Sebi tweaks guidelines on anti-money laundering; partners with 10% stake to come under beneficial owners

Capital markets regulator Sebi on Friday tweaked guidelines pertaining to anti-money laundering standards, whereby partners holding a 10 per cent stake in a firm will come under the definition of beneficial owners. Earlier, the requirement was 15 per cent.

The development comes after the government amended the Prevention of Money Laundering (Maintenance of Records) Rules or PMLA rules in September.

In case the client is a partnership firm, the beneficial owner would be the one who has "ownership of/ entitlement to more than 10 per cent of capital or profits of the partnership or who exercises control through other means", Sebi said in its updated guidelines on anti-money laundering standards and combating the financing of terrorism obligations of securities market intermediaries.

To ensure that the registered intermediaries properly discharge their legal obligations to report suspicious transactions to the authorities, the regulator said that the Principal Officer would be responsible for providing information to the financial intelligence unit.

"The Principal Officer would act as a central reference point in facilitating onward reporting of suspicious transactions and for playing an active role in the identification and assessment of potentially suspicious transactions and shall have access to and be able to report to senior management at the next reporting level or the Board of Directors.

Names, designation and addresses of ‘Principal Officer' including any changes therein shall also be intimated to the Office of the Director-FIU-IND," Sebi said.

FIU-IND is the central national agency of India responsible for receiving, processing, analysing and disseminating information relating to suspect financial transactions.

In the case of a trust, the reporting entity will have to ensure that trustees disclose their status at the time of commencement of an account-based relationship or when carrying out specified transactions.

The government has in recent months tightened various anti-money laundering provisions ahead of assessment by the global watchdog on terror financing and money laundering Financial Action Task Force.

In March, the PMLA rules were amended making it mandatory for banks and financial institutions to record financial transactions of politically exposed persons.

Also, financial institutions or reporting agencies were mandated to collect information about the financial transactions of the non-profit organisations or NGOs under the PMLA.