Master Circular on AML/CFT
Summary
This section of the circular establishes that securities market intermediaries registered under Section 12 of the SEBI Act must adhere to the Prevention of Money Laundering Act, 2002 (PMLA). It mandates strict client account opening procedures and the maintenance of transaction records as prescribed by the PMLA and its rules. Additionally, it references SEBI's historical directives on KYC, AML, CDD, and CFT, emphasizing that intermediaries may implement additional disclosures beyond minimum requirements. This section consolidates historical circulars and establishes the Master Circular's authority under the SEBI Act and PML Rules to regulate AML/CFT compliance. It mandates immediate adherence from all registered intermediaries, including overseas branches, while directing exchanges and depositories to verify such compliance. The document outlines the legislative background of the PMLA and defines specific transaction types that must be recorded by financial entities. This section mandates registered intermediaries to establish comprehensive policies and procedures to combat money laundering and terrorist financing in compliance with the PMLA. It outlines specific obligations for se
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Every banking company, financial institution and intermediary registered under Section 12 of the SEBI Act shall have to adhere to client account opening procedures and maintain records of such transactions as prescribed by the PMLA and Rules notified there under.
The directives lay down the minimum requirements and it is emphasised that the intermediaries may, according to their requirements, specify additional disclosures to be made by clients to address concerns of money laundering and suspicious transactions undertaken by clients.
Reference to applicable statutes and reporting guidelines for intermediaries is available at the website of the Financial Intelligence Unit – India (FIU-IND).
This Master circular consolidates all the requirements/instructions issued by SEBI with regard to AML/CFT till January 31 2010 and supersedes the earlier circulars... This Master Circular is divided into two parts...
The circular shall also apply to their branches and subsidiaries located abroad... When local applicable laws and regulations prohibit implementation of these requirements, the same should be brought to the notice of SEBI. In case there is a variance... branches/overseas subsidiaries of intermediaries are required to adopt the more stringent requirements of the two.
This Master 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)...
All the registered intermediaries are directed to ensure compliance with the requirements contained in this Master 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.
The Directives as outlined below provide a general background and summary of the main provisions of the applicable anti-money laundering and anti-terrorist financing legislations in India... set out the steps that a registered intermediary or its representatives should implement to discourage and to identify any money laundering or terrorist financing activities.
These Directives are intended for use primarily by intermediaries registered under Section 12 of the Securities and Exchange Board of India Act, 1992 (SEBI Act)... each registered intermediary should consider the specific nature of its business... when implementing the suggested measures and procedures... satisfy themselves that the measures taken by them are adequate, appropriate and abide by the spirit of such measures and the requirements as enshrined in the PMLA
The PMLA came into effect from 1st July 2005... The PMLA has been further amended vide notification dated March 6, 2009 and inter alia provides that violating the prohibitions on manipulative and deceptive devices, insider trading and substantial acquisition of securities or control as prescribed in Section 12 A read with Section 24 of the Securities and Exchange Board of India Act, 1992 (SEBI Act) will now be treated as a scheduled offence under schedule B of the PMLA.
As per the provisions of the PMLA, every banking company, financial institution... and intermediary... shall have to maintain a record of all the transactions; the nature and value of which has been prescribed in the Rules under the PMLA.
Such transactions include: All cash transactions of the value of more than Rs 10 lakh or its equivalent in foreign currency.
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Source: SecMarx — Master Circular on AML/CFT. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.