In order to put stronger checks against possible cleansing of funds through capital markets, the Securities and Exchange Board of India (SEBI) is finalising new anti-money laundering guidelines covering entities including brokers, merchant bankers and mutual funds among others. New SEBI guidelines are expected to be ready within a few weeks and will replace SEBI's existing Anti Money Laundering and Combating the Financing of Terrorism (AML/CFT) standards, which first came into effect about 10 years ago and saw the last major amendments in late 2010.
As per the SEBI, changes and additional safeguards are necessary to tackle the new challenges of technological and market advances and to harmonise the guidelines with new standards set by global bodies like FATF (Financial Action Task Force). Further, the regulatory body may also consult the practices followed by its peers in some other countries to understand the best regulatory framework for AML/CFT regulations.
Meanwhile, SEBI is of the view that that a strong defence mechanism already exists in the Indian capital market regulatory system to check illegal activities, a review has become necessary to consolidate the various initiatives undertaken by it. Steps taken to check money laundering and terror financing activities in the capital market include mandatory requirement of PAN (Permanent Account Number), strict KYC (Know Your Client) regime, and in-person verification of clients.
