Anti-money laundering: Sebi releases fresh set of guidelines. Details here

The capital markets regulator Sebi released guidelines on anti-money laundering standards and fighting the terrorism financing. These amendments pertain to the rules framed under the prevention of money laundering Act 2002.
The Prevention of Money Laundering (Second Amendment) Rules, 2023 came into force on Sept 4 this year


The capital markets regulator, the Securities Exchange Board of India (Sebi), issued a set of amendments on anti-money laundering requirements and fighting terrorist funding on Friday. These instructions are based on the requirements established by the Money Laundering Prevention Act of 2002.

For the uninitiated, the Prevention of Money Laundering (Second Amendment) Rules, 2023 entered into force on September 4, this year, and some provisions of the master circular stand to be updated as a result of these revisions.
The most recent changes are as follows:
1. Additional measures: If the host nation does not permit the correct execution of anti-money laundering/counter-terrorism financing (CFT) measures commensurate with home country regulations, financial groups will be expected to take suitable additional measures to manage risks and notify the Sebi and majority-owned subsidiaries of the financial group, which will include the following:
Policies and processes for information sharing are essential for money laundering and terrorism funding.
Provision of client account and transaction information from branches and subsidiaries as required for AML/CFT purposes. This will include information and analysis of anomalous transactions or activity.
Adequate controls for the confidentiality and use of information exchanged, including safeguards against tipping off.
2. Disclosing status: If the reporting entity is a trust, the trustees must reveal their status at the start of an account-based relationship.
3. Determining beneficial ownership

A. Client is a corporation: The beneficial owner is a natural person who has a controlling ownership stake or exercises control through other means, whether acting alone or jointly, or through one or more juridical persons.

B. If the Client is a partnership firm, the beneficial owners are the natural persons who, acting alone or jointly, possess more than ten percent of the partnership’s capital or profits or who exercise 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 most recent changes were announced in a circular issued by Sapna Sinha, deputy general manager.

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