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SEBI Issues Circular on AML and CFT Guidelines for Securities Market Intermediaries

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Money Laundering

The Securities and Exchange Board of India (SEBI) has released a circular dated October 13, 2023, amending the Guidelines on Anti-Money Laundering (AML) Standards and Combating the Financing of Terrorism (CFT) obligations for Securities Market Intermediaries under the Prevention of Money Laundering Act (PMLA) and relevant rules.

Key points from the circular are:

A. Determining Beneficial Ownership:

(i) For companies, a natural person acting alone or together / through juridical person(s) who has controlling ownership or control through other means would be the beneficial owner.

(ii) In partnership firms, a natural person acting alone or together / through juridical person(s) who has ownership to 10% of capital or profit or control would be the beneficial owner.

(iii)  For Unincorporated associations or bodies of individuals, a natural person acting alone or together / through juridical person(s) who has ownership over 15% of property or capital or profits would be the beneficial owner.

Further in the above three if no natural person is identified, the natural person holding the position of senior managing official would be the beneficial owner.

Trusts necessitate the identification of authors, trustees, and beneficiaries with over 10% interest, ensuring disclosure by trustees during the account relationship or specific transactions.

B. Principal Officer Responsibility:

The Principal Officer is responsible for ensuring registered intermediaries report suspicious transactions to the financial intelligence unit (FIU).

Notably, Paytm Payments Bank Limited was recently penalized by the Reserve Bank of India (RBI) with a monetary penalty of INR 5.39 crore for KYC and AML compliance lapses, including the failure to identify beneficial owners.

The circular is attached. Readers may share their feedback with Regstreet Law Advisors at info@regstreetlaw.com

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