In a move aimed at strengthening safeguards against money laundering and terrorist financing in the securities market, market regulator Securities and Exchange Board of India (SEBI) has proposed making an Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) certification mandatory for Principal Officers of all intermediaries registered with the regulator.
Under the proposal, Principal Officers will be required 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. Both existing and newly appointed Principal Officers will have six months to complete the certification.
In a consultation paper issued on Friday, SEBI said the certification requirement was intended to strengthen the knowledge, competence and professional capacity of Principal Officers responsible for implementing AML/CFT compliances.
The regulator said that while its existing guidelines mandate intermediaries to appoint a Principal Officer at the management level, there is currently no specific certification requirement relating to AML/CFT. Consequently, the level of expertise and knowledge among Principal Officers may vary across intermediaries.
Principal Officers play a central role in the implementing anti-money laundering requirements under the Prevention of Money Laundering Act (PMLA), 2002, and the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005.