SEBI-regulated intermediaries (brokers, mutual funds, custodians, depository participants and portfolio managers) will now have to appoint a designated director responsible for ensuring compliance with Anti-Money Laundering / Countering the Financing of Terrorism (AML/CFT) Obligations.
The designated director would be the managing director or a whole-time director in case of companies, managing partner in case of partnership firms, proprietor for proprietorship firms and a managing trustee in trusts.This would be in addition to the existing requirement of a principal officer, said a SEBI circular on Wednesday.The Director-Financial Intelligence Unit India can take appropriate action, including levying monetary penalty on the designated director for failure to comply with the obligations.
Intermediaries have been asked to provide details of the designated director, to the Office of the Director, FIU-India.Intermediaries have to carry out risk assessment to identify, assess and take measures to mitigate money laundering and terrorist financing risks with respect to their clients, countries or geographical areas, nature and volume of transactions and payment methods.
The risk assessment would be carried out according to specific information circulated by the Government of India and SEBI from time to time.Intermediaries relying on third party due diligence to ascertain proof of identity, proof of residence of the client and the beneficial owner (in case the client is acting on behalf of the beneficial owner) have to ensure that the third party is a regulated entity.
Further, SEBI clarified that ultimate responsibility of due diligence rested with the intermediary.Intermediaries now have to keep records of identity and transactions of clients for five years instead of the earlier requirement of 10 years.
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