Intermediaries accountable for laundering, terrorism financing


The Securities and Exchange Board of India (SEBI) has issued a circular stating that intermediaries – including brokers, mutual funds and portfolio managers – can be held accountable for any fraudulent activities committed by their clients. The 2 March 2023 circular amends the SEBI (Intermediaries) Regulations, 2008, and provides a framework for the prevention of fraudulent activities by clients.

It also mandates intermediaries to maintain records of client transactions and to report any suspicious activities to authorities. The move is to ensure that intermediaries comply with their obligations and play an active role in maintaining the integrity of Indian capital markets.

The SEBI says the guidelines apply to the overseas branches of registered intermediaries and their subsidiaries, particularly in countries “which do not apply or insufficiently apply the recommendations made by the Financial Action Task Force, to the extent local laws and regulations permit”.