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
This circular issues additional Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) requirements for SEBI-registered intermediaries. It updates the definition of Clients of Special Category to include Politically Exposed Persons and clients from high-risk countries. Intermediaries are mandated to screen against UN sanctions lists and file Suspicious Transaction Reports based on reasonable grounds regardless of transaction thresholds.
Text
The illustrative list of ‘Clients of Special Category’ (CSC) includes Non resident clients, High net-worth clients, Trusts/Charities/NGOs, Companies with close family shareholdings, Politically exposed persons (PEP), Companies offering foreign exchange offerings, Clients in high risk countries, Non face to face clients, and Clients with dubious reputation.
Background documents and findings regarding transactions shall be examined carefully, recorded in writing, made available to auditors and authorities during inspection, and preserved for ten years as required under PMLA 2002.
Unusual transactions by CSCs and businesses undertaken by offshore banks/financial services or export-import of small items must be reported.
The Principal Officer/Money Laundering Control Officer and other appropriate compliance staff shall have timely access to customer identification data, CDD information, transaction records, and other relevant information.
Intermediaries are directed that clients from high risk countries should be subject to appropriate counter measures including enhanced scrutiny, enhanced reporting mechanisms, systematic reporting, and enhanced due diligence.
Registered intermediaries should file STR if they have reasonable grounds to believe that the transactions involve proceeds of crime, irrespective of the amount of transaction and/or the threshold limit envisaged for predicate offences specified in part B of Schedule of PMLA, 2002.
The Principal Officer shall have access to and be able to report to senior management above his/her next reporting level or the Board of Directors.
Registered intermediaries are directed to ensure proposed customers do not appear in the UN Security Council Committee list before opening accounts, continuously scan existing accounts, and intimate full details of resembling accounts to SEBI and FIU-IND.
All registered intermediaries are directed to ensure compliance immediately. Stock exchanges and depositories must bring contents to members' attention, verify compliance during inspections, and take action under respective Rules/Bye-laws/Regulations for contravention.
This circular is issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, and Rule 7 of Prevention of Money-laundering Rules, 2005.
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.