SEBI on June 16, 2023 has issued amendment to Guidelines on Anti-Money Laundering (AML) Standards and Combating the Financing of Terrorism (CFT) /Obligations of Securities Market Intermediaries under the Prevention of Money-laundering Act, 2002 and Rules framed there under.
The guidelines are revised in the light of Prevention of Money-laundering (Maintenance of Records) Amendment Rules, 2023.
The amendment mandates the following compliances for intermediaries:
Intermediaries shall issue a statement of policies and procedure: The senior management of a registered intermediary shall be fully committed to establishing appropriate policies and procedures for the prevention of ML and TF and ensuring their effectiveness and compliance with all relevant legal and regulatory requirements. The registered intermediaries shall issue a statement of policies and procedures, on a group basis where applicable, for dealing with ML and TF reflecting the current statutory and regulatory requirements.
Intermediary shall verify client identity: 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 clientis so authorized and verify the identity of that person.
Registration of client NGOs in DARPAN portal: Every registered intermediary shall register the details of a client, in case of client being a non-profit organization, 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.
Reporting Money Laundering: Where registered intermediary is suspicious that transactions relate to money laundering or terrorist financing, and reasonably believes that performing the Client Due Diligence(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.
Risk mitigation: 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, including new delivery mechanisms, and the use of new or developing technologies for both new and existing products. The Stock Exchanges and registered intermediaries shall ensure:
- To undertake the ML/TF risk assessments prior to the launch or use of such products, practices, services, technologies; and
- Adoption of a risk based approach to manage and mitigate the risks.
Name screening of clients: 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.