Client obligation related to Anti money laundering

1. What does this have to do with opening a Trading/Demat account?

The first step in the money laundering process for criminals is to deposit their illicit funds into an account with a bank or financial intermediary, often using a false identity and address. The deposited funds are then transferred to other accounts, either locally or abroad, or used to purchase goods or services. These transactions may resemble those made with legally earned money, making it difficult to trace them back to their criminal origin. SEBI-registered intermediaries are required by law not only to prevent such activities but also to stop criminals from using banking and financial channels to launder money obtained through illegal or criminal activities.

2. How could money laundering affect you as a customer?

A key defense against money laundering is preventing the opening of accounts under false identities. Anyone wishing to open an account must provide proof of identity, address, and signature. These documents are required regardless of the type of account or its purpose. The request for these documents does not imply that the customer is suspected of money laundering. Criminals may try to appear as legitimate customers by, for example, opening multiple accounts with small amounts of money. Therefore, it is essential to verify the identity of all prospective account holders. Without these identity documents, criminals could potentially use your identity fraudulently.

3. What are the responsibilities of a client regarding money laundering?

Upstox is required to conduct ongoing due diligence and continuous scrutiny of transactions and accounts throughout the business relationship to ensure that the transactions align with the intermediary’s knowledge of the customer's business and risk profile. Clients must provide Upstox with updated information regarding their occupation, source of income, annual income, and net worth on a regular basis. Additionally, clients must explain any unusual trading patterns that Upstox may observe during routine monitoring.