Structuring, a Mule Account and a Supervisor in a Hurry
A customer, Bimal Das, 34, opens a savings account at a metro branch in his own name with an address in another state, quoting a mobile number that is already registered against another customer's account. Over the next eleven days the account receives three cash deposits - ₹3,40,000, ₹3,60,000 and ₹3,50,000 - made at two different branches, each time in bundles of ₹49,000. On day twelve an RTGS transfer of ₹9,90,000 goes to a firm whose account was opened three weeks ago and which shows the same address as Bimal's. When the clerk asks for PAN and the source of the funds, Bimal says small traders do not need PAN and becomes loud at the counter. The supervisor tells the clerk, 'Do it - each deposit is below the ₹10 lakh limit anyway, so there is nothing to report.'
1. List the red flags in this account and explain why the supervisor's 'each deposit is below ₹10 lakh' reasoning is wrong.
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Red flags
- Aggregation, not individual size: three deposits in eleven days total ₹10.5 lakh. Cash Transaction Report obligations are triggered by the aggregate cash transactions in an account in a calendar month, not by each single deposit, and the bank must aggregate across its own branches. The ₹10 lakh figure is crossed here.
- Structuring: bundles of ₹49,000 look designed to stay under the ₹50,000 threshold at which PAN must be quoted. Splitting a large sum into smaller deposits is a classic indicator.
- Profile mismatch: a 'small trader' suddenly handling ₹10 lakh in cash, when the account was dormant/quiet before, does not fit the declared profile.
- Weak KYC linkage: an out-of-state address, and a mobile number already linked to another customer - a clear KYC quality failure.
- Possible mule/front account: an immediate RTGS of almost the entire balance to a three-week-old firm sharing the customer's address suggests layering, not trade.
- Hostile refusal to give PAN or explain the source of funds.
Why the supervisor is wrong: the threshold is not a per-deposit safe harbour, and suspicious transaction reporting has no minimum amount at all. Reporting is triggered by suspicion, not only by size.
2. What must the branch do now, and what must it not do?
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Must do
- Complete and correct the KYC: obtain PAN (it is mandatory for cash deposits above ₹50,000 in a day, so the clerk's request was lawful), re-verify the mobile and address, and record the source of funds and purpose of the transfer.
- Apply enhanced due diligence: treat the account as high risk, verify the beneficial owner and the nature of business of the receiving firm, and check whether the firm or the customer appears in any internal negative list or fraud/mule database.
- Escalate to the Principal Officer/designated director: the branch does not decide on its own. A Suspicious Transaction Report goes to FIU-IND through the compliance chain, promptly, whatever the amount, along with a Cash Transaction Report for the aggregate cash.
- Preserve records: transaction slips, CCTV, account opening documents, and call records, retained as required under the anti-money-laundering rules.
- Keep the account under watch: continue normal dealing but record and report further activity rather than abruptly freezing it without authority.
Must not do
- Do not tip off the customer that a suspicious report is being considered - this is a legal prohibition and can itself be an offence.
- Do not accuse him of money laundering at the counter, shout back, or refuse service on personal dislike.
- Do not accept the cash 'just this once' or open a second account to spread the deposits.
- Do not close the account to make the file look clean; closure destroys the audit trail and helps the launderer.
3. Draft the short conversation the clerk should have with Bimal at the counter.
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Setting: take him to a side desk, not in front of the queue. Calm, low voice, neutral words, no accusation.
Script
- 'Sir, I understand the delay is frustrating. The rule is not personal: for any cash deposit above ₹50,000 in a day, the bank is required to record your PAN. I cannot key in the deposit without it, and I would be putting your account at risk if I did.'
- 'I also need a line on where this cash comes from - for example, sale proceeds, a property payment, or a family transfer. This is a standard record we keep for all high-value deposits.'
- 'You can bring your PAN card now, or deposit up to ₹50,000 today and the rest after you produce it. You can also ask your buyer to transfer by RTGS or NEFT.'
- If he objects: 'I will note your objection and give you a written acknowledgement of your complaint, with a reference number. But I cannot bypass the PAN requirement.'
Do not say 'you are being investigated', 'we are reporting you', or name any authority. Do not promise that the transfer 'will go through smoothly'. If he becomes abusive, call the manager rather than continue arguing.