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The Securities and Exchange Board of India (SEBI) has proposed making anti-money laundering and counter-terrorism financing certification mandatory for principal officers of all registered securities market intermediaries, aiming to strengthen compliance standards and improve the detection of suspicious financial transactions.
In a consultation paper issued on Friday, the market regulator proposed requiring principal officers to obtain the National Institute of Securities Markets (NISM) Series-XXIV certification on Anti-Money Laundering and Combating the Financing of Terrorism Provisions in Securities Markets. Under the proposal, existing principal officers would be required to complete the certification within six months of the issuance of the proposed requirement, while newly appointed officers would have six months from the date of their appointment. SEBI has also proposed that officers maintain the validity of the certification throughout their tenure. The proposed requirement seeks to establish a common minimum standard of knowledge and professional competence among principal officers responsible for implementing anti-money laundering and countering the financing of terrorism (AML/CFT) regulations. Currently, SEBI's guidelines require registered intermediaries to appoint a principal officer at the management level to oversee compliance with the Prevention of Money Laundering Act, 2002, and the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005. However, there is no specific mandatory AML/CFT certification requirement for the position, resulting in potentially varying levels of expertise across intermediaries. The principal officer is responsible for reporting suspicious transactions to the Financial Intelligence Unit-India (FIU-IND), recording reasons for identifying suspicious transactions and facilitating their reporting to the authorities. The proposed certification would cover areas including customer due diligence, beneficial ownership, risk-based client classification, enhanced due diligence, transaction monitoring, reporting obligations, targeted financial sanctions and emerging money laundering risks arising from new technologies and financial products. SEBI noted that the certification examination was developed in collaboration with NISM and was launched on February 28, 2025, to establish a common knowledge benchmark for employees of securities market intermediaries. The regulator has invited public comments and suggestions on the three proposals, including the mandatory certification, the designated examination and the six-month compliance timeline. Stakeholders can submit their responses through SEBI's website until November 27, 2026. The proposed measures are aimed at strengthening the securities market's AML/CFT compliance framework and ensuring that personnel handling critical regulatory responsibilities possess adequate expertise. (ANI)
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