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Corporate Laws Central Ministry of Finance Securities and Exchange Board of India Act, 1992

Amendment to the 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

13-Oct-2023 | SEBI/HO/MIRSD/SEC-FATF/P/CIR/2023/0170

Securities and Exchange Board of India (SEBI) has issued a Circular regarding amendment to the 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, effective from October 13, 2023, addressing all intermediaries registered with SEBI under Section 12 of the Securities and Exchange Board of India Act, 1992, as well as Stock Exchanges.

Key Amendments:

1. Group-Wide Programs for ML/TF: Financial groups must implement group-wide programs to address Money Laundering (ML) and Financing of Terrorism (TF). These programs must apply to all branches and majority-owned subsidiaries of the financial group. They should include policies for sharing information required for Customer Due Diligence (CDD) and ML/TF risk management.

2. Information Exchange within Financial Groups: The circular emphasizes the provision of customer, account, and transaction information from branches and subsidiaries to group-level compliance, audit, and/or AML/CFT functions. This is crucial for AML/CFT purposes. Similarly, branches and subsidiaries should receive relevant information from these group-level functions for risk management.

3. Confidentiality and Use of Information: Adequate safeguards must be in place to ensure the confidentiality and appropriate use of exchanged information. This includes measures to prevent tipping-off.

4. Additional Measures for Non-Cooperative Host Countries: If the host country's regulations hinder the proper implementation of AML/CFT measures consistent with home country requirements, financial groups must apply suitable additional measures to manage ML/TF risks and inform SEBI accordingly.

5. Trusts and Disclosure: In the case of a Trust, the reporting entity must ensure that trustees disclose their status at the commencement of an account-based relationship.

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