High value transactions by politicians under FIU scanner

It is not just politicians. Recently, a senior bureaucrat’s wife purchased jewellery worth Rs 7 lakh, which was reported to the FIU by the banks.

The Financial Intelligence Unit (FIU) has stepped up its surveillance on high value transactions by politicians, senior bureaucrats and their immediate relatives who fall under the “politically exposed persons” (PEP) category.

According to sources, the FIU generated 17 suspicious transaction reports (STRs) related to PEPs in the last one year. All these cases have been reported to the Income-Tax department for further investigation, sources said.

In January, a bank transaction of a Union minister from the BJP was reported to the FIU by the Punjab National Bank. It was later found that the minister had carried out a legitimate transaction — the funds were found to be proceeds of offloading his shares. Nonetheless, an STR was generated in his name.

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It is not just politicians. Recently, a senior bureaucrat’s wife purchased jewellery worth Rs 7 lakh, which was reported to the FIU by the banks. Normally, banks only report unusual transactions above Rs 10 lakh.

The FIU has asked banks to scrutinise the Know Your Customer (KYC) forms to ensure that if the ultimate beneficiary of an account could be a person holding public office, then the customer is categorised as PEP. All the accounts under PEP category are put in the “high monitoring” list.

The origins of this category can be traced to a circular issued by the Reserve Bank of India in 2008, based on recommendations made by the Financial Action Task Force (FATF) on anti-money laundering standards and combating financing of terrorism.

While the circular was meant to meet India’s international commitment to tackling trans-border money laundering, the FIU has tweaked it to monitor PEPs residing in the country.