Fourteen deposits just under ₹50,000: is structuring enough to file an STR?
You have just taken over as compliance officer at a district cooperative bank branch in Hisar. Over eleven working days, Mohan Lal, a 34-year-old scrap dealer, has deposited ₹9.42 lakh in cash across three branches of the bank - fourteen deposits, each between ₹44,000 and ₹49,500, mostly in late-afternoon visits and largely in ₹2,000 notes. He has also opened five accounts in the names of relatives, all showing the same residential address and the same mobile number, and each has received two or three cash deposits of ₹20,000–₹30,000. His stated annual income in the KYC record is ₹6 lakh. The branch manager says Mohan Lal is a local man, that it is the festive season and scrap sales are genuinely in cash, and that 'we should not create trouble for a good customer'. The bank's principal officer is on leave for another week, and the branch staff are asking you to sign off on the deposits as routine.
1. Is this suspicious enough to act on? Identify the red flags and explain what 'structuring' means in this pattern.
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Yes - the pattern, not any single deposit, is the red flag.
The threshold design is obvious: cash deposits above ₹50,000 in a day require PAN under Rule 114B of the Income-tax Rules, and each of these fourteen deposits sits just below it. That is the textbook definition of structuring - a series of cash transactions, integrally connected, deliberately kept below reporting thresholds to avoid scrutiny. Under the PMLA rules the series is aggregated, not examined deposit by deposit: ₹9.42 lakh in a month is close to the ₹10 lakh monthly cash transaction reporting line, and this is exactly what a person evading that line would do.
Other red flags:
- Five relative accounts sharing one address and one mobile number - a classic mule or front-account pattern, especially when each receives small round-sum cash deposits.
- Profile mismatch - ₹9.42 lakh in eleven working days against a declared annual income of ₹6 lakh.
- Cash-intensive business as cover - scrap dealing genuinely is cash-heavy, which is precisely why the pattern of the deposits, not the cash itself, must be judged.
The customer may well be legitimate. Suspicion under PMLA is a low threshold: it requires a reasoned belief, not proof. There is enough here to record and escalate.
2. Set out your next steps, the timeline, and how you handle the absent principal officer and the branch manager's resistance.
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Do not wait, and do not be talked out of it.
- Document now. Prepare a dated internal suspicion note with the transaction list, account numbers, KYC details, the shared address/mobile findings, and your reasoning. Compliance conclusions must be defensible months later.
- Escalate in writing. The Principal Officer is the normal channel under PMLA, but his leave is not a defence. Copy the note to the bank's Designated Director (a board-level appointment under the PMLA rules) and to internal audit. If neither responds, the compliance officer's duty to report is personal and cannot be overridden by a branch manager.
- File a Suspicious Transaction Report through the FIU-IND gateway within seven days of reaching the conclusion. There is no monetary threshold for an STR - that is the whole point of the instrument.
- No tipping off. Neither Mohan Lal nor the branch staff outside the need-to-know may be told that a report has been filed. That is a statutory prohibition.
- Do not close the accounts abruptly. Sudden closure invites the customer to move to another bank and destroys the audit trail. Instead apply enhanced due diligence, seek a written source-of-funds declaration and business records, and keep the accounts under watch.
- Record the manager's instruction. If he repeats it in writing, escalate to the audit committee. Retail pressure is not a lawful reason to suppress a report.
3. What KYC action is needed on the five relative accounts, and what do you do about the cash deposits below the PAN threshold?
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Treat the five accounts as a linked-group review.
- Re-KYC with in-person verification for each relative: independent identity and address proof, own mobile number, and a declaration of the source of funds. A common address and mobile is acceptable in a joint family, but it must be verified, not assumed.
- Beneficial ownership check. Ask who operates the accounts and who the cash belongs to. If the relatives cannot explain their own deposits, that is a strong indication of front accounts and the STR must cover all six accounts, not just Mohan Lal's.
- Income and occupation capture for each relative; the current KYC is inadequate if it shows no independent income for people depositing ₹20,000–₹30,000 repeatedly.
- Operating restrictions while the review is pending - no new beneficiaries, no cheque book issue, no limit enhancement.
On PAN: where any single-day cash deposit in an account exceeds ₹50,000, PAN is mandatory; where the customer genuinely has no PAN, obtain Form 60 or 61. For deposits below the limit, PAN is not required per transaction, but this does not stop the bank from aggregating for PMLA purposes - the ₹9.42 lakh monthly figure is what matters for the Cash Transaction Report and for the suspicion assessment. Keep all records for five years.