Mumbai, Jan. 18: The Securities and Exchange Board of India (Sebi) today directed market intermediaries to obtain sufficient information to identify persons who beneficially own or control securities accounts.
With this direction, which came as part of its anti-money-laundering guidelines, the market regulator sought the intermediaries to verify their customers’ identities using reliable, independent source documents, data or information. It also directed them to identify the beneficial ownership and control of securities. This, in other words, means determining which individual ultimately owns or controls the securities and/or the person on whose behalf a transaction is being conducted.
These directions should be seen in the light of the recent scam involving multiple demat accounts.
Sebi said under the provisions of the Prevention of Money Laundering Act (PMLA) 2002 (the law came into effect from July last year), every banking company, financial institution and intermediary, which includes stock-brokers, sub-brokers, share transfer agents, bankers to an issue, trustees to a trust deed, registrars to an issue, merchant bankers, underwriters, portfolio managers, investment advisers and any other intermediary associated with securities market, will have to maintain a record of all the transactions.
Such transactions include all cash transactions of more than Rs 10 lakh or its equivalent in foreign currency, all series of cash transactions that are below Rs 10 lakh but integrally connected to each other and such series of transactions that have taken place within one calendar month, and all suspicious transactions whether or not made in cash.
The market regulator has advised all intermediaries to designate an officer as a principal officer, who would be responsible for ensuring compliance of the PMLA provisions.
Sebi said all suspicious transactions, whether or not made in cash and including credits or debits into/from any non-monetary account, such as demat or securities accounts, should be maintained by the registered intermediary.
“Whenever it is apparent that the securities acquired or maintained through an account are beneficially owned by a party other than the client, that party should be identified using client identification and verification procedures,” Sebi said.