CIRCULAR
SEBI/HO/MIRSD/MIRSDSECFATF/P/CIR/2023/091
June 16, 2023
To,
1. All Intermediaries registered with the Securities and Exchange Board of
India under Section 12 of the Securities and Exchange Board of India Act,
1992
2. Stock Exchanges
Dear Sir/Madam,
Subject: 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
1. Please refer to the Master Circular reference number SEBI/HO/MIRSD/MIRSD-
SEC-5/P/CIR/2023/022 dated February 03, 2023 on the captioned subject issued
by the Securities and Exchange Board of India (SEBI).
2. The Government of India through gazette notification S.O. 1074(E) dated March
07, 2023 (PML eGazette dated March 07,2023) has amended the Prevention of
Money Laundering (Maintenance of Records) Rules, 2005 with immediate effect.
3. In view of the amendments to the Prevention of Money-Laundering (Maintenance
of Records) Rules, 2005 and to further enhance the effectiveness of AML/CFT
framework, certain provisions of the aforesaid Master Circular shall stand modified
as mentioned below: -
3.1. After paragraph 7 and before paragraph 8, the following paragraphs shall be
inserted, namely-
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“7A. “group" shall have the same meaning assigned to it in clause (cba) of
sub-rule (1) of rule 2 of the Prevention of Money-laundering (Maintenance of
Records) Rules, 2005 as amended from time to time.”
3.2. In Paragraph 8, sub-paragraph (i) shall be substituted with “issue a
statement of policies and procedures and implement, on a group basis
where applicable, for dealing with ML and TF reflecting the current statutory
and regulatory requirements;”
3.3. In Paragraph 11, sub-paragraph (ii) shall be substituted with the following
sub-paragraph, namely-
“(ii) 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 client is so authorized and verify
the identity of that person.”
3.4. In Paragraph 11, in sub-paragraph (iii), in item (a) titled “For clients other
than individuals or trusts”, in the Explanation, in clause (i), for the numbers
and symbol “25%”, the numbers and symbol “10%” shall be substituted.
3.5. In Paragraph 11, in sub-paragraph (iii), in item (b) titled “For client which is
a trust”, for the numbers and symbol “15%”, the numbers and symbol “10%”
shall be substituted.
3.6. In Paragraph 11, after sub-paragraph (viii), the following sub-paragraphs
shall be inserted, namely:-
“(ix) Every registered intermediary shall register the details of a client, in case
of client being a non-profit organisation, 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.
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(x) Where registered intermediary is suspicious that transactions relate to
money laundering or terrorist financing, and reasonably believes that
performing the 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.”
3.7. In Paragraph 12, in sub-paragraph (iii), item (e), shall be substituted as
follows:
“(e) “Politically Exposed Persons” (PEPs). PEP shall have the same
meaning as given in clause (db) of sub-rule (1) of rule 2 of the Prevention of
Money-Laundering (Maintenance of Records) Rules, 2005. The additional
norms applicable to PEP as contained in paragraph 14 of the Master Circular
shall also be applied to the accounts of the family members or close relatives
of PEPs.”
3.8. After paragraph 24 and before paragraph 25, the following paragraph shall
be inserted, namely-
“24A 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:
a. To undertake the ML/TF risk assessments prior to the launch or use of
such products, practices, services, technologies; and
b. Adoption of a risk based approach to manage and mitigate the risks”.
3.9. Paragraph 47 shall be substituted with the following, namely: -
“In order to ensure expeditious and effective implementation of the
provisions of Section 51A of UAPA, Government of India has outlined a
procedure through an order dated February 02, 2021 (Annexure 1) for strict
compliance. These guidelines have been further amended vide a Gazette
Notification dated June 08, 2021 (Annexure 2). A corrigendum dated March
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15, 2023 has also been issued in this regard (Annexure 3). The list of Nodal
Officers for UAPA is available on the website of MHA”.
3.10. After paragraph 52 and before paragraph 53, the following paragraph shall
be inserted, namely-
“52A. “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.”
3.11. In Paragraph 59, after sub-paragraph (vi), the following sub-paragraph shall
be inserted, namely: -
“(vii) Non-profit organization” means any entity or organisation, constituted
for religious or charitable purposes referred to in clause (15) of section 2 of
the Income-tax Act, 1961 (43 of 1961), that is registered as a trust or a
society under the Societies Registration Act, 1860 (21 of 1860) or any similar
State legislation or a Company registered under the section 8 of the
Companies Act, 2013 (18 of 2013);”
4. This Circular is available at www.sebi.gov.in under the link “Legal Circulars”
Yours faithfully,
Sapna Sinha
Deputy General Manager
Phone No. 022-26449748
Email id: sapnas@sebi.gov.in
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