Master Circular on AML/CFT Obligations of Securities Market Intermediaries under PMLA, 2002

CIR/ISD/AML/3/2010 · 2010-12-31 · SEBI Integrated Surveillance Department

Summary

This circular establishes the Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) obligations for SEBI-registered intermediaries under the Prevention of Money Laundering Act, 2002. It mandates adherence to client account opening procedures and record maintenance as prescribed by the PMLA and its rules. The document serves as a master circular consolidating previous directives on KYC, CDD, AML, and CFT standards. This section lists regulatory circulars from 1993 to 2008 regarding KYC norms, PAN requirements, and in-person verification procedures for intermediaries. It includes a consolidation note stating the Master Circular supersedes earlier directives issued between 2006 and 2009. The text further outlines the legal basis under Section 11(1) of the SEBI Act and PML Rules, directing immediate compliance by all registered intermediaries. Part 3 outlines the background of the Prevention of Money Laundering Act (PMLA) and its applicability to registered intermediaries. It mandates the establishment of internal policies and procedures to prevent money laundering and terrorist financing. The section further details specific Client Due Diligence (CDD) measures req

Text

Intermediaries registered under Section 12 of the SEBI Act shall adhere to client account opening procedures and maintain records of transactions as prescribed by the PMLA and Rules notified thereunder.

Directives lay down minimum requirements for KYC, AML, CDD, and CFT, allowing intermediaries to specify additional disclosures to address money laundering concerns.

The circular lists key directives issued from 1993 regarding KYC, CDD, AML, and CFT, including guidelines on Power of Attorney execution, BO account opening, and in-person verification.

Responsibility of stock-brokers to ensure in-person verification by its own staff.

Exception for certain classes of persons from PAN being the sole identification number for all participants trading in the securities market.

In-person verification to be carried out by staff of depository participant.

Exemption for investors residing in the State of Sikkim from PAN being the sole identification number for trading in the securities market.

clarification on various topics relating to ‘in-person’ verification of BOs at the time of opening demat accounts

Proof of Identity (POI) and Proof of Address (POA) for opening a Beneficiary Owner (BO) Account for

Mandatory requirement of PAN for participants transacting in the securities market.

Procedure for maintaining and preserving records, reporting requirements and formats of reporting cash transactions and suspicious transactions

Framework for AML and CFT including policies and procedures, Client Due Diligence requirements, record keeping, retention, monitoring and reporting

Source: SecMarx — Master Circular on AML/CFT Obligations of Securities Market Intermediaries under PMLA, 2002. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.