ANTI-MONEY LAUNDERING: SEBI RELEASES FRESH SET OF GUIDELINES
The capital markets regulator Securities Exchange Board of India (Sebi) on Friday released a set of amendents on anti-money laundering standards and combating the financing of terrorism. These guidelines relate to the rules framed under the prevention of money laundering Act 2002.
For the uninitiated, Prevention of Money Laundering (Second Amendment) Rules, 2023 came into force on Sep 4, this year, and in view of these amendments, certain provisions of the master circular stand to get modified.
The latest amendments include the following:
- Additional measures: In case the host country does not allow the proper implementation of anti-money laundering/ financing of terrorism (CFT) consistent with the home country requirements, financial groups will be required to apply appropriate additional measures to manage the risks and inform the Sebi.
Financial groups will be meant to implement group wide programmes for dealing with money laundering which will be applicable to all branches and majority owned subsidiaries of the financial group which will include the following:
Policies and procedures for sharing information required for money laundering and terrorism funding.
The provision of customer account and transaction information from branches and subsidiaries when necessary for AML/CFT purposes. This will include information and analysis of transactions or activities which appear unusual.
Adequate safeguards on the confidentiality and use of information exchanged including safeguards to prevent tipping-off. - Disclosing status: In case of a trust, the reporting entity will ensure that trustees disclose their status at the time of commencement of an account-based relationship.
- Identifying beneficial ownership: While identifying beneficial ownership and control, the beneficial owner will be determined as follows:
A. Client is a company: The beneficial owner is the natural persons whether acting alone or together, or through one or more juridical person, has a controlling ownership interest or who exercises control through other means.
B. Client is a partnership firm: The beneficial owners is the natural person who whether acting alone or together has ownership of entitlement to more than ten percent of capital or profits of the partnership or who exercises control through other means.
C. Client is an unincorporated association or body of individuals: The beneficial owner is the natural person who whether acting alone or together has ownership of or entitlement to more than fifteen per cent of the property or capital or profits of such association or body of individuals.
D. Client is a trust: Identification of beneficial owner will include identification of the author of the trust , the trustee, the beneficiaries with ten percent or more interest in the trust and any other natural person exercising ultimate effective control over the trust.
E. For foreign investors: The intermediaries dealing with foreign investors may be guided by Sebi master circular dated Dec 19, 2022 for the purpose of identification of beneficial ownership of the client.
The latest amendments have been introduced via circular released by deputy general manager Sapna Sinha.
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