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Banking Transactions That Could Be Considered Suspicious: 10 Points

NDTV logo NDTV 16-09-2017 NDTV Profit Team

The number of suspicious financial transactions flagged by banks and other financial institutions went up sharply in 2016-17. This is according to the RBI's annual report which was released last month. The RBI report said banks reported nearly six-fold jump in suspicious transactions from 61,361 in 2015-16 to 3.61 lakh in 2016-17. The number was 45,858 in 2014-15, according to the RBI report. The figures are based on the suspicious transactions reported by banks to Financial Intelligence Unit of Ministry of Finance. Other than banks, other entities like financial institutions and intermediaries like non-banking financial companies, chit funds, stock brokers have also reported a sharp jump in suspicious transactions.

Financial Intelligence Unit was set up in 2004 and is the agency responsible for receiving, processing, analysing and disseminating information relating to suspect financial transactions.

suspicious transactions rbi document © Provided by NDTV 24x7 suspicious transactions rbi document (A break-up of suspicious financial transactions detected in 2016-17, according to the RBI report)

Financial Intelligence Unit on its website has mentioned the transactions that can be considered suspicious by banks and other entities. Here are some of them:

1) False identification documents, identification documents which could not be verified within reasonable time and accounts opened with names very close to other established business entities

2) Large number of accounts having a common account holder, unexplained transfers between multiple accounts with no rationale

3) Accounts opened with names very close to other established business entities

4) Use of different accounts by client alternatively

5) Unusual activity compared with past transactions

6) Sudden activity in dormant accounts

7) Value of transaction just under the reporting threshold amount in an apparent attempt to avoid reporting, large sums being transferred from overseas for making payments, inconsistent with the clients apparent financial standing, inconsistency in the payment pattern by client

8) Source of funds are doubtful, nature of transactions inconsistent with what would be expected from declared business, activity inconsistent with what would be expected from declared business, value inconsistent with the client's apparent financial standing

9) Frequent purchases of drafts or other instruments with cash

10) Appears to be case of insider trading, transactions reflect likely market manipulations, suspicious off market transactions

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