Suspicion of money laundering/terrorist financing

 With a view to preventing banks from being used, intentionally or unintentionally, by criminal elements for money laundering or terrorist financing, the RBI has clarified that whenever there is suspicion of money laundering or terrorist financing or when other factors give rise to a belief that the customer does not, in fact, pose a low risk, banks should carry out full scale customer due diligence (CDD) before opening an account.

Filing of Suspicious Transaction Report (STR)

In terms of the guidelines contained in Para 2 (iv) and 8 of the circular RPCD.RRB.BC.NO. 81/03.05.33(E)/2004-05 dated February 18, 2005 a bank should not open an account or close an existing account where the bank  is unable to apply appropriate customer due diligence measures. It is clarified that in the circumstances when a bank believes that it would no longer be satisfied that it knows the true identity of the account holder, the bank should file an STR with Financial Intelligence Unit of India (FIU-IND).

Politically Exposed Persons (PEPs)

 In terms of instructions contained in Para 5 of circular RPCD.CO.RRB.BC.No. 27/03.05.33(E)/2009-10 dated September 29, 2009 on the subject, in the event of an existing customer or the beneficial owner of an existing account, subsequently becoming a PEP, banks should obtain senior management approval to continue the business relationship and subject the account to the CDD measures as applicable to the customers of PEP category including enhanced monitoring on an ongoing basis. It is also applicable to accounts where a PEP is the ultimate beneficial owner. Further, in regard to PEP accounts, it is reiterated that banks should have appropriate ongoing risk management procedures for identifying and applying enhanced CDD to PEPs, customers who are close relatives of PEPs, and accounts of which a PEP is the ultimate beneficial owner.

Principal Officer

The role and responsibilities of the Principal Officer should include overseeing and ensuring overall compliance with regulatory guidelines on KYC/AML/CFT issued from time to time and obligations under the Prevention of Money Laundering Act, 2002, rules and regulations made thereunder, as amended form time to time.

These guidelines are issued under Section 35A of the Banking Regulation Act, 1949. Any contravention thereof or non-compliance shall attract penalties under Banking Regulation Act.

Source: rbi.org.in

The Government of India is planning to have regulatory checks on the quality of medical equipments to ensure safety for patients and efficiency of medical devices. The checks will be implemented on all the manufacturers, importers and suppliers of the medical devices where they will be required to get themselves registered with the country’s drug regulatory authority, the Drug Controller General of India (DCGI).

The central government is formulating a new law, the Central Devices Act (CDA) with the aim to regulate the entire medical device industry. Currently the Drugs and Cosmetics Act regulates only 14 medical devices which are primarily concerned to regulate medicines. The step is seen as an extension of the comprehensive amendment to the current drug law and aims to bring all the medical devices under the regulatory preview of the health ministry.

The government is also planning to set up a system where the drug licensing and drug pricing authorities will work in co-ordination to ensure proper market implementation of the price and composition of each drug sold in the country. The process shall involve forming a ‘functional linkage’ between the office of the DCGI and the National Pharmaceutical Pricing Authority (NPPA).

Under the current setup, the DCGI approves marketing of a drug and the NPPA is supposed to enforce price control laws, but as the parent ministries of both these outfits are different, DCGI comes under the health ministry, while NPPA is under the chemicals and fertilisers ministry, proper working synergy has remained a major hurdle in regulating the retail drug market.

The Indian pharmaceuticals market is estimated to be about Rs.50,000 crore a year. The prices of a fifth of the medicines are set by the government. For the others, the manufacturers are not allowed to raise prices by more than 10% of the stated maximum retail price in a year.

Source:Hindustan Times Content Team

India has traditionally been associated with outsourcing around the world, but according to a new report, Indian companies have created nearly 60,000 jobs in the United States of America, in addition to investment and acquisition deals worth $26.5 billion.

The report, ‘How America Benefits from Economic Engagement with India’ investigates one specific aspect of globalisation of the American economy, namely, the United States-India business relationship. During 2004-2009, 90 Indian companies made 127 greenfield investments worth $5.5 billion, and created 16,576 jobs in the US.

Greenfield investments are investments made to start a new venture by constructing new operational facilities from the ground up. The top three destination states for greenfield investments were Minnesota, Virginia and Texas, in that order.

It is noteworthy that the software and information technology services sector, which account for bulk of the outsourcing deals, received less than 15% of the total investment. The investments mainly were in mining, manufacturing, and other industries, the report said. The top three states in terms of jobs created were Ohio, Texas, and California, the report said.

During 2004-09, 239 Indian companies made 372 acquisitions in the United States. The five US industrial sectors that received the most greenfield investment were Metals; Software & IT Services; Leisure & Entertainment; industrial machinery, equipment & tools; and financial services, accounting for almost 80% of total greenfield investment in the US.

The report, jointly produced by University of Maryland, India-US World Affairs Institute and Federation of Indian Chambers of Commerce and Industry, gives a comprehensive analysis of America’s economic engagement with India during the period 2004 to 2009.

Source: Hindustan Times Content Team

The government has ended the turf war between IRDA and SEBI on the regulation of unit linked insurance products (ULIPs). The products will be regulated by the insurance regulator IRDA.

President Pratibha Patil issued the Ordinance, explaining that the life insurance business shall include any unit-linked policy or scrips or any such instruments. The government has also constituted a high-level committee chaired by Finance Minister Pranab Mukherjee, which will sort out all issues of jurisdiction regarding hybrid products.

In April, SEBI banned 14 life insurance firms from issuing fresh ULIP schemes. However, IRDA asked the life insurers to ignore the SEBI order and the matter was taken to the Finance Ministry, which advised them to move the court. In the meantime, the ministry had asked to maintain the status quo.

ULIPs account for more than 50 per cent of the life insurance business and the money collected from policy holders is invested in equities.

Source: financialexpress.com

The Intellectual Property (IP) office is planning to separate its trademark registry division out of the division which currently deals with patents, trademarks and designs. This move could result in a balanced focus on trademarks as well as patents.

To separate the two offices, the Department of Industrial Policy and Promotion (DIPP), under which the IP office falls, has already shifted some powers of the Controller General of Patents, Designs and Trademarks related to trademarks to another officer.

Since January 2009, the government has been planning to reform the way the office works and, to cleanse the system of corrupt practices, made most information related to the processing of patents, designs and trademarks accessible online, reducing scope for corruption.

Under the trademark legislation, as it stands now, the government’s power is limited to appointing another officer to discharge some functions of the registrar (or controller general), as the latter may from time to time authorize. But the controller general remains in charge.

The creation of independent and separate trademark and the patent departments has been welcomed by most industry analysts. Particularly in view of the fact that patent litigation in respect of pre and post grant oppositions has significantly increased in India. Hence having an independent head would increase its efficiency. Similarly, the trademark department would also benefit from greater stress upon accountability and transparency.

Source: Hindustan Times Content Team

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The environment ministry has scrapped a proposal for a mega power plant in Chhattisgarh after finding that the construction of the plant started without its mandatory environment clearance. In what appears to be gross irregularity, Jindal Power Limited started work on the 2,400 MW coal-based power plant not at the original site but where a 1,000 MW power plant is [Read More...]

Easy Bill ties up with Life Insurance Company of India (LIC of India) for providing the LIC customers an easy premium paying facility. This service, available at all outlets throughout India, is simple, authentic, and Easy bill will accept all payments whether on time or late.   Easy Bill provides a wide range of services catering to all the ticketing [Read More...]