1. Policy for Penny Stock:
   
   • A stock that trades at a relatively low price and market capitalization. These types of stocks are generally considered to be highly speculative and high risk because of their lack of liquidity, large bid-ask spreads, small capitalization, and limited following and disclosure. Depending on the market condition and RMS policy of the company, RMS reserves the right to refuse to provide the limit in Penny stocks, and losses, if any, on account of such refusal shall be borne by the client only.
2. Setting up Client’s exposure limits/Risk Management Policy:
   
   • The stock broker may, from time to time, impose and vary limits on the orders that the client can place through the stock broker's trading system (including exposure limits, turnover limits, limits as to the number, value, and/or kind of securities in respect of which orders can be placed etc.). The client is aware and agrees that the stock broker may need to vary or reduce the limits or impose new limits urgently on the basis of the stock broker's risk perception and other factors considered relevant by the stock broker, including but not limited to limits on account of exchange/SEBI directions/limits (such as broker level/market level limits in security-specific/volume specific exposures etc.), and the stock broker may be unable to inform the client of such variation, reduction or imposition in advance. The client agrees that the stock broker shall not be responsible for such variation, reduction or imposition or the client's liability to route any order through the stock broker's trading system on account of any such variation, reduction or imposition of limits. The client further agrees that the stock broker may at any time, at its sole discretion and without prior notice, prohibit or restrict the client's ability to place orders or trade in securities through the stock broker, or it may subject to any order placed by the client to a review before its entry into the trading systems any may refuse to execute/allow execution of orders due to but not limited to the reason of lack of margin/securities or the order being outside the limits set by stock broker/exchange/SEBI and any other reasons which the stock broker may deem appropriate in the circumstances. The client agrees that the losses, if any, on account of such refusal or due to delay caused by such review shall be borne exclusively by the client alone.
   • We have a margin-based RMS system. Total deposits of the clients are uploaded in the system, and the client may take exposure on the basis of margin applicable for respective security as per the VAR-based margining system of the stock exchange and/or margin defined by RMS based on their risk perception. The client may take benefit of "credit for sale" i.e., the benefit of share held as a margin by selling the same by selecting the delivery option through the order entry window on the trading platform; the total value of shares will be added with the value of deposit and on the basis of that client may take fresh exposure.
   • In case of exposure taken on the basis of shares margin, the payment is required to be made before the exchange pay-in date; otherwise, it will be liable to square off after the pay-in time or any time due to a shortage of margin.
   • The stock broker is entitled to disable/freeze the account & / or trading facility / any other service facility if, in the opinion of the stock broker, the client has committed a crime/fraud or has acted in contradiction of this agreement or / is likely to evade /violate any laws, rules, regulations, directions of a lawful authority whether Indian or foreign or if the stock broker so apprehends.
3. Applicable brokerage rate:
   
   
   • Brokerage will be charged within the limits prescribed by SEBI/Exchange.
   • For Cash Market Segment:
     The maximum brokerage chargeable in relation to trades effected in the securities admitted to dealings on the Capital Market segment of the Exchange shall be 2.5 % of the contract price exclusive of statutory levies. It is hereby further clarified that where the sale /purchase value of a share is Rs.10/ - or less, a maximum brokerage of 25 paise per share may be collected.
   • For Option contracts:
     Brokerage for option contracts shall be charged on the premium amount at which the option contract was bought or sold and not on the strike price of the option contract. It is hereby clarified that brokerage charged on options contracts shall not exceed 2.5% of the premium amount or Rs 100/- (per lot), whichever is higher.
   • The applicable brokerage rate is mentioned in the Application kit, and any future change in the brokerage rate will be communicated to the client.
4. Imposition of penalty/ delayed payment charges:
   • Clients will be liable to pay late pay-in/delayed payment charges for non-making payment of their pay-in/margin obligation on time as per the exchange requirement/schedule at the rate of up to 18% p.a.
   • The client agrees that the stock broker may impose fines/ penalties for any orders/ trades/ deals/ actions of the client which are contrary to this agreement/rules/regulations/bye laws of the exchange or any other law for the time being in force, at such rates and in such form as it may deem fit. Further, where the stock broker has to pay any fine or bear any punishment from any authority in connection with/ as a consequence of/in relation to any of the orders/ trades /deals/ actions of the client, the same shall be borne by the client.
   • The client agrees to pay to the stock broker brokerage, commission, fees, all taxes, duties, and levies imposed by any authority, including but not limited to the stock exchanges (including any amount due on account of reassessment /backlogs etc.), transaction expenses, incidental expenses such as postage, courier, etc. as they apply from time to time to the client's account/transactions/services that the client avails from the stock broker.
5. The right to sell clients securities or close client’s position, without giving notice to the client, on account of non-payment of client’s dues
   • Without prejudice to the stock broker's other right (including the right to refer the matter to arbitration), the stock broker shall be entitled to liquidate/ close out all or any of the client's position without giving notice to the client for non-payment of margin or other amounts including the pay in obligations, outstanding debts, etc and adjusted the proceeds of such liquidation / close out, if any, against the client liability/obligations. adjusted the proceeds of such liquidation/closeout, if any, against the client's liability/obligations.
   • The client shall ensure timely availability of funds/securities in form and manner at the designated time and in designated bank and depository account(s) for meeting his/her/Its pay in obligation of funds and securities. The stock broker shall not be responsible for any claim/loss/damage arising out of non-availability/short availability of funds/securities by the client in the designated account(s) of the stock broker for meeting the pay in obligation of either funds or securities.
   • Any and all losses and financial charges on account of such liquidations/ closing out shall be charged to & borne by the client. In cases of securities lying in a margin account/client beneficiary account and having corporate actions like Bonus, Stock spilt, Right Issue, etc, for margin or other purpose the benefit of shares due to receive under Bonus, Stock split, Right Issue etc. will be given when the shares are actually received in the stock broker designated demat account. In case the payment of the margin/security is made by the client through a bank instrument, the stock broker shall be at liberty to give the benefit I credit for the same only on the realization of the funds from the said bank Instrument etc, at the absolute discretion of the stock broker. Where the margin/ security is made available by way of securities or any other property, the stock broker is empowered to decline its acceptance as margin/ security & to accept it at such reduced value as the stock broker may deem fit by applying haircuts or by valuing it by marking it to market or by any other method as the stock broker may deem fit in its absolute discretion.
   • The stock broker has the right but not the obligation, to cancel all pending orders and to sell/close/liquidate all open positions/securities/shares at the pre-defined square off time or when Mark to Market (M-T-M) percentage reaches or crosses stipulated margin percentage, whichever is earlier. The stock broker will have sole discretion to decide the referred stipulated margin percentage depending upon the market condition. In the event of such a square-off, the client agrees to bear all the losses based on actual executed prices; the client shall also be solely liable for all and any penalties and charges levied by the exchange(s).
   • The stock broker is entitled to prescribe the date and time by which the margin/security is to be made available, and the stock broker may refuse to accept any payments in any form after the deadline for margin /security expires. Notwithstanding anything to the contrary in the agreement or elsewhere, if the client fails to maintain or provide the required margin/fund /security or to meet the funds/margins/ securities pay in obligations for the orders / trades / deals of the client within the prescribed time and form, the stock broker shall have the right without any further notice or communication to the client to take any one or more of the following steps:
     1. To withhold any payout of funds/securities.
     2. To withhold/disable the trading / dealing facility to the client.
     3. To liquidate one or more security(s) of the client by selling the same in such manner and at such rate that the stock broker may deem fit at its absolute discretion. It is agreed and understood by the client that securities here include securities that are pending delivery/ receipt.
     4. To liquidate/square off partially or fully the position of sale & / or purchase in any one or more securities/contracts in such manner and at such rate which the stock broker may decide in its absolute discretion.
     5. To take any other steps that the stock broker may deem fit in the given circumstances. The client agrees that the loss(s) if any, on account of any one or more steps as enumerated herein above being taken by the stock broker, shall be borne exclusively by the client alone and agrees not to question the reasonableness, requirements, timing, manner, form, pricing, etc., which are chosen by the stock broker.
6. Shortage In obligations arising out of internal netting of trades:
   • Stock broker shall not be obliged to deliver any securities or pay any money to the client unless and until the same has been received by the stock broker from the exchange, the clearing corporation/ clearing house or other company or entity liable to make the payment and the client has fulfilled his/her/its obligations first.
   • The policy and procedure for Settlement Of shortages in obligations arising out of internal netting of trades is as under:
     1. The Short-delivering client Is debited by an amount equivalent to 20 % above the closing rate of the day prior to the pay-in/Payout Day. The securities delivered short are purchased from the market on T+1 day, and the purchase consideration (Inclusive of all statutory taxes & levies) Is debited to the short-delivering seller client along with a reversal entry of the provisionally amount debited earlier.
     2. If securities cannot be purchased from the market due to any force majeure condition, the short delivering seller Is debited at the closing rate on T+1 day or Auction Day on Exchange +10% where the delivery Is matched partially or fully at the Exchange Clearing, the delivery and debits/credits shall be as per Exchange Debits and Credits.
     3. In cases of securities having corporate actions, all cases of short delivery of cum transactions which cannot be auctioned on cum basis or where the cum basis auctioned on cum basis or where the cum basis auction payout Is after the book closure/record date, would be compulsorily closed out at higher of 10% above the official closing price on the auction day or the highest traded price from first trading day of the settlement till the auction day.
7. Conditions under which a client may not be allowed to take further position or the broker may dose the existing position of a client:
   • We have a margin-based RMS system. The client may take exposure up to the amount of margin available with us. The client may not be allowed to take a position in case of non-availability/shortage of margin as per our company's RMS policy. The existing position of the client Is also liable to square off/close out without giving notice due to a shortage of margin/nonmaking of payment for their pay in obligation/outstanding debts.
8. Temporarily suspending or closing a client's account at the client's request:
   • On the request of the client in writing, the client's account can be suspended temporarily, and the same can be activated on the written request of the client only. During the period client account is suspended, the market transaction in the client account will be prohibited. However, a settlement can take place for the client shares/ledger balance.
   • On the client's request in writing, the client account can be closed provided the client account Is settled. If the client wants to reopen the account in the case client has to again complete the KYC requirement.
9. Deregistering a client:
   • Notwithstanding anything to the contrary stated in the agreement, the stock broker shall be entitled to terminate the agreement with immediate effect in any of the following circumstances:
     1. If the action of the client is prima face illegal/ Improper or such as to manipulate the price of any securities or disturb the normal/proper functioning of securities or disturb the normal/proper functioning of the market, either alone or in conjunction with others.
     2. If there is any commencement of a legal process against the client under any law in force.
     3. On the death/lunacy or other disability of the Client.
     4. If the client is a partnership firm, has any steps taken by the Client and/or its partners for dissolution of the partnership?
     5. If the Client suffers any adverse material change in his/her/its financial position or defaults in any other agreement with the Stock broker.
     6. If there is reasonable apprehension that the Client is unable to pay its debts or the Client has admitted its inability to pay its debts as they become payable.
     7. If the client Is in breach of any term, condition or covenant of this Agreement.
     8. If the client has made any material misrepresentation of facts, including (without Imitation) In relation to the security.
     9. If a receiver administrator or liquidator has been appointed or allowed to be appointed of all or any part of the undertaking of the Client.
     10. If the Client has taken or suffered to take any action for its recognitions, liquidation or dissolution.
     11. If the client has voluntarily or compulsorily become the subject of proceeding under any bankruptcy or insolvency law or being a company, goes into liquidation or has a receiver appointed in respect of its assets or refers itself to the board for industrial and Financial Reconstruction or under any other law providing protection as a relief undertaking.
     12. If any covenant or warranty of the client is incorrect or untrue in any material respect.
10. Inactive Client account:
    • A client account will be considered inactive if the client does not trade at least once in any one of the segments/exchanges the client has signed up for for a period of 12 months. Such accounts will be flagged as ``Inactive `in the back office as well as in the exchange`s UCC database. Any trades in the inactive account are subject to penalty from the exchanges; therefore, the concerned client or employee involved in such transactions will be appropriately penalized.
    • All the assets of the inactive client should be settled on a monthly/quarterly basis as per the client`s preference in the manner prescribed from time to time. The unsettled securities or funds due to non-traceability of the client/s shall be transferred to the Client Bank/Client collateral Demat account.
    • The client whose account was inactivated and coming for reactivation after a period of one year after being flagged as inactive, then the client needs to submit the new application form along with the supporting documents and reactivation form.
    • Account Closure may be initiated when the Company receives a specific request from the client to close his trading account and undertakes to clear all outstanding dues. Alternatively, the company may initiate involuntary closure by giving a notice of 30 days to the client and proceed to recover outstanding dues, if any, from the client towards the settlement of any outstanding obligations. Once the account is deactivated, the client will not be able to place any orders in any trade segments.
11. Client Acceptance of policies and Procedures stated hereinabove:
    • I/We have fully understood the same and do hereby sign the same and agree not to call into question the validity, enforceability, and applicability of any provision/clauses in this document under any circumstances whatsoever. These Policies and Procedures may be amended/ changed unilaterally by the broker, provided the change is informed to me/us with through any one or more means or methods. I/we agree never to challenge the same on any grounds including delayed receipt / non receipt or any other reasons whatsoever. These Policies and Procedures shall always be read along with the agreement and shall be compulsorily referred to while deciding any dispute/difference or claim between me/ us and the stock broker before any court of law / judicial / adjudicating authority, including arbitrator/mediator etc.
      (The policies described above are subject to changes and the client hereby agrees to keep himself updated of the changes from time to time).

PMLA POLICY

Background:

This Anti-Money Laundering (AML) Policy (the Policy) has been prepared in accordance with the Prevention of Money Laundering Act, 2002 (PMLA Act). This Policy also takes into account the provisions of the PMLA Act and other Rules laid down by SEBI, as per the Master Circular dated February 03, 2023.

Prevention of Money Laundering Act, 2002 (PMLA) forms the core of the legal framework put in place by India to combat money laundering and related crimes. Under PMLA, all the entries registered with SEBI are required to furnish information on all suspicious transactions, whether or not made in cash, to FIU-IND. Under Section 3 of PMLA, projecting crime as untainted property is an offense of money laundering liable to be punishment under Section 4 of the PMLA.

As per PMLA, every banking company, financial institution, and intermediary shall have to maintain a record of all the transactions, the nature and value of which have been prescribed in the Rules notified under the PMLA. For the purpose of PMLA, transactions include:

1. All cash transactions of the value of more than Rs 10 lakhs or its equivalent in foreign currency.
2. All series of cash transactions are integrally connected to each other and have been valued below Rs 10 lakhs or its equivalent in foreign currency. Such series of transactions are within one calendar month.
3. All suspicious transactions, whether or not made in cash and including inter-alia, credits, or debits from any non-monetary account such as a demat account or security account maintained by the registered intermediary.
   For the purpose of suspicious transactions reporting, apart from ‘transactions integrally connected’, ‘transactions remotely connected or related’ need to be considered.
   "Suspicious transactions" means a transaction, whether or not made in cash to a person acting in good faith:
   1. gives rise to a reasonable ground of suspicion that it may involve the proceeds of crime; or
   2. appears to be made in circumstances of unusual or unjustified complexity or
   3. appears to have no economic rationale or bonafide purpose.
   4. gives rise to a reasonable ground of suspicion that it may involve facing of activities relating to terrorism

This Policy only supplements the existing SEBI / FIU guidelines relating to anti-money laundering and any subsequent guidelines from the date of the Policy on anti-money laundering will be implemented immediately.

Objective:

The Objective of this policy is to prevent S A Artha Securities Private Limited from being used, intentionally or unintentionally, by criminal elements for money laundering or terrorist financing activities and also to enable S A Artha Securities Private Limited to know/understand its customers and their financial dealings better which in turn will help S A Artha Securities Private Limited to manage its risks prudently. It is important that S A Artha Securities Private Limited management views “money-laundering prevention” and “knowing your customer” as part of the risk management strategies and not simply as standalone requirements that are being imposed by legislation/regulators’.

Hence the objective of the policy is to:

• To have a proper Customer Due Diligence (CDD) process through KYC process before registering clients.
• To monitor/maintain records of all cash transactions of a value of more than Rs.10 lacs.
• To maintain records of all series of integrally connected cash transactions within one calendar month.
• To monitor and report suspicious transactions.
• To discourage and identify money laundering or terrorist financing activities.
• To take adequate and appropriate measures to follow the spirit of the PMLA.

Money Laundering:

Money laundering is the criminal practice of putting ill-gotten gains or dirty money through a series of transactions so that the funds are cleaned to look like proceeds from legal activities. It is driven by criminal activities and conceals the true source, ownership, or use of funds. Section 3 of the PMLA Act defines money laundering in the following words: “Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money-laundering”.

Know your client:

One of the best methods of preventing money laundering is a sound knowledge of a client’s business and pattern of financial transactions. The adoption of procedures by which financial institutions “know your client” is not only a principle of good business but is also an essential tool to avoid involvement in money laundering.

S A Artha Securities Private Limited shall adopt appropriate KYC procedures and internal control measures to:

• Determine and document the true identity of the customers who establish relationships, open accounts or conduct significant business transactions and obtain basic background information on customers;
• Assess the money laundering risk posed by customers’ expected use of S A Artha Securities Private Limited products and services;
• Protect S A Artha Securities Private Limited from the risks of doing business with any individual or entity whose identity cannot be determined or who refuses to provide information, or who has provided information that contains significant inconsistencies that cannot be resolved after due investigation.

Client Due Diligence:

The CDD measures shall include the following:

1. S A Artha Securities Private Limited will obtain all the information from the client and verify it with the documents submitted before opening an account. All new accounts shall be reviewed against the negative list issued by SEBI, Exchange UN sanction list, etc. In-person verification is carried out as per the requirements of the regulators. S A Artha Securities Private Limited takes care at the time of settlement regarding the nature of the transaction, movement/source of transaction, etc. Special care would be taken in case of non-individual accounts such as corporate, partnership firms etc, where the ownership structure is opaque. In all such cases the accounts would be activated only post approval from the compliance officer. S A Artha Securities Private Limited will obtain the details with respect to Shareholders and promoters from non-individual clients, and wherever possible, it has to be verified independently. For all clients applying for trading rights in the futures and options segments, further details as regards their proof of income and source of funds would be required.
2. Further check would be done for actual beneficial ownership and control of the particular account. Beneficial Owner is the natural person or persons who ultimately own, control or influence a client and/or persons on whose behalf a transaction is being conducted. It also incorporates those persons who exercise ultimate effective control over a legal person or arrangement.
   For clients other than individuals or trusts, person having more than 25% of share or capital or profits in a company, 15% of share or capital or profits in a partnership firm and 15% of the property or capital or profits in unincorporated association or body of individuals is considered as the beneficial owner. Where no natural person is identified, the identity of the relevant natural person who holds the position of senior managing official is considered as BO.
   For client which is a trust, 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 is considered as the Beneficial Owner. 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.
3. For onboarding of NRI / FII / FPI clients, in case there is any connection with any country which has been observed by the Financial Action Task Force (FATF) to be non-compliant with its requirements, the account shall be rejected, which means if person has provided a residential / correspondence address of such country, directions for the operating of the account are received from the said country or the POA holder of the account is connected in the above manner what that country.
4. S A Artha Securities Private Limited shall conduct periodic due diligence and scrutiny of client’s transaction and accounts throughout the course of the business relationship to ensure that the transactions being conducted are consistent with the Organization’s knowledge of the client, its business and risk profile, taking into account, where necessary, the customer’s source of funds.
5. S A Artha Securities Private Limited shall apply higher levels of due diligence when an account is operated by a mandate holder or where an account is opened by an intermediary in fiduciary capacity. KYC documents will be taken for both the mandate holder/intermediary in fiduciary capacity and the account holder.
6. S A Artha Securities Private Limited shall update all documents, data or information of all clients and beneficial owners collected under CDD process.

Customer Acceptance Policy

• S A Artha Securities Private Limited shall not open account in a fictitious names or account on behalf of other persons whose identity has not been disclosed or cannot be verified. The factors of risk perception of the client are clearly defined having regard to clients’ location, nature of business activity, trading turnover etc. and manner of making payment for transactions undertaken. The parameters shall enable classification of clients into low, medium and high risk.
• Risk Categorisation for Account in the name of Individual

  Type	Recommended Risk Categorisation	Risk perception
  Salaried	Low risk	The source of income is fixed, and the pattern of entries in the account can be correlated with known sources of income/ expenditure.
  Senior citizens	Medium / High Risk	The source of income for trading-related purposes is not known clearly. It may be operated by third parties. Will be considered high risk in case operating in F&O
  House-wife	Medium / High Risk	The source of income for trading-related purposes is not known clearly. May be operated by third parties. Will be considered high risk in case operating in F&O
  Self Employed Professionals/ Businessmen	Low risk (except professionals associated with the film industry who will be categorized as “Medium” risk).	Accounts are maintained by chartered accountants, architects, doctors, lawyers, sportsmen, etc.
  Non-Resident Individuals	Low / Medium risk	The accounts are opened only after IPV. In case an IPV is not performed, and we have relied on documentation submitted by the client, the account would be categorized as medium risk.
  Politically Exposed Persons	High Risk	Politically exposed persons are individuals who are or have been entrusted with prominent public functions in a foreign country, e.g., Heads of State or of Governments, senior politicians, senior government/judicial/military officers, senior executives of state-owned corporations, important political party officials, etc. S A Artha Securities Private Limited should gather sufficient information on any person/customer of this category intending to establish a relationship and check all the information available on the person in the public domain. S A Artha Securities Private Limited shall verify the identity of the person and seek information about the sources of funds before accepting the PEP as a customer. Such accounts should be subjected to enhanced monitoring on an ongoing basis. The above norms should also be applied to the accounts of the family members and close relatives of PEPs.

• Risk Categorisation for Account in the name of non-individual
  1. Type of Entity

     Type	Recommended Risk Categorisation	Risk perception
     Private Ltd/Public Ltd Companie	Low / Medium / High risk	Depending on the clarity of the shareholding structure and the nature of operations, such companies would be classified. Such classifications shall be decided post the review of the compliance officer
     Local Authorities or Public Bodies	Low Risk	They are constituted under Special Acts. Operations are governed by such Acts / Rules
     Public Sector Undertakings, Government Departments/ Undertakings, Statutory Corporations	Low Risk	These types of entities are governed by specific Acts, Notifications etc framed by the Government of India or the State Govt and are controlled and run by the Govt.
     Mutual Funds/Scheduled Commercial Banks/Insurance Companies/Financial Institutions	Low Risk	These entities are strictly regulated by their respective regulators.
     Partnership Firm	Low / Medium / High risk	Depending on the clarity of the beneficial ownership and the nature of operations, such entities would be classified. Such classifications shall be decided post the review of the compliance officer
     Trusts – Public Charitable Trust	Medium / High Risk	Depending on the clarity of the beneficial ownership and the nature of operations, such entities would be classified. Such classifications shall be decided post the review of the compliance officer
     Hindu Undivided Family (HUF)	Medium Risk	These are unregistered bodies and the pattern of entries in the account may not be correlated with known sources of income/ expenditure
     Societies / Associations / Clubs	High Risk (except ‘Housing Societies’ which will be categorized as “Low” risk).	These are not highly regulated entities and the pattern of entries in the account may not be correlated with known sources of income/ expenditure.
     Trusts – Private Trust	High Risk	These may be unregistered trusts and the pattern of entries in the account may not be correlated with known sources of income/ expenditure.
     Co-operative Banks	High Risk	These are not highly regulated entities.

  2. Basic Industry

     Risk Category	Industry
     High	The Risk categorisation is dependent on industries which are inherently High Risk or may exhibit high cash intensity, as below: Arms Dealer Money Changer Exchange Houses Gems / Jewellery / Precious metals / Bullion dealers (including sub-dealers) Real Estate Agents Construction Offshore Corporation Art/antique dealers Restaurant/Bar/casino/night club Import/Export agents (traders; goods not used for own manufacturing/retailing) Share & Stock broker Finance Companies (NBFC) Transport Operators Auto dealers (used/ reconditioned vehicles/motorcycles) Scrap metal dealers Liquor distributorship Commodities middlemen Co-operative Banks Car/Boat/Plane dealerships/brokers Multi-Level Marketing (MLM) Firms
     Medium	None
     Low	All other industry

• Clients of the special category (as given below) may, if necessary, be classified even higher. Such clients require a higher degree of due diligence and regular updates of the Know Your Client (KYC) profile. CSC shall include NRI, High net-worth clients, Trust, Charities, Non- Governmental Organisations (NGOs), Organisations receiving donations, Companies with close family shareholdings or beneficial ownership, PEP, Companies offering foreign exchange offerings, clients of high-risk countries, non-face-to-face clients and clients with dubious reputation as per public information available. S A Artha Securities Private Limited shall apply Customer Due Diligence measures based on the risk assessment, thereby requiring intensive 'due diligence' for higher-risk customers, especially those for whom the sources of funds are not clear.
• S A Artha Securities Private Limited shall not open an account or shall close an existing account where S A Artha Securities Private Limited is unable to apply appropriate customer due diligence measures i.e. S A Artha Securities Private Limited is unable to verify the identity and/or obtain documents required as per the risk categorization due to non-cooperation of the customer or non-reliability of the data/information furnished to S A Artha Securities Private Limited.
• If client is permitted to act on behalf of another person S A Artha Securities Private Limited will collect information such as what manner the account shall be operated, transaction limit for operation, additional authority for transactions exceeding a specified quantity/value etc. Further, the rights and responsibilities of both the persons, i.e., the agent-client registered with S A Artha Securities Private Limited, as well as the person on whose behalf the agent is acting, shall be clearly laid down. Adequate verification of a person’s authority to act on behalf of the client shall also be carried out.
• Necessary checks shall be conducted before opening a new account so as to ensure that the identity of the customer does not match with any person with a known criminal background or with banned entities such as individual terrorists or terrorist organizations, etc. For conducting such reviews, while S A Artha Securities Pvt shall check the lists provided by SEBI/FMC/Exchanges/internally maintained lists, it shall rely primarily on the United Nations list which is available at http://www.un.org/sc/committees/1267/consolist.shtml. The clients covered under the high-risk countries as per the FATF list are not allowed to open accounts through S A Artha Securities Private Limited.
  If the client is new and name in PAN matches with the negative list, the compliance officer will speak to the client over recorded phone and take declaration from the client that he is not the same person. If the client provides the documents, S A Artha Securities will onboard the client and place at high risk else account will not be opened.
  If the existing client name /address/other details of the client matches with the negative list, compliance officer will review past transactions and if the past transactions shown are similar to SEBI/FMC order the account will be closed, if not declaration from the client is taken that he is not the same person. If the client provides the documents, S A Artha Securities Private Limited will onboard the client and place at high risk else account will be closed.
• The CDD process shall necessarily be revisited when there are suspicions of ML/TF.

Client Identification Procedure:

Customer identification procedure means verifying the identity of the customer by using reliable, independent source documents, data or information. S A Artha Securities Private Limited needs to obtain sufficient information necessary to establish, to its satisfaction, the identity of each new customer, whether regular or occasional, and the purpose of the intended nature of relationship. S A Artha Securities Private Limited must also be able to satisfy the regulators that due diligence was observed based on the risk profile of the customer in compliance with the extant guidelines in place.

S A Artha Securities Private Limited shall have in place a comprehensive Customer Identification Procedure which details the various documents that S A Artha Securities Private Limited can take as Identity, Address proof for various types of customers given at the end. Based on risk perception, type / entity of customer, segment of customer following features shall be verified with supporting documents obtained from the customers.

Important points for filling KYC Form:

1. Self-attested copy of PAN card is mandatory for all clients, including Promoters/Partners/Karta/Trustees and whole-time directors and persons authorized to deal in securities on behalf of company/firm/others.
2. Copies of all the documents submitted by the applicant should be self-attested and accompanied by originals for verification. In case the original of any document is not produced for verification, then the copies should be properly attested by entities authorized for attesting the documents, as per the below mentioned list.
3. If any proof of identity or address is in a foreign language, then translation into English is required.
4. Name & address of the applicant mentioned on the KYC form, should match with the documentary proof submitted.
5. If correspondence & permanent address are different, then proofs for both have to be submitted.
6. Sole proprietor must make the application in his individual name & capacity.
7. For non-residents and foreign nationals, (allowed to trade subject to RBI and FEMA guidelines), copy of passport/PIO Card/OCI Card and overseas address proof is mandatory.
8. For foreign entities, CIN is optional; and in the absence of DIN no. for the directors, their passport copy should be given.
9. In case of Merchant Navy NRI’s, Mariner’s declaration or certified copy of CDC (Continuous Discharge Certificate) is to be submitted.
10. For opening an account with Depository participant or Mutual Fund, for a minor, photocopy of the School Leaving Certificate/Mark sheet issued by Higher Secondary Board/Passport of Minor/Birth Certificate must be provided.
11. Politically Exposed Persons (PEP) are defined as 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.

Proof of Identity (POI):

List of documents admissible as Proof of Identity:

1. Unique Identification Number (UID) (Aadhaar)/ Passport/ Voter ID card/ Driving license.
2. PAN card with photograph.
3. Identity card/ document with applicant’s Photo, issued by any of the following: Central/State Government and its Departments, Statutory/Regulatory Authorities, Public Sector Undertakings, Scheduled Commercial Banks, Public Financial Institutions, Colleges affiliated to Universities, Professional Bodies such as ICAI, ICWAI, ICSI, Bar Council etc., to their members; and Credit cards/Debit cards issued by Banks.

Proof of Address (POA):

List of documents admissible as Proof of Address:
(*Documents having an expiry date should be valid on the date of submission.)

1. Passport/ Voters Identity Card/ Ration Card/ Registered Lease or Sale Agreement of Residence/ Driving License/ Flat Maintenance bill/ Insurance Copy.
2. Utility bills like Telephone Bill (only land line), Electricity bill or Gas bill - Not more than 3 months old.
3. Bank Account Statement/Passbook -- Not more than 3 months old.
4. Self-declaration by High Court and Supreme Court judges, giving the new address in respect of their own accounts.
5. Proof of address issued by any of the following: Bank Managers of Scheduled Commercial Banks/Scheduled Co-Operative Bank/Multinational Foreign Banks/Gazetted Officer/Notary public/Elected representatives to the Legislative Assembly/Parliament/Documents issued by any Govt. or Statutory Authority.
6. Identity card/document with address, issued by any of the following: Central/State Government and its Departments, Statutory/Regulatory Authorities, Public Sector Undertakings, Scheduled Commercial Banks, Public Financial Institutions, Colleges affiliated to Universities and Professional Bodies such as ICAI, ICWAI, ICSI, Bar Council etc., to their members.
7. For FII/sub account, Power of Attorney given by FII/sub-account to the Custodians (which are duly notarized and/or apostilled or consularised) that gives the registered address should be taken.
8. The proof of address in the name of the spouse may be accepted.

Exemptions/clarifications to PAN:

(*Sufficient documentary evidence in support of such claims is to be collected.)

1. In case of transactions undertaken on behalf of Central Government and/or State Government and by officials appointed by Courts e.g. Official liquidator, Court receiver etc.
2. Investors residing in the state of Sikkim.
3. UN entities/multilateral agencies exempt from paying taxes/filing tax returns in India.
4. SIP of Mutual Funds up to Rs 50, 000/- p.a.
5. In case of institutional clients, namely, FIIs, MFs, VCFs, FVCIs, Scheduled Commercial Banks, Multilateral and Bilateral Development Financial Institutions, State Industrial Development Corporations, Insurance Companies registered with IRDA and Public Financial Institution as defined under section 4A of the Companies Act, 1956, Custodians shall verify the PAN card details with the original PAN card and provide duly certified copies of such verified PAN details to the intermediary.

List of people authorized to attest the documents:

1. Notary Public, Gazetted Officer, Manager of a Scheduled Commercial/ Co-operative Bank or Multinational Foreign Banks (Name, Designation & Seal should be affixed on the copy).
2. In case of NRIs, authorized officials of overseas branches of Scheduled Commercial Banks registered in India, Notary Public, Court Magistrate, Judge, Indian Embassy /Consulate General in the country where the client resides are permitted to attest the documents.

In case of non-individuals, additional documents to be obtained from non-individuals, over & above the POI & POA, as mentioned below:

Additional documents to be taken in case clients want to open accounts in F&O

An illustrative list of documents which the members may collect from its clients (towards documentary evidence of financial details) is as below:

1. Copy of ITR Acknowledgement
2. Copy of Annual Accounts
3. Copy of Form 16 in case of salary income
4. Net worth certificate
5. Salary Slip
6. Bank account statement for last 6 months
7. Copy of demat account Holding statement
8. Any other relevant documents substantiating ownership of assets.
9. Self-declaration along with relevant supporting.

However, merely obtaining identification documents for identity, address and signature proof from the customer does not mean that the KYC is complete. KYC means actually knowing the customer, nature of his business and the purposes for which S A Artha Securities Private Limited account will be used.

S A Artha Securities Private Limited may ask for periodical updating of customer identification and other data after the account is opened.

Reliance on third party for carrying out Client Due Diligence (CDD)

Risk Management

S A Artha Securities Private Limited recognises the clients of different category depending on the circumstances such as client’s background, type of business relationship or transaction etc, and shall apply CDD measures on a risk sensitive basis. S A Artha Securities Private Limited basic principle enshrined in this approach is that the it 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. The type and amount of identification information and documents that S A Artha Securities Private Limited shall obtain necessarily depend on the risk category of a particular client. Further, low risk provisions 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.

S A Artha Securities Private Limited shall carry out risk assessment to identify, assess and take effective measures to mitigate its money laundering and terrorist financing risk with respect to its clients, countries or geographical areas, nature and volume of transactions, payment methods used by clients, etc. The risk assessment carried out shall consider all the relevant risk factors before determining the level of overall risk and the appropriate level and type of mitigation to be applied. The assessment shall be documented, updated regularly and made available to competent authorities and self-regulating bodies, as and when required.

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.

Monitoring of Transactions:

S A Artha Securities Private Limited pays special attention to all complex, unusually large transactions / patterns which appear to have no economic purpose. S A Artha Securities Private Limited may specify internal threshold limits for each class of client accounts and pay special attention to transactions that exceed these limits. The background including all documents/office records /memorandums/clarifications sought pertaining to such transactions and purpose thereof should also be examined carefully and findings be recorded in writing. Further such findings, records and related documents shall be made available to auditors and also to SEBI/stock exchanges/FIU-IND/other relevant authorities, during audit, inspection or as and when required.

S A Artha Securities Private Limited shall apply client due diligence measures also to existing clients on the basis of materiality and risk, and conduct due diligence on such existing relationships appropriately. The extent of monitoring shall be aligned with the risk category of the client.

Suspicious Transaction Reports (STR):

The Suspicious Transaction Report (STR) shall be furnished within 7 days of arriving at a conclusion that any transaction, whether cash or non-cash, or a series of transactions integrally connected are of suspicious nature. The Principal Officer shall record his reasons for treating any transaction or a series of transactions as suspicious. It shall be ensured that there is no undue delay in arriving at such a conclusion once a suspicious transaction report is received. Such report shall be made available to the competent authorities on request.

Whether a particular transaction is suspicious or not will depend upon the background details of the client, details of the transactions and other facts and circumstances. Followings are the circumstance, which may be in the nature of suspicious transactions:

• 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.

Record Management:

1. Information to be maintained
   S A Artha Securities Private Limited maintain and preserve the following information in respect of transactions.
   • The nature of the transactions;
   • The amount of the transaction and the currency in which it is denominated;
   • The date on which the transaction was conducted; and
   • The parties to the transaction.
2. Record Keeping
   S A Artha Securities Private Limited ensure compliance with the record keeping requirements contained in the SEBI Act, 1992, Rules and Regulations made there-under, PML Act, 2002 as well as other relevant legislation, Rules, Regulations, Exchange Bye-laws and Circulars.
   S A Artha Securities Private Limited maintains 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 behaviour. In case of any suspected 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, S A Artha Securities Private Limited retain the following information for the accounts of their customers in order to maintain a satisfactory audit trail:
   1. the beneficial owner of the account;
   2. the volume of the funds flowing through the account; and
   3. for selected transactions:
      • the origin of the funds;
      • the form in which the funds were offered or withdrawn, e.g. cash, cheques, etc.;
      • the identity of the person undertaking the transaction;
      • the destination of the funds;
      • the form of instruction and authority.

   S A Artha Securities Private Limited ensure that all client and transaction records and information are made available on a timely basis to the competent investigating authorities. Where required by the investigating authority, they shall retain certain records, e.g. client identification, account files, and business correspondence, for periods which may exceed those required under the SEBI Act, Rules and Regulations framed thereunder PMLA, other relevant legislations, Rules and Regulations or Exchange byelaws or circulars.

   S A Artha Securities Private Limited maintains records of the nature and value of transactions as mentioned below:

   • all cash transactions of the value of more than ten lakh rupees or its equivalent in foreign currency;
   • all series of cash transactions integrally connected to each other which have been individually valued below rupees ten lahks or its equivalent in foreign currency where such series of transactions have taken place within a month and the monthly aggregate exceeds an amount of ten lakh rupees or its equivalent in foreign currency;
   • It may, however, be clarified that for the purpose of suspicious transactions reporting, apart from ‘transactions integrally connected’, ‘transactions remotely connected or related’ shall also be considered.
   • all cash transactions where forged or counterfeit currency notes or bank notes have been used as genuine or where any forgery of a valuable security or a document has taken place facilitating the transactions;
   • all suspicious transactions whether or not made in cash and including, inter-alia, credits or debits into or from any non-monetary account such as demat account, security account maintained by the registered intermediary.

3. Retention of Records:

   1. All necessary records on transactions, both domestic and international, shall be maintained at least for the minimum period prescribed under the relevant Act and Rules (PMLA and rules framed thereunder as well SEBI Act) and other legislation, Regulations or exchange Byelaws or circulars.
   2. Records on customer identification, account files and business correspondence should also be kept for 5 years as would be required under the PMLA 2002 and rules made thereunder from the date of cessation of the transaction.
   3. Records of the all-trading details of the client needs to be stored for 5 years as would be required under the PMLA 2002 and rules made thereunder.

   In situations where the records relate to on-going investigations 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.

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

S A Artha Securities Private Limited shall ensure that in terms of Section 51A of the Unlawful Activities (Prevention) Act, 1967 (UAPA) and amendments thereto, do not have any accounts in the name of individuals/entities appearing in the lists of individuals and entities, suspected of having terrorist links, which are approved by and periodically circulated by the United Nations Security Council (UNSC).

In order to ensure expeditious and effective implementation of the provisions of Section 51A of UAPA, Government of India has outlined a procedure through an order dated February 02, 2021 https://www.sebi.gov.in/sebi_data/commondocs/feb-2023/Annexure_1_Government_Order_02.02.23_p.pdf for strict compliance. These guidelines have been further amended vide a Gazette Notification dated June 08, 2021 https://www.sebi.gov.in/sebi_data/commondocs/feb-2023/Annexure_2_Gazette_notification_02.02.23_p.pdf.

List of Designated Individuals/Entities:

The Ministry of Home Affairs, in pursuance of Section 35(1) of UAPA 1967, declares the list of individuals/entities, from time to time, who are designated as 'Terrorists'. S A Artha Securities Private Limited shall take note of such lists of designated individuals/terrorists, as and when communicated by SEBI.

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 https://press.un.org/en/content/press-release. The details of the lists are as under:

• The “ISIL (Da’esh) &Al-Qaida Sanctions List”, which includes names of individuals and entities associated with the Al-Qaida. The updated ISIL & Al-Qaida Sanctions List is available at: https://www.un.org/securitycouncil/sanctions/1267/press-releases.
• The list issued by United Security Council Resolutions 1718 of designated Individuals and Entities linked to Democratic People's Republic of Korea www.un.org/securitycouncil/sanctions/1718/press-releases.

S A Artha Securities Private Limited ensure that accounts are not opened in the name of anyone whose name appears in said list. S A Artha Securities Private Limited shall continuously scan all existing accounts to ensure that no account is held by or linked to any of the entities or individuals included in the list.

S A Artha Securities Private Limited shall maintain updated designated lists and run a check on the given parameters on a regular basis to verify whether the designated individuals/entities are holding any funds, financial assets or economic resources or related services held in the form of securities with them.

S A Artha Securities Private Limited shall also file a Suspicious Transaction Report (STR) with FIU-IND covering all transactions carried through or attempted in the accounts covered under the list of designated individuals/entities under Section 35 (1) and 51A of UAPA.

Full details of accounts bearing resemblance with any of the individuals/entities in the list shall immediately be intimated to the Central [designated] Nodal Officer for the UAPA, at Fax No.011-23092551 and also conveyed over telephone No. 011-23092548. The particulars apart from being sent by post shall necessarily be conveyed on email id: jsctcr-mha@gov.in.

S A Artha Securities Private Limited shall also send a copy of the communication mentioned above to the UAPA Nodal Officer of the State/UT where the account is held and to SEBI and FIU-IND, without delay. The communication shall be sent to SEBI through post and through email (sebi_uapa@sebi.gov.in) to the UAPA nodal officer of SEBI, Deputy General Manager, Division of FATF, Market Intermediaries Regulation and Supervision Department, Securities and Exchange Board of India, SEBI Bhavan II, Plot No. C7, “G” Block, Bandra Kurla Complex, Bandra (E), Mumbai 400 051. The consolidated list of UAPA Nodal Officers is available on the website of the Government of India, Ministry of Home Affairs.

Reporting to Financial Intelligence Unit-India:

Financial Intelligence Unit-India (FIU-IND) is the central national agency of India responsible for receiving, processing, analyzing, and disseminating information on suspect financial transactions. FIU-IND is also responsible for coordinating and strengthening efforts of national and international intelligence, investigation, and enforcement agencies in combating money laundering and related crimes.

S A Artha Securities Private Limited shall adhere to the following:

1. The Cash Transaction Report (CTR) (wherever applicable) for each month shall be submitted to FIU-IND by 15th of the succeeding month.
2. The Suspicious Transaction Report (STR) shall be submitted within 7 days of arriving at a conclusion that any transaction, whether cash or non-cash or a series of transactions integrally connected, is of a suspicious nature. The Principal Officer shall record his reasons for treating any transaction or a series of transactions as suspicious. It shall be ensured that there is no undue delay in arriving at such a conclusion.
3. The Non-Profit Organization Transaction Reports (NTRs) for each month shall be submitted to FIU-IND by 15th of the succeeding month.
4. The Principal Officer will be responsible for the timely submission of CTR, STR and NTR to FIU-IND;
5. Utmost confidentiality shall be maintained in the filing of CTR, STR and NTR to FIU-IND.

S A Artha Securities Private Limited shall report information relating to cash and suspicious transactions to the Director, Financial Intelligence Unit-India (FIU-IND) at the following address:

Director,
FIU-IND,
Financial Intelligence Unit-India,
6th Floor, Hotel Samrat,
Chanakyapuri, New Delhi-110021.
Website - http://fiuindia.gov.in.

Designation of officers for ensuring compliance with provisions of PMLA:

• Appointment of a Principal Officer: The Principal Officer appointed by S A Artha Securities Private Limited would act as a central reference point in facilitating onward reporting of suspicious transactions and for playing an active role in the identification and assessment of potentially suspicious transactions and shall have access to and be able to report to senior management at the next reporting level or the Board of Directors. Name, designation and addresses (including email addresses) of ‘Principal Officer’ including any changes therein shall also be intimated to the Office of the Director-FIU-IND. The ‘Principal Officer’ is of a sufficiently senior position and is able to discharge the functions with independence and authority
• Appointment of a Designated Director: The Designated Director appointed by S A Artha Securities Private Limited ensures over all compliance of the company. Name, designation and addresses (including email addresses) of ‘Designated Director’ including any changes therein shall also be intimated to the Office of the Director-FIU-IND.

Hiring and Training of Employees and Investor Education:

• Hiring of Employees: S A Artha Securities Private Limited have adequate screening procedures in place to ensure high standards when hiring employees’ A Artha Securities Private Limited identifies the key positions within their own organization structures having regard to the risk of money laundering and terrorist financing and the size of their business and ensure the employees taking up such key positions are suitable and competent to perform their duties.
• Training of Employees: S A Artha Securities Private Limited shall have an ongoing employee training program so that the members of the staff are adequately trained in AML and CFT procedures. Training requirements shall have specific focuses for frontline staff, back-office staff, compliance staff, risk management staff and staff dealing with new clients. It is crucial that all those concerned fully understand the rationale behind these directives, obligations, and requirements, implement them consistently, and are sensitive to the risks of their systems being misused by unscrupulous elements.
• Investor Education: Implementation of AML/CFT measures requires S A Artha Securities Private Limited to demand certain information from investors that may be of a personal nature or has hitherto never been called for. Such information can include documents evidencing the source of funds/income tax returns/bank records, etc. This can sometimes lead to the client raising questions about the motive and purpose of collecting such information. In order to sensitize the clients about these requirements as the ones emanating from AML and CFT framework, S A Artha Securities Private Limited shall prepare specific literature/ pamphlets, etc., so as to educate the client of the objectives of the AML/CFT program.