SEBI Amends Anti-Money Laundering Guidelines, Tightens Beneficial Ownership Definition
In light of the recent changes to the Prevention of Money Laundering Rules, SEBI tightened its definition of beneficial ownership under its anti-money laundering guidelines on Friday.
According to the amended guidelines, an entity would be considered to have beneficial ownership in a company if it has a 10% stake in it, as against the erstwhile requirement of 25%. For trusts, the threshold has been reduced to 10% from the erstwhile 15%.
In February 2023, the Securities and Exchange Board of India updated its anti-money laundering guidelines, enhancing the due diligence requirements for registered intermediaries and stock exchanges in the country. The guideline made the registered intermediary primarily and ultimately responsible for its clients.
Subsequently, in March 2023, the Finance Ministry notified a list of changes to the PMLA Rules, significantly tightening the reporting requirements of entities. This included a change to the beneficial ownership threshold. SEBI has now tightened its guidelines to bring them in line with the amended PMLA Rules.
Among other changes, SEBI has included a definition for non-profit organisations that is the same as the one provided in the Income Tax Act. Intermediaries would have to register their clients with the DARPAN portal and keep the registration records for five years, SEBI has said.
Stock exchanges and intermediaries would also be obligated to conduct risk assessments before launching any new products, practices, technologies, or services, according to the amended guidelines.
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