Amendment to Guidelines on Anti-Money Laundering (AML) Standards and Combating the Financing of Terrorism (CFT)
Summary
This SEBI circular amends the Master Circular on Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) standards for securities market intermediaries. The amendments incorporate changes to the Prevention of Money Laundering (Maintenance of Records) Rules, 2005, effective from March 7, 2023. Key updates include revised beneficial ownership thresholds, new definitions for 'group' and 'non-profit organisation', and enhanced risk assessment requirements.
Text
“group” shall have the same meaning assigned to it in clause (cba) of sub-rule (1) of rule 2 of the Prevention of Money-laundering (Maintenance of Records) Rules, 2005 as amended from time to time.
issue a statement of policies and procedures and implement, on a group basis where applicable, for dealing with ML and TF reflecting the current statutory and regulatory requirements;
Verify the client’s identity using reliable, independent source documents, data or information. Where the client purports to act on behalf of juridical person or individual or trust, the registered intermediary shall verify that any person purporting to act on behalf of such client is so authorized and verify the identity of that person.
In Paragraph 11, in sub-paragraph (iii), in item (a) titled “For clients other than individuals or trusts”, in the Explanation, in clause (i), for the numbers and symbol “25%”, the numbers and symbol “10%” shall be substituted.
In Paragraph 11, in sub-paragraph (iii), in item (b) titled “For client which is a trust”, for the numbers and symbol “15%”, the numbers and symbol “10%” shall be substituted.
Every registered intermediary shall register the details of a client, in case of client being a non-profit organisation, on the DARPAN Portal of NITI Aayog, if not already registered, and maintain such registration records for a period of five years after the business relationship between a client and the registered intermediary has ended or the account has been closed, whichever is later.
Where registered intermediary is suspicious that transactions relate to money laundering or terrorist financing, and reasonably believes that performing the CDD process will tip-off the client, the registered intermediary shall not pursue the CDD process, and shall instead file a STR with FIU-IND.
“Politically Exposed Persons” (PEPs). PEP shall have the same meaning as given in clause (db) of sub-rule (1) of rule 2 of the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005. The additional norms applicable to PEP as contained in paragraph 14 of the Master Circular shall also be applied to the accounts of the family members or close relatives of PEPs.
The Stock Exchanges and registered intermediary shall identify and assess the ML/TF risks that may arise in relation to the development of new products and new business practices... The Stock Exchanges and registered intermediaries shall ensure: a. To undertake the ML/TF risk assessments prior to the launch or use of such products, practices, services, technologies; and b. Adoption of a risk based approach to manage and mitigate the risks.
In order to ensure expeditious and effective implementation of the provisions of Section 51A of UAPA, Government of India has outlined a procedure through an order dated February 02, 2021... strict compliance. These guidelines have been further amended vide a Gazette Notification dated June 08, 2021... A corrigendum dated March 15, 2023 has also been issued...
The Stock Exchanges and the registered intermediaries shall leverage latest technological innovations and tools for effective implementation of name screening to meet the sanctions requirements.
“Non-profit organization” means any entity or organisation, constituted for religious or charitable purposes referred in clause (15) of section 2 of the Income-tax Act, 1961 (43 of 1961), that is registered as a trust or a society under the Societies Registration Act, 1860 (21 of 1860) or any similar State legislation or a Company registered under the section 8 of the Companies Act, 2013 (18 of 2013);
Source: SecMarx — Amendment to Guidelines on Anti-Money Laundering (AML) Standards and Combating the Financing of Terrorism (CFT). Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.