New anti-money laundering regulations have been released by Sebi. Read more here

 New anti-money laundering regulations have been released by Sebi. Read more here

The Securities Exchange Board of India (Sebi), which oversees the capital markets, published a package of amendments on anti-money laundering requirements and preventing the funding of terrorism on Friday. These recommendations pertain to the regulations established under the 2002 Prevention of Money Laundering Act.

For those who are unaware, the Prevention of Money Laundering (Second Amendment) Rules, 2023 went into effect on September 4 of this year. As a result of these revisions, the master circular's specific contents may change.

The following is a list of the most recent changes:

1. Additional measures: Financial groups will be required to take the proper additional measures to manage the risks and notify the Sebi if the host country does not permit the proper implementation of anti-money laundering/financing of terrorism (CFT) consistent with the home country requirements.

Financial organizations will be required to create group-wide anti-money laundering programs that will be applicable to all of their branches and majority-owned subsidiaries and will contain the following:

Policies and procedures for information exchange are necessary for money laundering and supporting terrorism.

as appropriate for AML/CFT purposes, the supply of client account and transaction information from branches and subsidiaries. This will provide details and analysis of transactions or behaviors that stand out. 

adequate protections for the privacy and use of the shared information, including measures to stop tip-offs. 

2. Status disclosure: In the event of a trust, the reporting entity will make sure that trustees declare their status when an account-based connection first begins.

3. Determining beneficial ownership: The following criteria will be used to establish beneficial ownership and control:

A. The client is a corporation. The beneficial owner is any natural person who has a dominant ownership stake and who may be said to be operating alone, jointly, via one or more juridical entities, or through other methods. 

B. The client is a partnership business; the beneficial owner is the natural person who, acting alone or jointly, has the right to more than 10% of the capital or earnings of the partnership or who exercises control in another way.

The beneficial owner is a natural person who, whether acting alone or with others, possesses ownership of or right to more than 15% of the property, capital, or earnings of the client, which is an unincorporated group or body of persons.

D. If the client is a trust, the beneficial owner will be identified together with the trust's creator, trustee, beneficiaries who hold 10% or more of the trust, and any other natural person who has the final say in how the trust is run. 

E. For foreign investors: The Sebi master circular dated December 19, 2022 may serve as a guidance for intermediaries working with international investors in determining the client's beneficial ownership. 

Sapna Sinha, the deputy general manager, issued a circular introducing the most recent changes.