Here Is How Banks View Transactions To Be Suspicious

The number of suspicious financial transactions reported by banks went up in the year 2016-17. Such activities gave the impression that unaccounted wealth was being deposited into banks. The figures released in the recent report of RBI are based on the suspicious transactions reported by banks to Financial Intelligence Unit of Ministry of Finance.

What are Suspicious Transactions?

All series of cash transactions connected to each other which have been individually valued below Rs.10 lakh where they have taken place within a month and the monthly aggregate exceeds Rs.10 lakh is termed as suspicious transactions. Money laundering done by using cash transactions, bank accounts, secured and unsecured lending, and investment related transactions etc. is covered under suspicious transactions.

Transactions considered suspicious by Financial Intelligence Unit on its website under different categories–

1. Value of transactions

– Value just under the reporting threshold amount in an apparent attempt to avoid reporting
– Value inconsistent with the client’s apparent financial standing

2. Activity in Accounts

– Unusual activity compared with past transactions
– Sudden activity in dormant accounts
– Activity inconsistent with what would be expected from declared business

3. Multiple Accounts

– Many accounts having a common account holder, introducer or authorized signatory
– Unexplained transfers between multiple accounts

4. Nature of transactions

– Unusual or unjustified complexity
– Frequent purchases of drafts or other negotiable instruments with cash
– Nature of transactions inconsistent with what would be expected from declared business .

5. Identity of client

– False identification documents
– Identification documents which could not be verified within reasonable time
– Accounts opened with names similar to other established business entities

There are 18 lakh such cases detected after demonetization where the income profiles of people did not match their account profiles. Now, these could also form a part of an investigation, the process for which has already been initiated.

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