The Securities Exchange Board of India (SEBI) recently issued amendments to anti-money laundering and anti-terrorism financing standards, relating to rules established under the Prevention of Money Laundering Act of 2002. These amendments, effective since September 4, 2023, impact certain provisions within the master circular.
Key amendments include:
- Additional Measures: Financial groups must implement additional measures when the host country’s anti-money laundering and financing of terrorism standards do not align with the home country’s requirements. They should also inform SEBI of these actions. Financial groups are required to establish group-wide programs for combating money laundering, applicable to all branches and majority-owned subsidiaries. This entails creating policies for sharing information related to money laundering and terrorism funding, providing customer account and transaction information, and ensuring confidentiality safeguards.
- Disclosing Trustee Status: Reporting entities dealing with trusts must ensure trustees disclose their status at the start of an account-based relationship.
- Identifying Beneficial Ownership: Beneficial ownership is determined as follows:
- For companies, it’s natural persons with controlling ownership interest.
- For partnership firms, it’s those with ownership of over ten percent of capital or profits.
- For unincorporated associations or bodies, it’s those with ownership of over fifteen percent of property or capital.
- For trusts, it includes the trust’s author, trustee, beneficiaries with at least ten percent interest, and individuals with ultimate control.
- Foreign investors should follow SEBI’s guidance from the circular dated December 19, 2022, for identifying beneficial ownership.
These amendments were introduced through a circular issued by Deputy General Manager Sapna Sinha.
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By FCCT Editorial Team
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