Table of Contents

1. .Introduction
2. Scope of the Policy
3. Policy Objectives
4. Understanding Money Laundering
5. Stock Axis Ventures – KYC/AML Philosophy
6. Know Your Customer (KYC)
7. Client Identification Procedures
8. Customer Acceptance Policy
9. Client Due Diligence (CDD)
10. Monitoring Client Transactions
11. Measures to Combat Financing of Terrorism (CFT)
12. Maintenance of Transaction Records
13. Customer Identification Guidelines
14. Reporting to Financial Intelligence Unit – India (FIU-IND)
15. Filing of Suspicious Transaction Reports (STRs)
16. Designation and Role of Principal Officer

1.Introduction

This Know Your Customer (KYC) and Anti-Money Laundering (AML) Policy (hereinafter referred to as "the Policy") has been framed in accordance with the Prevention of Money Laundering Act, 2002 (PMLA). It incorporates the applicable provisions of the PMLA, along with the rules and guidelines issued by SEBI, FIU-IND, and other regulatory authorities.

As per the PMLA, all banking companies, financial institutions (including chit funds, co-operative banks, housing finance companies, and non-banking financial companies), and intermediaries (including stockbrokers, sub-brokers, share transfer agents, bankers to an issue, merchant bankers, portfolio managers, investment advisers, and others registered under Section 12 of the SEBI Act, 1992) are required to maintain detailed records of specified transactions. These transactions include:

• All cash transactions exceeding ₹10 lakhs (or equivalent in foreign currency).
• Series of interconnected cash transactions, each below ₹10 lakhs (or equivalent in foreign currency), but cumulatively exceeding the threshold within a calendar month.
• All suspicious transactions, whether executed in cash or not, including credit or debit entries in non-monetary accounts such as Demat or securities accounts held with a registered intermediary.

For the purpose of reporting suspicious activities, not only "transactions integrally connected" but also those "remotely connected or related" must be considered. A suspicious transaction refers to any activity—cash or non-cash—that, in the opinion of a reasonably prudent person:

Appears to involve proceeds of crime,

Occurs under circumstances that are unusually complex or unjustified, or

Lacks a clear economic rationale or legitimate purpose.

This Policy by Stock Axis Ventures is designed to supplement and not override the existing SEBI/FIU guidelines on KYC/AML. Any future regulatory updates or directives will be implemented with immediate effect, followed by ratification from the Board. In case of any inconsistency, the prevailing regulatory framework shall take precedence over this document.

2. Scope

This Policy applies to all existing and prospective clients of Stock Axis Ventures and covers all transactions or proposed transactions conducted through Stock Axis Ventures.

3. Objectives

The primary objectives of this policy are to:

• Establish a formal set of policies and procedures, applicable across the organization, for addressing money laundering and terrorist financing risks, in alignment with prevailing statutory and regulatory requirements.
• Ensure that all staff members fully understand and implement the contents of these guidelines.
• Continuously review and update internal policies and procedures related to the prevention of money laundering and terrorist financing, ensuring their ongoing relevance and effectiveness.
• Adopt a risk-sensitive customer acceptance policy that aligns with the potential threat of money laundering and terrorist financing.
• Implement a robust Customer Due Diligence (CDD) process prior to client onboarding.
• Undertake CDD measures commensurate with the risk posed by the customer type, nature of the business relationship, or the specific transaction.

4. What is Money Laundering

Money laundering refers to the illegal process of disguising the origins of money obtained through illicit means, making it appear as though it originates from legitimate sources. It typically involves multiple layers of financial transactions designed to obscure the true source, ownership, and use of the funds.

In simpler terms, money laundering is often described as the process of turning "black money" (illegally obtained) into "white money" (seemingly legal). When successful, this process enables criminals to integrate illicit funds into the legal economy, effectively masking their unlawful origins.

As defined in Section 3 of the Prevention of Money Laundering Act (PMLA): “Whosoever directly or indirectly attempts to indulge or knowingly assists or is knowingly 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 the offence of money laundering.”

5. AML Philosophy of Stock Axis Ventures (under the brand name Stock Axis Venture)

The Anti-Money Laundering (AML) philosophy of the Company is to ensure that Stock Axis Ventures is not misused—either intentionally or unintentionally—by individuals or entities for money laundering or terrorist financing activities.

This policy also aims to help Stock Axis Ventures better understand its customers and their financial behavior, enabling the company to manage associated risks responsibly and comply with applicable legal and regulatory requirements.

6. Know Your Customer (KYC)

One of the most effective ways to prevent and detect money laundering is by thoroughly understanding a customer’s business and financial transaction patterns. Adopting procedures to "Know Your Customer" is not only a sound business practice but also a key component in avoiding association with illicit financial activities. Stock Axis Ventures shall implement robust KYC procedures and internal control measures to:

Assess the risk of money laundering based on how customers are expected to use the company’s products and services;

Protect the company from engaging with individuals or entities whose identities cannot be verified, who refuse to provide required information, or who present inconsistent information that cannot be resolved after reasonable investigation;

Accurately determine and document the true identity of customers establishing relationships, opening accounts, or conducting significant transactions, while also collecting essential background information.

7. Client Identification Procedure

Client identification involves verifying the customer’s identity using reliable and independent documentation, data, or information. Stock Axis Ventures must gather adequate information to confidently identify every new client—whether regular or occasional—and understand the nature and purpose of the intended relationship.

The company must also be capable of demonstrating to regulatory authorities that it conducted appropriate due diligence aligned with each customer’s risk profile and in accordance with applicable guidelines.

To support this, Stock Axis Ventures will maintain a detailed Customer Identification Procedure document. This document will outline the acceptable forms of identity and address proofs for different categories of clients. It will be reviewed and updated as necessary with approvals from Compliance and Business teams and subsequently ratified by the Board of Directors.

8. Customer Acceptance Policy

Stock Axis Ventures strictly prohibits the opening of accounts under anonymous, fictitious, or benami (proxy) names. Submission of a valid PAN (Permanent Account Number) is mandatory for all accounts, and each client shall be permitted to maintain only one account with the company.

At the time of account opening, a comprehensive risk assessment will be conducted based on various parameters such as the nature of the customer’s business activity, geographic location, type of clients, mode of payments, transaction volume, and overall social and financial status.

These factors will help categorize customers into the following risk levels:

Low Risk

Medium Risk

High Risk

Very High Risk

9. CUSTOMER DUE DILIGENCE (CDD)

At Stock Axis Ventures, Customer Due Diligence (CDD) measures include the following key components:

Client Information & Identity Verification:

Before registering a client, it is mandatory to gather and verify all relevant background information. This includes, but is not limited to:

• Client's full identity
• Registered office and correspondence address
• Contact details
• Occupation
• Promoters/Directors (in case of companies)
• Source of income
• Experience in the securities market
• PAN number
• SEBI registration number (if applicable)

Client Information & Identity Verification:

Before registering a client, it is mandatory to gather and verify all relevant background information. This includes, but is not limited to:

• Client's full identity
• Registered office and correspondence address
• Contact details
• Occupation
• Promoters/Directors (in case of companies)
• Source of income
• Experience in the securities market
• PAN number
• SEBI registration number (if applicable)

Client Information & Identity Verification:

Before registering a client, it is mandatory to gather and verify all relevant background information. This includes, but is not limited to:

• Client's full identity
• Registered office and correspondence address
• Contact details
• Occupation
• Promoters/Directors (in case of companies)
• Source of income
• Experience in the securities market
• PAN number
• SEBI registration number (if applicable)

Beneficial Ownership and Control:

Post-registration, the client's account must undergo a secondary verification by an independent employee to identify the actual beneficial ownership and control.

• Collect and verify shareholder/promoter details.
• Identify individuals authorized to operate the account.
• Determine who ultimately controls the account.
• Independently verify the source of funds used in transactions.
• Evaluate the nature of transactions at the time of settlement.

Ongoing Due Diligence and Scrutiny:

Ongoing Due Diligence and Scrutiny:

• Transactions align with the client’s known profile.
• The source of funds is consistent and legitimate.
• Risk categorization remains up to date.

All transactions should be scrutinized throughout the business relationship to confirm that they are consistent with Stock Axis Venture's understanding of the client's business, risk profile, and financial background.

10. Monitoring of Transactions

Ongoing monitoring is a critical component of an effective KYC framework. Stock Axis Ventures can manage and mitigate risks effectively only if there is a clear understanding of the customer’s normal and expected activity. This enables the identification of transactions that deviate from regular patterns.

The Company shall implement a comprehensive transaction monitoring system from a KYC/AML perspective. This includes robust transaction alert mechanisms that proactively signal suspicious activities and potential money laundering risks. A reference list of such alerts will be maintained as part of this policy.

The AML monitoring team at Stock Axis Ventures (operating under Stock Axis Ventures) shall regularly update this alert list in line with evolving market conditions and trading behaviors observed among clients. Apart from internal triggers, the team shall also monitor alerts issued by exchanges, such as those detailed in NSE Circular No. NSE/INVG/22908 dated March 7, 2013.

Indicative List of Suspicious Activities

Determining whether a particular transaction is suspicious depends on the specific background of the client, the nature of the transaction, and other relevant facts and circumstances. The following scenarios may be considered indicative of suspicious transactions:

Clients whose identity verification proves difficult or who appear uncooperative

Clients availing asset management services where the source of funds is unclear or inconsistent with their stated financial profile or business activity

Clients based in, or introduced from, high-risk jurisdictions, including those referred by banks, affiliates, or individuals from such regions

Significant and unexplained increases in business volume

Unusually large cash deposits made by an individual or business

Clients transferring large sums of money to or from overseas accounts with instructions for cash settlements

Transfer of investment proceeds to unrelated third parties

Off-market transactions occurring in the client’s Demat (DP) account

High-frequency trading in relatively illiquid securities

Concentrated trading in “Z” or “T to T” category scrips

Options trading or trading in illiquid stocks where the client realizes abnormal profit or loss not aligned with price movements in the cash segment

Clients taking significantly high exposures compared to their declared income

These examples are not exhaustive and shall be reviewed and updated periodically by Stock Axis Ventures as part of its ongoing AML compliance framework.

11. Combating Financing of Terrorism (CFT)

Stock Axis Ventures shall maintain a heightened level of vigilance within its systems to identify and monitor transactions that may give rise to reasonable suspicion of being linked to the financing of terrorism-related activities. The company shall ensure appropriate checks are in place to detect and report any such suspicious activity in compliance with applicable laws.

12. Maintenance of Records / Information Preservation / Reporting to FIU-IND

The Government of India, Ministry of Finance, Department of Revenue, through its notification dated July 1, 2005, published in the Gazette of India, enforced the Prevention of Money Laundering Act (PMLA), 2002 along with the associated Rules.

As per these Rules, effective from July 1, 2005, Section 12 of the PMLA imposes specific obligations on financial institutions, including Stock Axis Ventures, to maintain and preserve records related to client transactions and account information. These include:

Maintenance and preservation of client identification records and transactional data

Retention of such records for the time period prescribed under the Act

Reporting of cash transactions and suspicious activities to the Financial Intelligence Unit-India (FIU-IND) as per the prescribed formats and timelines.

Stock Axis Ventures is committed to complying with all applicable legal requirements under PMLA to ensure transparency and support in the prevention of money laundering and terrorist financing.

13. Maintenance of Records of Transactions

Stock Axis Ventures shall establish and maintain a robust system for recording all transactions, including those specified under Rule 3 of the PMLA Rules. These include:

• All cash transactions exceeding ₹10 lakh or its equivalent in foreign currency.
• A series of cash transactions that are integrally connected and individually valued below ₹10 lakh (or its foreign currency equivalent), but collectively exceeding ₹10 lakh within a calendar month.
• All transactions involving receipts by non-profit organizations exceeding ₹10 lakh or its equivalent in foreign currency.

14. Information to be Preserved

Stock Axis Ventures shall preserve all relevant information related to transactions covered under Rule 3 of the PMLA Rules. This includes all data necessary to reconstruct each individual transaction, as required by regulatory authorities. The following details shall be maintained:

• Nature of the transaction.
• Amount and the currency in which the transaction was denominated
• Date on which the transaction occurred.
• Identities of the parties involved in the transaction.

15. Maintenance and Preservation of Records

Stock Axis Ventures shall maintain comprehensive records of all financial transactions, including those covered under Rule 3 of the PMLA Rules. The company shall implement appropriate systems and procedures to ensure proper storage, easy retrieval, and prompt access to such records when required by competent authorities.

All transaction records, whether domestic or international, shall be preserved for the period specified under the PMLA, 2002 and the Rules thereunder, from the date of the transaction. These records must enable reconstruction of individual transactions, including currency details, to support legal proceedings if needed.

Additionally, identification records such as copies of passports, identity cards, driving licenses, PAN cards, utility bills, and other Know Your Customer (KYC) documents collected at the time of account opening and during the course of the business relationship shall be securely stored. These records must also be preserved for the period mandated under the PMLA, 2002 and made available to regulatory or enforcement authorities upon request, even after the business relationship has ended.

16. Record Generation, Maintenance, and Retention

Stock Axis Ventures shall ensure full compliance with the record-keeping requirements as mandated under the SEBI Act, 1992, the Prevention of Money Laundering Act (PMLA), 2002, along with all applicable rules, regulations, exchange bye-laws, and circulars issued from time to time.

Records shall be maintained in such a manner that they allow reconstruction of individual transactions, including amounts and types of currencies involved, to serve as potential evidence for prosecuting criminal activities.

In cases involving suspected drug-related, money laundering, or terrorist-financing activities, the competent authorities may require a complete audit trail. Stock Axis Ventures shall retain the following details to support such investigations:

• Identification of the beneficial owner of the account
• Volume and frequency of fund flows in and out of the account
• For selected transactions:

17. Retention of Records

The following record retention guidelines shall be followed:

• All records of domestic and international transactions shall be preserved for the duration specified under the PMLA, 2002, and related rules, from the date of the transaction.
• Customer identification records (e.g., PAN card, passport, driving license, voter ID, or other valid KYC documents), account files, and business correspondence shall be retained for the prescribed period under PMLA rules from the end of the business relationship or transaction.
• Trading details of clients shall be stored for such duration as required under PMLA regulations.
• Records shall be maintained in both physical (hard copy) and digital (soft copy) formats.
• In cases where records relate to ongoing investigations or suspicious transaction reports, they shall be retained until formal confirmation is received that the case has been resolved or closed.

18. Customer Identification Procedure for Account Opening

Customer identification involves verifying the identity of a client using reliable, independent documents, data, or information. Based on the customer's risk profile, type/entity, and segment, the following details shall be verified through valid supporting documents:

Instructions/Checklist for Filling KYC Form:

A copy of the PAN card is mandatory for all clients, including Promoters, Partners, Karta, Trustees, Whole-time Directors, and persons authorized to deal in securities on behalf of a company, firm, or other entities.

• If any identity or address proof is in a foreign language, a certified English translation must be provided.
• The name and address mentioned in the KYC form must match the documentary proofs submitted.
• If the correspondence and permanent addresses differ, valid proofs for both must be submitted.
• A sole proprietor must apply in individual name and capacity.
• For non-residents and foreign nationals (permitted to trade under RBI and FEMA guidelines), a copy of Passport/PIO Card/OCI Card along with overseas address proof is mandatory.
• For foreign entities, the CIN is optional. In the absence of a DIN for directors, passport copies must be submitted.
• In the case of Merchant Navy NRIs, a Mariner’s Declaration or a certified copy of the Continuous Discharge Certificate (CDC) is required.
• Politically Exposed Persons (PEPs) are defined as individuals who hold or have held prominent public positions in a foreign country—such as Heads of State, senior politicians, top government/judicial/military officials, senior executives of state-owned corporations, and key political party officials.

19. Proof of Identity (POI):

List of Acceptable Documents as Proof of Identity:

• Aadhaar Card (Unique Identification Number)/Passport/Voter ID/Driving License
• PAN Card with photograph
• 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.

20. Proof of Address (POA):

List of Acceptable Documents as Proof of Address:
(All documents with an expiry date must be valid on the date of submission)

• Passport / Voter ID / Ration Card / Registered Lease or Sale Agreement of Residence / Driving License / Flat Maintenance Bill / Insurance Document.
• Utility bills such as Landline Telephone Bill, Electricity Bill, or Gas Bill (Not older than 3 months)
• Bank Statement or Passbook (Not older than 3 months)
• Self-declaration from High Court or Supreme Court judges, providing their new address
• 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.
• 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.
• For FII/sub account, Power of Attorney given by FII/sub-account to the Custodians (which are duly notarized and/or apostiled or consularised) that gives the registered address should be taken.
• The proof of address in the name of the spouse may be accepted.

21. Exemptions/Clarifications Regarding PAN:

PAN Card is not mandatory under the following conditions:

• Transactions executed on behalf of Central/State Government or court-appointed officials (e.g., Official Liquidators, Court Receivers)
• Investors residing in the State of Sikkim
• UN entities and multilateral agencies exempt from Indian taxes