1. Background:

The Prevention of Money Laundering Act, 2002 (as amended) (“PMLA”) was introduced with effect from July 1, 2005. As per the provisions of the PMLA, every banking company, financial institution and 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 PMLA and Rules notified thereunder.

SEBI has issued necessary 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 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.

Religare Macquarie Wealth Management Limited (RMWL) is a registered Portfolio Manager with SEBI, and a Wealth Management distributor and intermediary, is therefore required to put in place AML measures.

This note is to make RMWL clients aware of our obligations to be compliant with the Act and SEBI requirements.

2. Money Laundering:

a. Money laundering has now become one of the key concerns of the international financial community. Money laundering is not just an attempt to disguise money derived from illegal activities, rather money laundering is involvement in any transaction or series of transactions that seek to conceal or disguise the nature or source of proceeds derived from illegal activities, including drug trafficking, terrorism, organized crime, fraud and many other crimes.

b. Know Your Customer (“KYC”) is one of the main principles of anti-money laundering measures. The objective of KYC is to prevent RMWL from being used, intentionally or unintentionally, by criminal elements for money laundering or the financing of terrorism through verifying the identities of clients, their source of funds and ultimate ownership of any funds invested.

c. A proper KYC program enables RMWL to know and understand its clients and their financial dealings better, which in turn will help RMWL to manage risks prudently.

3. Requirements

SEBI regulations require each registered intermediary to adopt written procedures to implement anti money laundering provisions as envisaged under PMLA which would include :

a. Policy for acceptance of clients

b. Procedure for identifying the clients

c. Transaction monitoring and reporting especially Suspicious Transactions Reporting (STR)

The KYC program should ensure that:-

i. No account is opened in any anonymous or fictitious/benami name(s)

ii. No account should be opened or transactions conducted in the name of or on behalf of banned/suspended individuals, organisations or entities. To ensure compliance, necessary cross checks must be made to ensure that the identity of a client does not match with any person with a known criminal background or who is banned/suspended entity.

iii. No account should be opened if appropriate KYC measures cannot be applied to a client for want of verifiable documents on account of the non co-operation of the client or non reliability of the data/information furnished by the Client.

In order to comply with the KYC program, the documents which may be requested from the clients include (but are not limited to) passports, identity cards, proof of address and proof of source of funds (which may require production of documents to detail income and networth).

Regular monitoring of transactions is vital for ensuring effectiveness of the AML procedures. All complex, unusually large transactions / patterns which appear to have no economic purpose would be monitored and details may be verified with the Client.

In the course of our relationship with you as our client, we look forward to your ongoing cooperation in assisting RMWL in compliance with the Act and SEBI regulations with the aim of preventing money laundering and financing of terrorism.