. the Board approved PMLA Policy framework is implemented effectively.
    • b. systems generated data based on set parameters is regularly and promptly downloaded to analyze, identify and report transactions of suspicious nature to FIU-IND directly
    • c. group responds promptly to any request for information, including KYC related information maintained by us, made by the regulators, FIU-IND and other statutory authorities.
    • d. group`s staff members and associates are trained to address issues related to the application of the PMLA.
    • e. the staff selection and training process complies with the PMLA Policy.
    • f. group and all concerned staff is regularly updated regarding any changes / additions / modifications in PMLA provisions.
• Appointment of Designated Partner
  • For ensuring overall supervision and compliance with the obligations imposed under chapter IV of the Act and the Rules the group has appointed the “Designated Partner”. The details of the designated Partner are as given below:-
  • Name : Ankit Garg
  • Designation : Director
  • Contact No : 0120-6633300
  • Email : ankit.garg@ashlarindia.com
• Client Due Diligence Measures (CDD Measures)
  • The CDD measures comprise the following:
  • Obtain sufficient information in order to identify persons who beneficially own or control the securities account. Whenever it is apparent that the securities acquired or maintained through an account are beneficially owned by a party other than the client, that party shall be identified using client identification and verification procedures.
  • Verify the client’s identity using reliable, independent source documents, data or information;
  • Identify beneficial ownership and control, i.e. determine which individual(s) ultimately own(s) or control(s) the client and/or the person on whose behalf a transaction is being conducted;
  • Suggestive measures for identification of beneficial ownership are as given below:-
  • For clients other than individuals or trusts:
    • Where the client is a person other than an individual or trust, viz., company, partnership or unincorporated association/body of individuals, identification of beneficial owners of the client may be done by applying following measures namely;
    • ascertain the identity of the natural person, who, whether acting alone or together, or through one or more juridical person, exercises control through ownership or who ultimately has a controlling ownership interest.
    • Explanation: Controlling ownership interest means ownership of/entitlement to:
      • more than 25% of shares or capital or profits of the juridical person, where the juridical person is a company;
      • more than 15% of the capital or profits of the juridical person, where the juridical person is a partnership; or
      • more than 15% of the property or capital or profits of the juridical person, where the juridical person is an unincorporated association or body of individuals.
    • In cases where there exists doubt as to whether the person with the controlling ownership interest is the beneficial owner or where no natural person exerts control through ownership interests, the identity of the natural person exercising control over the juridical person through other means.
    • Explanation: Control through other means can be exercised through voting rights, agreement, arrangements or in any other manner.
    • Where no natural person is identified under clauses mentioned above, the identity of the relevant natural person who holds the position of senior managing official.
  • For client which is a trust:
    • Where the client is a trust, the beneficial ownership of the client shall be identifying by taking reasonable measures to verify the identity of the settler of the trust, the trustee, the protector, the beneficiaries with 15% or more interest in the trust and any other natural person exercising ultimate effective control over the trust through a chain of control or ownership.
  • Exemption in case of listed companies:
    • Where the client or the owner of the controlling interest is a company listed on a stock exchange, or is a majority-owned subsidiary of such a company, it is not necessary to identify and verify the identity of any shareholder or beneficial owner of such companies.
  • Applicability for foreign investors:
    • for dealing with foreign investors’, clarifications issued vide SEBI circulars CIR/MIRSD/11/2012 dated September 5, 2012 and CIR/ MIRSD/ 07/ 2013 dated September 12, 2013, for the purpose of identification of beneficial ownership of the client shall be followed.
  • Verify the identity of the beneficial owner of the client and/or the person on whose behalf a transaction is being conducted, corroborating the information provided in relation to (c);
  • Understand the ownership and control structure of the client;
  • Conduct ongoing due diligence and scrutiny, i.e. Perform ongoing scrutiny of the transactions and account throughout the course of the business relationship to ensure that the transactions being conducted are consistent with the registered intermediary’s knowledge of the client, its business and risk profile, taking into account, where necessary, the client’s source of funds; and
  • All documents, data or information of all clients and beneficial owners collected under the CDD process shall be periodically updated.
  • Reliance on third party for carrying out due diligence
    • We may rely on a third party for the purpose of
    • identification and verification of the identity of a client and
    • where the client is acting on behalf of a beneficial owner, identification of the beneficial owner and verification of the identity of the beneficial owner.
    • provided such third party is regulated, supervised or monitored by SEBI, and have measures in place for compliance with CDD and record-keeping requirements in line with the obligations under the PML Act.
    • However as a registered intermediary we shall be ultimately responsible for CDD and undertaking enhanced due diligence measures.
• Policy for acceptance of Clients
  • Our client acceptance policies and procedures aims to identify the types of clients that are likely to pose a higher than average risk of ML or TF so that we will be in a better position to apply client due diligence on a risk sensitive basis depending on the type of client business relationship or transactions.
  • In nutshell the following safeguards are to be followed while accepting the clients namely;
    • No account is opened in a fictitious / benami name or on an anonymous basis.
    • Each client shall be classified into low or medium or high risk categories depending upon the risk perception.
    • Such risk categorization may be arrived considering various factors of risk perception of the client having regard to:-
      • clients’ location (registered office address, correspondence addresses and other addresses if applicable),
      • nature of business activity, trading turnover etc. and
      • manner of making payment for transactions undertaken.
    • Clients of Special Category (CSC) (as defined later in this policy) may, if necessary, be classified even higher. Such clients require higher degree of due diligence and regular update of Know Your Client (KYC) profile.
    • Documentation requirements and other information to be collected in respect of different classes of clients depending on the perceived risk and having regard to the requirements of Rule 9 of the PML Rules, Directives and Circulars issued by SEBI from time to time.
    • We must obtain documentary evidence of each KYC information provided by the client and verify each such supporting document with originals prior to acceptance of a copy and same be stamped “Verified with the original” and each client must be met in person before registration.
    • In case where online e-KYC process is being used, KYC can be completed through online / App based KYC, by carrying out in-person verification through video, online submission of Officially Valid Document (OVD) / other documents under eSign.
    • The investor visits the website/App/digital platform and fills up the online KYC form and submits requisite documents online The name, photograph, address, mobile number, email ID, Bank details of the investor shall be captured online and OVD / PAN / signed cancelled cheque shall be provided as a photo / scan of the original under eSign and the same shall be verified as under:-
      • Mobile and email is verified through One Time Password (OTP)
      • Aadhaar is verified through UIDAIs authentication / verification mechanism, further where the investor submits his Aadhaar number, ensure that such investor to redact or blackout
      • PAN is verified online using the Income Tax Database
      • Bank account details are verified by Penny Drop mechanism or any other mechanism using API of the Bank.
      • OVDs (such as Passport, Driving License, Voter Card, Proof of possession of Aadhar , NAREGA Job Card, Letter issued by the National Population Register containing details of name, address etc) other than Aadhaar shall be submitted through DigiLocker / under eSign mechanism
    • The original seen and verified requirement under SEBI circular no. MIRSD/SE/Cir-21/2011 dated October, 5 2011 for OVD would be met where the investor provides the OVD in the following manner:
      • As a clear photograph or scanned copy of the original OVD, through the eSign mechanism, or;
      • As digitally signed document of the OVD, issued to the DigiLocker by the issuing authority.
    • Further the PV/ VIPV would not be required when the KYC of the investor is completed using the Aadhaar authentication / verification of UIDAI or when the KYC form has been submitted online, documents have been provided through DigiLocker or any other source which could be verified online.
    • While carrying out VIPV, following requirements to be kept in mind:-
      • The activity log along with the credentials of the person performing the VIPV shall be stored for easy retrieval
      • IPV shall be in a live environment, clear and still, the investor in the video shall be easily recognisable and shall not be covering their face in any manner.
      • IPV process shall include random question and response from the investor including displaying the OVD, KYC form and signature or could also be confirmed by an OTP
      • Photograph of the customer downloaded through the Aadhaar authentication / verification process matches with the investor in the VIPV
    • The information collected by us should be enough to satisfy competent authorities (regulatory / enforcement authorities) in future that due diligence was observed by us in compliance with the Guidelines.
    • A complete identification record of person doing the In-person verification and verification of documents must be kept in readily available manner.
  • We should not open an account where we are unable to apply appropriate CDD measures / KYC policies. This shall be applicable in cases where it is not possible to ascertain the identity of the client, or the information provided by the client is suspected to be non-genuine, or there is perceived non co-operation of the client in providing full and complete information.
  • We shall not continue to do business with such a person and file a suspicious activity report. We shall also evaluate whether there is suspicious any trading in determining whether to freeze or close the account. We shall be cautious to ensure that we do not return securities or money that may be from suspicious trades.
  • Further, we shall consult the relevant authorities in determining what action we shall take when we suspects suspicious trading activity.

e. We shall ensure that in case of individual client only the client himself/ herself be allowed to transact on his/her own behalf. A person may be allowed to deal on behalf of his / her spouse, dependent children or dependent parents provided a written authorization is obtained from concerned family member.

In case of non-individual clients only the person(s) having appropriate written authorization are allowed to deal for and on behalf of the client.

In all the cases, we must obtain the identification documents of the person so authorized to deal on behalf of the client and adequate verification of person’s authority to act on behalf of the client shall also be carried out.

The authorization letter should specify the manner in which the account shall be operated, transaction limits for the operation, additional authority (if any) required for transactions exceeding a specified quantity/value.

f. Before activating any account, we must ensure that the identity of the client does not match with any person having known criminal background or is not banned in any other manner, whether in terms of criminal or civil proceedings by any enforcement agency worldwide.

An updated list of individuals and entities which are subject to various sanction measures such as freezing of assets/accounts, denial of financial services etc., as approved by the Security Council Committee established pursuant to various United Nations' Security Council Resolutions (UNSCRs) can be accessed at its website at http://www.un.org.

g. The CDD process shall necessarily be revisited when there are suspicions of money laundering or financing of terrorism (ML/FT).

For the purpose of above and elsewhere used in this policy framework, Clients of Special Category (CSC) shall include:-

• i.) Non resident clients
• ii.) High net-worth clients unless known to Senior Management or introduced by a known source,
• iii.) Trust, Charities, Non-Governmental Organizations (NGOs) and organizations receiving donations
• iv.) Companies having close family shareholdings or beneficial ownership
• v.) Politically Exposed Persons (PEP) are individuals who are or have been entrusted with prominent public functions in a foreign country, e.g., Heads of States or of Governments, senior politicians, senior government/judicial/military officers, senior executives of state-owned corporations, important political party officials, etc.
• vi.) Companies offering foreign exchange offerings
• vii.) Clients in high risk countries where existence / effectiveness of money laundering controls is suspect, where there is unusual banking secrecy, countries active in narcotics production, countries where corruption (as per Transparency International Corruption Perception Index) is highly prevalent, countries against which government sanctions are applied, countries reputed to be any of the following – Havens/ sponsors of international terrorism, offshore financial centers, tax havens, countries where fraud is highly prevalent. While dealing with clients in high risk countries where the existence/effectiveness of money laundering control is suspect, intermediaries apart from being guided by the Financial Action Task Force (FATF) statements that identify countries that do not or insufficiently apply the FATF Recommendations, published by the FATF on its website (www.fatf- gafi.org), shall also independently access and consider other publicly available information.
• viii.) Non face to face clients
• ix.) Clients with dubious reputation as per public information available etc.

The above mentioned list is only illustrative and the independent judgment must be exercised to ascertain whether any other set of clients shall be classified as CSC or not.

5. Risk-Based Approach to KYC

Client acceptance is a critical activity in AML compliance. Registering any client means providing such client with an entry point to local and international financial systems. Client acceptance, thus, becomes the first step in controlling money laundering and terrorist financing.

Regulatory guidelines stipulate that a sound KYC program should determine the true identity and existence of the customer and the risk associated with the customer. It is therefore imperative that we capture information about their background, sources of funds, nature and type of business, domicile and financial products used by them and how these are delivered to them in order to properly understand their risk profile.

It is generally recognized that certain clients may be of a higher or lower risk category depending on the circumstances such as the client’s background, type of business relationship or transaction etc. The basic principle enshrined in this approach is that the registered intermediaries shall adopt an enhanced client due diligence process for higher risk categories of clients. Conversely, a simplified client due diligence process may be adopted for lower risk categories of clients.

In line with the risk-based approach, the type and amount of identification information and documents that we shall obtain necessarily depend on the risk category of a particular client and for this purpose clients may be classified into following categories namely;-

Category – A: Low Risk
Category – B: Medium Risk
Category – C: High Risk

Category “A” clients are those pose low or nil risk. These clients have a respectable and verifiable social and financial standing. Their KYC Information and financial details is easily verifiable.

Category “B” clients are those who mostly deals on intra-day basis or on speculative basis. These are the clients who maintain running account without making / withdrawing payment / deliveries frequently.

Category “C” clients are those who have defaulted in the past, have suspicious background or the clients identified as CSC.

Further, low risk profile shall not apply when there are suspicions of ML/FT or when other factors give rise to a belief that the customer does not in fact pose a low risk.

Any business relationship with “High Risk Clients” including clients identified as CSC must not be commenced unless approved by Senior Management Officials.

As customer risk rating and KYC drives enhanced due diligence and ongoing monitoring it is critical that an ongoing comprehensive assessment is conducted to understand the risks associated with our business and customers and necessary modifications and improvements in associated Client acceptance and Due Diligence Policies and Procedures are made.

Risk Assessment

We have formulated a periodic risk assessment mechanism to, identify money laundering and terrorist financing risk, assess and take effective measures to mitigate them with respect to our clients, countries or geographical areas, nature and volume of transactions, payment methods used by our clients, etc.

The risk assessment shall also take into account any country specific information that is circulated by the Government of India and SEBI from time to time, as well as, the updated list of individuals and entities who are subjected to sanction measures as required under the various United Nations' Security Council Resolutions (these can be accessed at the URL – http://www.un.org/sc/committees/1267/aq_sanctions_list.shtml and http://www.un.org/sc/ committees/1988/list.shtml) Our risk assessment process consider all the relevant factors before determining the level of overall risk and the appropriate level and type of mitigation to be applied and assessment is documented and updated regularly and made available to competent authorities and self-regulating bodies, as and when required.

6. Client Identification Procedures:-

We carry out client identification procedure at different stages i.e. while establishing the relationship with the client, while carrying out transactions for the client or when there is any doubt regarding the veracity or the adequacy of previously obtained client identification data.

• We shall identify whether their client or potential client or the beneficial owner of such client is a politically exposed person.

  Such procedures shall include seeking relevant information from the client, referring to publicly available information or accessing the commercial electronic databases of PEPS. Further, the enhanced CDD measures as outlined in clause 2.2.5 shall also be applicable where the beneficial owner of a client is a PEP.

• Senior management’s prior approval is mandatory for establishing business relationships with PEPs. Further, where a client has been accepted and the client or beneficial owner is subsequently found to be, or subsequently becomes a PEP, we shall obtain senior management approval to continue the business relationship.
• Reasonable measures to shall be taken to verify the sources of funds as well as the wealth of clients and beneficial owners identified as PEP.
• The client shall be identified by obtaining adequate information to satisfactorily establish the identity of each new client and the purpose of the intended nature of the relationship.
• Client`s information must be adequate enough to satisfy competent authorities (regulatory / enforcement authorities) in future that due diligence was observed by us in compliance with the directives. Each original document shall be seen prior to acceptance of a copy.
• Failure by prospective client to provide satisfactory evidence of identity shall be noted and reported to the Senior Management.
• We must follow SEBI prescribed minimum requirements relating to KYC for certain classes of registered intermediaries from time to time and conduct ongoing due diligence where inconsistencies in the information provided by the client are noticed.
• Irrespective of the amount of investment made by clients, no minimum threshold or exemption is available from obtaining the minimum information / documents from clients as stipulated in the PML Rules/ SEBI Circulars (as amended from time to time) regarding the verification of the records of the identity of any client and non-compliance shall attract appropriate sanctions / regulatory actions.
• The underlying objective shall be to follow the requirements enshrined in the PMLA, SEBI Act and Regulations, directives and circulars issued there under so that we are aware of the clients on whose behalf we are dealing.

7. Transaction based Monitoring and Identification of Suspicious Transactions

Ongoing monitoring is an essential element of effective KYC procedures. We can effectively control and reduce the risk only if we have an understanding of the normal and reasonable activity of the client so that they have the means of identifying transactions that fall outside the regular pattern of activity.

However, the extent of monitoring will depend on the risk sensitivity of the account.

Special attention is required to be given to all complex, unusually large transactions and all unusual patterns which have no apparent economic or visible lawful purpose.

For the purpose of monitoring of transaction under PMLA following should be taken care of:

• examine the background and the purpose of transactions which are complex or unusually large/ with patterns which appear to have no economic purpose
• transactions which exceed the limits specified for the relevant class of client accounts
• understanding of normal activity in client account to identify deviations and substantial increase in business without any apparent cause
• clients transferring large sums of money to/from overseas locations
• attempted transfer of proceeds to unrelated 3rd parties
• transactions of clients based in high risk jurisdictions
• Unusual transactions by CSCs and businesses undertaken by offshore banks / financial services, businesses reported to be in the nature of export- import of small items
• Random examination of a selection of transaction to comment on their nature

Broad category of triggers that will require the complete analysis of transaction may include:-

• Transactions involving Artificial Volume Creation / High Value Deals / Synchronized Trades
• client’s disproportionate volume with respect to his last known financial details
• scrip concentration-concentrated position in particular scrips which have un usual price or volumes
• high value off market transfer instructions
• high value transactions in a new/dormant account
• frequent small quantity transactions in an account
• transaction undertaken by client with respect to whom alerts raised by employees/media reports/ Enforcement Agency etc.
• transactions undertaken by customers for whom there are adverse media reports about criminal activities/terrorist activities / terrorist financing activities
• transaction undertaken by customers who offered false/forged identification documents / address found to be wrong

A list of circumstances which may be in the nature of suspicious transactions is given below. This list is only illustrative and whether a particular transaction is suspicious or not will depend upon the background, details of the transactions and other facts and circumstances:-

• Clients whose identity verification seems difficult or clients that appear not to cooperate
• Asset management services for clients where the source of the funds is not clear or not in keeping with clients’ apparent standing /business activity;
• Clients based in high risk jurisdictions;
• Substantial increases in business without apparent cause;
• Clients transferring large sums of money to or from overseas locations with instructions for payment in cash;
• Attempted transfer of investment proceeds to apparently unrelated third parties;
• Unusual transactions by CSCs and businesses undertaken by offshore banks/financial services, businesses reported to be in the nature of export- import of small items.

Findings of transaction analysis must be recorded in writing, as the same along with records and related documents may required to be provided to auditors, SEBI, Stock Exchanges, FIUIND, other relevant authorities during audits or as and when asked for.

These records are required to be maintained and preserved for a period of five years from the date of transaction between the client and intermediary.

8. Reporting of Suspicious Transactions

The Principal Officer would act as a central reference point in playing an active role in the identification and assessment of potentially suspicious transactions and facilitating onward reporting of suspicious transactions.

Accordingly, any potential suspicious transaction shall immediately be notified to Principle Officer which may be a detailed report with specific reference to the clients, transactions and the nature / reason of suspicion and for this purpose, transactions abandoned or aborted by clients on being asked to give some details or to provide documents are also to be reported even if not completed by clients, irrespective of the amount of the transaction.

We must ensure continuity in dealing with the reported client as normal until told otherwise and the client not be told of the report/suspicion i.e. group officials and employees shall be prohibited from “Tipping off” the fact that a STR or related information is being reported or provided to the FIU-IND.

The Principal Officer shall examine the transaction in details and if reaches to the conclusion that the notified transaction is “Suspicious” shall report the same to Financial Intelligence Unit (FIU) within 7 days from the date of arriving at such conclusion by filing the Suspicion Transaction Report (STR).

It is clarified that the STR must be filed irrespective of the amount of transaction and/or the threshold limit, if there are reasonable grounds to believe that the transactions involve proceeds of crime.

9. Record Keeping

We, as an SEBI registered Intermediary, shall maintain all the records to ensure compliance of requirements contained in SEBI Act 1992, Rules and Regulations made there under, PMLA as well as other relevant legislation, Rules, Regulations, Exchange Bye-laws and Circulars.

We are required to maintain such records as are sufficient to permit reconstruction of individual transactions (including the amounts and types of currencies involved, if any) so as to provide, if necessary, evidence for prosecution of criminal behavior.

Should there be any suspected drug related or other laundered money or terrorist property, the competent investigating authorities would need to trace through the audit trail for reconstructing a financial profile of the suspect account. To enable this reconstruction, we shall retain the following information for the accounts of their clients in order to maintain a satisfactory audit trail:

• the beneficial owner of the account;
• the volume of the funds flowing through the account; and
• for selected transactions:
  • the origin of the funds
  • the form in which the funds were offered or withdrawn, e.g. cheque, demand drafts etc
  • the identity of the person undertaking the transaction;
  • the destination of the funds;
  • the form of instruction and authority.

We shall ensure maintaining proper record of transactions namely:-

• all cash transactions of the value of more than rupees ten lakh or its equivalent in foreign currency;
• all series of cash transactions integrally connected to each other which have been valued below rupees ten lakh or its equivalent in foreign currency where such series of transactions have taken place within a month and the aggregate value of such transactions exceeds rupees ten lakh;
• all cash transactions where forged or counterfeit currency notes or bank notes have been used as genuine and where any forgery of a valuable security has taken place;
• all suspicious transactions whether or not made in cash and by way of as mentioned in the Rules

To enable this reconstruction, we need to retain the following information:-

• the nature of transaction
• the amount of transaction and the currency in which same was denominated
• the date on which the transaction was conducted and
• the parties to the transaction

Records to be maintained in a way that all client and transaction records and information are available on a timely basis to the competent investigating authorities.

10. Retention of Records

Following Document Retention Terms should be observed:

• All necessary records on transactions, both domestic and international, should be maintained at least for the minimum period of FIVE YEARS (5) from the date of cessation of the transaction.
• Records evidencing the identity of its clients and beneficial owners as well as account files and business correspondence shall be maintained and preserved for a period of FIVE YEARS (5) after the business relationship between a client and intermediary has ended or the account has been closed, whichever is later.
• In situations where the records relate to on-going investigation or transactions, which have been the subject of a suspicious transaction reporting, they should be retained until it is confirmed that the case has been closed.
• All necessary records of information related to transactions, whether attempted or executed, which are reported to the Partner, FIU-IND, as required under Rules 7 & 8 of the PML Rules, shall be maintained and preserved for a period of FIVE YEARS (5) from the date of the transaction between the client and the intermediary.

Records may be maintained in both hard and / or soft copies.

11. Training of staff/Employees

All the staff members involved in front office dealings, back office, KYC & Compliances, Risk Management or any kind of client dealings need to be adequately trained in AML and CFT (Combating Financing of Terrorism) procedures. They should fully understand the rationale behind these directives, obligations and requirements, implement them consistently and are sensitive to the risks of our systems being misused by unscrupulous elements.

Accordingly, we have an ongoing employee-training programme (in-house as well as sending employees for attending of independent training workshops) so that the concerned staff are adequately trained in AML and CFT procedures. These training programs are conducted on periodic basis and each of the concerned staff is required to attend atleast 2 such training programs each year.

Further, the Principle Officer is authorized to ensure that all the concerned staff is well versed with latest modifications in the PMLA policy framework and is adequately sensitized to the risks of ML & TF.

12. Employees Hiring

We have adequate screening procedures in place to ensure high standard when hiring employees. We have identified the key positions within the Company structure having regard to the risk of money laundering and terrorist financing.

The HR Department is instructed to verify the identity, cross check all the references, family background and should take adequate safeguards to establish the authenticity and genuineness of the persons before recruiting.

The department should obtain the following documents:

• Photographs
• Proof of address
• Identity proof
• Proof of Educational Qualification
• Proof of Bank Account Details

13. Investor’ Education

Implementation of AML/CFT measures requires us to demand certain information from investors which may be of personal nature or which have never been called for. Such information can include documents evidencing source of funds/income tax returns/bank records etc. This can sometimes lead to raising of questions by the clients with regard to the motive and purpose of collecting such information. We, therefore need to sensitize prospective client that these requirements emanating from AML and CFT framework.

This may either be done by preparing specific literature or by educating the clients/sub-brokers/Authorised Person on the objectives of the Anti Money Laundering (AML) / Combating Financing of Terrorism (CFT) programme.

14. Review of PMLA/CFT Procedures

The policy shall be reviewed periodically so as to incorporate the latest change(s) in the Anti Money Laundering Act 2002 or change in any other act, bye-lows, rules, regulations of SEBI, CBI or in any statutory and regulatory government department related to or affect to this.

Further the review of this policy framework shall be undertaken by the person other than the one who has framed this policy.

15. Procedure for freezing of funds, financial assets or economic resources or related services

Section 51A, of the Unlawful Activities (Prevention) Act, 1967 (UAPA), relating to the purpose of prevention of, and for coping with terrorist activities was brought into effect through UAPA Amendment Act, 2008. In this regard, the Central Government has issued an Order dated August 27, 2009 detailing the procedure for the implementation of Section 51A of the UAPA. Under the aforementioned Section, the Central Government is empowered to freeze, seize or attach funds and other financial assets or economic resources held by, on behalf of, or at the direction of the individuals or entities listed in the Schedule to the Order, or any other person engaged in or suspected to be engaged in terrorism. The Government is also further empowered to prohibit any individual or entity from making any funds, financial assets or economic resources or related services available for the benefit of the individuals or entities listed in the Schedule to the Order or any other person engaged in or suspected to be engaged in terrorism.

Accordingly, we need to ensure the effective and expeditious implementation of said Order has been issued vide SEBI Circular ref. no : ISD/AML/CIR-2/2009 dated October 23, 2009, which needs to be complied with scrupulously.

WRITEUP ON “PREVENTION OF ANTI MONEY LAUNDERING ACT 2002” FOR THE INFORMATION OF CUSTOMERS”

The Prevention of Money Laundering Act, 2002 (PMLA) was brought into force with effect from 1st July 2005. Necessary Notifications / Rules under the said Act were published in the Gazette of India on July 01, 2005.

The purpose of this act is to prevent financing of terrorism and to prevent laundering of money i.e. to legalize or channelize the money generated from illegal activities like drug trafficking, organized crimes, hawala rackets and other serious crimes.

The PMLA are applicable to all intermediary (which includes a stock-broker, sub-broker, share transfer agent, banker to an issue, trustee to a trust deed, registrar to an issue, merchant banker, underwriter, portfolio manager, investment adviser and any other intermediary associated with securities market and registered under Section 12 of the SEBI Act.

All these entities shall have to maintain a record of all the transactions; the nature and value of which has been prescribed in the Rules under the PMLA. Such transactions include:

• All cash transactions of the value of more than Rs 10 lakh or its equivalent in foreign currency.
• All series of cash transactions integrally connected to each other which have been valued below Rs 10 lakh or its equivalent in foreign currency where such series of transactions take place within one calendar month.
• All suspicious transactions whether or not made in cash and including, inter-alia, credits or debits into from any non-monetary account such as demat account, security account maintained by the registered intermediary.

It is the obligation of an Intermediary to report certain kind of transactions routed through them to FINANCIAL INTELLEGENCE UNIT (FIU) – INDIA a department specially set up to administer this Act under the Ministry of Finance.

Any such type of transaction, though not executed but attempted and failed are also required to be reported.

In order to comply with the provisions of the Act, we as an intermediary need to:-

• Obtain sufficient information in order to identify persons who beneficially own or control the securities account.
• Verify the client’s identity using reliable, independent source documents, data or information;
• Identify beneficial ownership and control, i.e. determine which individual(s) ultimately own(s) or control(s) the client and/or the person on whose behalf a transaction is being conducted
• Verify the identity of the beneficial owner of the client
• Conduct ongoing due diligence and scrutiny
• Periodically update all documents, data or information of all clients and beneficial owners collected under the CDD process
• No account is open in a fictitious / benami name or on an anonymous basis
• Ensure that no account is opened where the we are unable to apply appropriate CDD measures / KYC policies or where client`s identity verification seems difficult or client appears not to co-operate.

It is generally recognized that certain clients may be of a higher or lower risk category depending on the circumstances such as the client’s background, type of business relationship or transaction etc. The basic principle enshrined in this approach is that an enhanced client due diligence process is required for higher risk categories of clients. Such clients shall include:-

i. Clients of Special Category i.e.

• Non Residents
• HNIs
• Trust, Charities, NGOs and organizations receiving donations
• Companies with close family holdings or beneficial Ownership
• Politically Exposed Persons
• Companies offering foreign exchange offerings
• Clients in high risk countries
• Non face to face clients
• Clients with dubious reputation as per public information available etc

ii. Clients transferring large sums of money to or from overseas locations with instructions for payment in cash

iii. Attempted transfer of investment proceeds to unrelated third parties

It may be noted that no account trading / demat can be opened in the name of entities whose name appear in the list of UNSC or entities debarred by SEBI.

The end clients are therefore advised to co-operate with us by providing additional information / documents if asked at the time to opening of the account and / or for during the course of dealings with us to ensure due compliance of the requirements under the PMLA Act.

As a responsible citizen it is our statutory as well as moral duty to be vigilant and refrain from temptation of easy monetary gains by knowingly or unknowingly supporting the people who are involved in activities which are endangering our freedom and causing damage to nation and to us as well.

For any further clarification, you may please refer to detailed PMLA Policy published on our website or contact Principle Office of the company.

Lists of Red Flag Indicators for Terrorist Financing

Four Lists of Red Flag Indicators for Terrorist Financing

1. Financial and Behavioural Indicators Published by The Egmont Group of Financial Intelligence Units

Indicators linked to the financial transactions:

1. The use of funds by the non-profit organization is not consistent with the purpose for which it was established.
2. The transaction is not economically justified considering the account holder’s business or profession.
3. A series of complicated transfers of funds from one person to another as a means to hide the source and intended use of the funds.
4. Transactions which are inconsistent with the account’s normal activity.
5. Deposits were structured below the reporting requirements to avoid detection.
6. Multiple cash deposits and withdrawals with suspicious references.
7. Frequent domestic and international ATM activity.
8. No business rationale or economic justification for the transaction.
9. Unusual cash activity in foreign bank accounts.
10. Multiple cash deposits in small amounts in an account followed by a large wire transfer to another country.
11. Use of multiple, foreign bank accounts.

Behavioural Indicators:

1. The parties to the transaction (owner, beneficiary, etc.) are from countries known to support terrorist activities and organizations.
2. Use of false corporations, including shell-companies.
3. Inclusion of the individual in the United Nations 1267 Sanctions list.
4. Media reports that the account holder is linked to known terrorist organizations or is engaged in terrorist activities.
5. Beneficial owner of the account not properly identified.
6. Use of nominees, trusts, family member or third party accounts.
7. Use of false identification.
8. Abuse of non-profit organization.

2. Potentially Suspicious Activity That May Indicate Terrorist Financing Published in the FFIEC BSA/AML Examination Manual

Activity Inconsistent with the Customer’s Business:

1. Funds are generated by a business owned by persons of the same origin or by a business that involves persons of the same origin from higher-risk countries (e.g., countries designated by national authorities and FATF as non-cooperative countries and territories).
2. The stated occupation of the customer is not commensurate with the type or level of activity.
3. Persons involved in currency transactions share an address or phone number, particularly when the address is also a business location or does not seem to correspond to the stated occupation (e.g., student, unemployed, or self-employed).
4. Regarding non-profit or charitable organizations, financial transactions occur for which there appears to be no logical economic purpose or in which there appears to be no link between the stated activity of the organization and the other parties in the transaction.
5. A safe deposit box opened on behalf of a commercial entity when the business activity of the customer is unknown or such activity does not appear to justify the use of a safe deposit box.
6. Funds Transfers:
7. A large number of incoming or outgoing funds transfers take place through a business account, and there appears to be no logical business or other economic purpose for the transfers, particularly when this activity involves higher-risk locations.
8. Funds transfers are ordered in small amounts in an apparent effort to avoid triggering identification or reporting requirements.
9. Funds transfers do not include information on the originator, or the person on whose behalf the transaction is conducted, when the inclusion of such information would be expected.
10. Multiple personal and business accounts or the accounts of non-profit organizations or charities are used to collect and funnel funds to a small number of foreign beneficiaries.
11. Foreign exchange transactions are performed on behalf of a customer by a third party, followed by funds transfers to locations having no apparent business connection with the customer or to higher-risk countries.
12. Other Transactions That Appear Unusual or Suspicious: 13. Transactions involving foreign currency exchanges are followed within a short time by funds transfers to higher-risk locations.
14. Multiple accounts are used to collect and funnel funds to a small number of foreign beneficiaries, both persons and businesses, particularly in higher-risk locations.
15. A customer obtains a credit instrument or engages in commercial financial transactions involving the movement of funds to or from higher-risk locations when there appear to be no logical business reasons for dealing with those locations.
16. Banks from higher-risk locations open accounts.
17. Funds are sent or received via international transfers from or to higher-risk locations.
18. Insurance policy loans or policy surrender values that are subject to a substantial surrender charge.

3. Financial Red Flags Published by DML Associates LLC:

1. IP logins in areas of conflict such as near the Syrian border, to include Jordan and Lebanon, but particularly in Turkey
2. Periods of transaction dormancy, which could be the result of terrorist training or engagement in combat
3. ATM cash withdrawals in areas of conflict
4. Wire transfers to areas of conflict
5. Charitable activity in areas of conflict especially in Syria
6. Financial activity identifiable with travel [purchase of airline tickets] to Syria through Turkey and other points of entry to include Jordan, Lebanon and Israel

4. Terrorist Activity Financing Related Indicators Published by FINTRAC (Canada’s Financial Intelligence Unit)

It may be noted that a single indicator on its own may seem insignificant, but combined with others, could provide reasonable grounds to suspect that the transaction is related to terrorist financing activity.

1. Client accesses accounts, and/or uses debit or credit cards in high risk jurisdictions (including cities or districts of concern), specifically countries (and adjacent countries) under conflict and/or political instability or known to support terrorist activities and organizations.
2. Client identified by media or law enforcement as having travelled, attempted/intended to travel to high risk jurisdictions (including cities or districts of concern), specifically countries (and adjacent countries) under conflict and/or political instability or known to support terrorist activities and organizations.
3. Client conducted travel-related purchases (e.g. purchase of airline tickets, travel visa, passport, etc.) linked to high-risk jurisdictions (including cities or districts of concern), specifically countries (and adjacent countries) under conflict and/or political instability or known to support terrorist activities and organizations.
4. The client mentions that they will be travelling to, are currently in, or have returned from, a high risk jurisdiction (including cities or districts of concern), specifically countries (and adjacent countries) under conflict and/or political instability or known to support terrorist activities and organizations.
5. Client depletes account(s) by way of cash withdrawal.
6. Client or account activity indicates the sale of personal property/possessions.
7. Individual/Entity’s online presence supports violent extremism or radicalization.
8. Client indicates planned cease date to account activity.
9. Client utters threats of violence that could be of concern to National Security/Public Safety.
10. Sudden settlement of debt(s) or payments of debts by unrelated 3rd party(ies).
11. Law enforcement indicates to reporting entity that the individual/entity may be relevant to a law enforcement and/or national security investigation.
12. Client’s transactions involve individual(s)/entity(ies) identified by media or law enforcement as the subject of a terrorist financing or national security investigation.
13. Client donates to a cause that is subject to derogatory publicly available information (crowdfunding initiative, charity, NPO, NGO, etc.). 14. Client conducts uncharacteristic purchases (e.g. camping/outdoor equipment, weapons, ammonium nitrate, hydrogen peroxide, acetone, propane, etc.).
15. A large number of email transfers between client and unrelated 3rd party(ies).
16. Client provides multiple variations of name, address, phone number or additional identifiers.
17. The sudden conversion of financial assets to a virtual currency exchange or virtual currency intermediary that allows for increased anonymity.

The red flags indicators noted above can conveniently be shared with staff to create the awareness amongst them for tracking and reporting suspicious transactions and for enhancing the efforts to counter terrorism.

INVESTOR GRIEVANCE HANDLING POLICY

Introduction

We at Ashlar Securities Private Limited endeavour to address all complaints regarding service deficiencies or causes for grievance, for whatever reason, in a reasonable time and manner. We realize that quick and effective handling and resolution of client’s/ Investor’s grievance is essential to provide excellent client service.

To achieve this, our company has clearly documented policy for redressal of investor grievances. Through this policy, our company shall ensure that a suitable mechanism exists for receiving and addressing complaints from our clients/investors with specific emphasis on resolving such grievances fairly and expediously.

In accordance with SEBI circular no. SEBI Circular SEBI/HO/MIRSD/DOP/P/CIR/2021/676 dated December 02, 2021, SEBI master circular SEBI/HO/OIAE/IGRD/P/CIR/2022/0150 dated November 07, 2022 and other relevant circular of Exchanges. The Company, has laid down policy guideline which have been framed in the light of above circular, we are adopting and implementing this Investor grievance handling policy to all clients of Ashlar Securities Pvt Ltd to effectively redress the grievances of the investors in a timely manner and facilitate investor awareness.

Scope

This Policy applies to all employees, paid interns, contractors, part-time, full-time employees including Authorised Persons.

Objective

The objective of the Policy is to promote and build prompt Investor Grievance redressal mechanism and investor friendly relations. The Policy thus recognises the investors’ right to always have a contact address available to enable them to query or record a grievance. This also enables the Company use investors’ views as a feedback mechanism.

Policy and Procedure

This policy seeks to ensure that

Grievance, if any that may arise shall be resolved in a proper and time bound manner with detailed advice to the client/investor. In case the resolution needs time, an interim response acknowledging the grievance/complaint shall be issued.

The Compliance Officer shall give quarterly report of the client’s grievance to the Directors of the company with complete details as Name and code of the client, Nature of Complaint, Date of receipt of the complaint and status of resolving the same. For grievances remaining unresolved for a period of more than 15 days from the date of receipt, the Compliance officer shall provide a justification to the Directors.

The Compliance officer shall maintain proper records of all grievances received and resolved.

All personnel/employees at the customer facing channels and other support departments will be periodically trained in handling of client’s complaints.

The Grievance Redress Mechanism with updated contact details and email ID shall be provided to the Clients and uploaded on the Company’s website.

Grievance Handling Mechanism

The Company has an established mechanism for investor service and grievance handling, with ASHLAR and the Compliance Officer appointed by the Company for this purpose, being the important functional nodes.

Some of the key steps undertaken by the Company for handling Investor Grievances are enumerated as follows:

• An Investor /Client can make his/her complaint through email or letter to the Company.
• The Investor/Client can make a written complaint through letter and sent it or hand delivered to Company’s Head Office.
• Handling of all investor grievances is a centralized function and is being handled by Compliance department at corporate office.
• The Company has a designated email ID investorcell@ashlarindia.com for handling investor grievances on which investor can send a complaint. This e-mail ID is permanently displayed on company’s website www.ashlarindia.com and is also mentioned on the KYC form.
• The client/investor can contact Compliance Officer at her email id- investorcell@ashlarindia.com and Phone No. – 0120-6633229 & 8010934852.Phone No. – 0120-6633229 & 8010934852.
• The Compliance Officer has access to the above designated Investor Complaints e-mail ID and is responsible for monitor this e-mail ID on a daily basis.
• All the Investor Grievances received in writing at H.O. or at the investorcell@ashlarindia.com would be verified and scrutinize by the compliance department and it would initiate necessary steps to resolve the complaint within 1 -2 working days of the receipt of the complaint by them.
• Any course of action which involves the concerned department at Head office it would be informed to the concerned head of the department and Business team. Likewise, if the course of action which involves branch and or associate, business team at the corporate office would be informed/updated.
• If there is no response from concerned department or the branch and or associate within 3 working days of the complaint, the same would be escalated to Head Compliance for immediate action and if there no response within 5 working days the same would be reported to the Designated Director as in the form of an MIS reporting
• All investor grievances should be resolved within time period of 15-25 days of the receipt of the complaint to the department.
• More than 3 complaints received during a month from the same branch (number of complaints is subject to review depending upon the market conditions and volumes generated by the branches and or associates) Head of business would have to seek an explanation from the branch manager and keep the compliance department informed/updated.
• All the investor grievances would be handled in the following manner by the compliance department:
• All the investor grievances (hard copy or softcopy) would be updated in an excel register (softcopy)/ in complaint register (hardcopy) as in the format specified in Annexure-1 on the same day of the receipt of the complaint. This register would be monitored by the compliance officer.
• After verification and scrutiny the appropriate steps would be initiated to resolve the complaint at the earliest.
• A monthly MIS of the complaints received, pending and or resolved would be given to the Head of Business and designated Directors of the Company.
• As per the exchange/depositary/SEBI directives the complaint register has to be maintained in hardcopy function wise i.e. Broking compliant register, DP complaint register and PMS complaint register as in the format specified in Annexure-1
• Therefore, compliance department will ensure that depending upon the type of the complaint, all the information i.e. from the receipt of the complaint till the status of being resolved would be updated in the register as stated in point 10 d
• The compliance officer would ensure that it gives its sign-off only after the complaint is resolved.
• This policy is to be reviewed as & when management thinks fit or whenever changes are mandated by statutory authorities.

Review/Amendments of Policy:

• This policy shall be reviewed as and when needed by Compliance Officer.
• In the event of any conflict between the circular or any other statutory enactment and the clause of this policy, the amendment shall prevail over this policy.
• Any subsequent amendments/modification in the circulars shall automatically apply to the policy.

Policy communication

A copy of the policy shall be made available to all the relevant staff, dealers branch in-charge, authorise person compliance officer and other stakeholder persons for their information and any change should be communicated to them.

Ashlar Securities Pvt Ltd (ASHLAR) is committed to providing effective and prompt service to its investors. ASHLAR has in place, a designated e-mail address i.e. investorcell@ashlarindia.com for assistance and/or grievance redressal and is closely monitored by the Compliance Officer.

The escalation matrix for complaints relating to the Investors of ASHLAR is as provided below:

• Level 1- Customer Care
• Level 2- Head of Customer Care:
  • In the event, the grievance(s) are not resolved within 3 working days of its submission along with all requisite documents/information or the investor is not satisfied with the resolution provided, he/ she can forward his/her complaint to the next level of hierarchy.
• Level 3- Compliance Officer
  • In the event, the grievance(s) are not resolved within 5 working days of its submission along with all requisite documents or the investor is not satisfied with the resolution provided, he/ she can forward his/her complaint to the COO/director.
• Level 4- Chief Executive Officer/Director
  • In case of non-redressal of the complaint to the investor’s satisfaction within a reasonable time frame, the investor may approach the COO/director.

Details of	Contact Person	Contact No.	Address	Email Id	Working Hours
Customer Care	-	0120-6633 231	A-38, Sector-67, Noida-201301,U.P.	helpdesk@wisdomcapital.in	9:00AM TO 5:00PM (Monday to Friday)
Head of Customer Care	-	0120-6633 205		care@ashlarindia.com
Compliance Officer	-	0120-6633 229		compliance@ashlarindia.com
	-	0120-6633 229/225		dp@ashlarindia.com
Chief Executive Officer (COO)	-	0120-6633 299		deepak@ashlarindia.com

• Level 5 –
  • In case a complaint is still not redressed to the investor's satisfaction, the investor may approach the Securities and Exchange Board of India and file their grievance through “SCORES”, the centralized online system for lodging and tracking complaints.
  • SCORES facility can be accessed through the weblink -
    • SEBI at https://scores.gov.in/scores/Welcome.html
    • Exchange at https://investorhelpline.nseindia.com/NICEPLUS/