Anti Money Laundering (AML) Standards/Combating Financing of Terrorism (CFT)/Obligations of Securities Market Intermediaries under Prevention of Money Laundering Act, 2002 and Rules framed there-under
Summary
SEBI issues a circular to clarify and add obligations regarding Anti-Money Laundering (AML) and Combating Financing of Terrorism (CFT) for registered intermediaries. The document mandates updates to internal audit independence, periodic client data updates, and enhanced due diligence for politically exposed persons. It also clarifies record-keeping timelines and the scope of 'tipping off' provisions under the Prevention of Money Laundering Act.
Text
internal audit function should be independent, adequately resourced and commensurate with the size of business and operations, organization structure, number of clients and other such factors.
Registered intermediaries shall periodically update all documents, data or information of all clients and beneficial owners collected under the CDD process
The CDD process should necessarily be revisited when there are suspicions of money laundering or financing of terrorism (ML/FT)
Further low risk provisions should not apply when there are suspicions of ML/FT or when other factors give rise to a belief that the customer does not in fact pose a low risk
registered intermediaries should independently access and consider other publicly available information
All registered intermediaries shall proactively put in place appropriate risk management systems to determine whether their client or potential client or the beneficial owner of such client is a politically exposed person
Registered intermediaries shall also take reasonable measures to verify the sources of funds as well as the wealth of clients and beneficial owners identified as PEP
the “date of cessation of transactions” shall be read to mean the “date of termination of an account or business relationship”
the ”tipping off” provision in clause 13.3 of the Master Circular extends not only to the filing of the STR and/or related information but even before, during and after the submission of an STR
All the registered intermediaries are directed to ensure compliance with the requirements contained in this circular on an immediate basis
Stock exchanges, Depositories and AMFI are also directed to bring the contents of this circular to the attention of their members/ depository participants and verify compliance during inspections
This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992 (SEBI Act), and Rule 7 and Rule 9 of Prevention of Money-laundering... Rules, 2005 (PML Rules)
Source: SecMarx — Anti Money Laundering (AML) Standards/Combating Financing of Terrorism (CFT)/Obligations of Securities Market Intermediaries under Prevention of Money Laundering Act, 2002 and Rules framed there-under. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.