NCDEX asks brokers to comply with anti-money laundering law

The leading agri-commodity exchange NCDEX has asked its 843 brokers to comply with the anti-money laundering norms such as providing information on high value transactions (above Rs 10 lakh) and do due diligence on its customers.

As of now, intermediaries (brokers) in the commodity market are not covered under the Prevention of Money Laundering Act (PMLA) of 2002. The Act defines 'intermediary' as a stock broker and others associated with securities market.

However, the Forward Markets Commission (FMC) has brought the commodity brokers under the ambit of the Act by preparing detailed guidelines, as the regulator has the power to frame rules governing the sector.

Notifying the FMC guidelines to its registered brokers, NCDEX said commodity brokers will have to verify the identity of their clients, maintain certain records and disclose the details of all cash transactions over Rs 10 lakh or its equivalent in foreign currency, to the designated authority as is being done by stock brokers under the PMLA.

This apart, commodity brokers will have to comply with the last month's circular that had directed them not to deal in any cash transaction in normal circumstances. In exceptional circumstances, they could accept cash up to Rs 20,000 under the Income Tax Act, it said.

Under the new guidelines, commodity brokers have been mandated to follow the identification procedures specified for high-risk customers, which include politically exposed persons (PEP) of foreign origin.