FMC brings members under PMLA ambit

In order to protect the commodity derivatives market from money laundering, the Forward Markets Commission (FMC) has brought commodity brokers under the ambit of Prevention of Money Laundering Act 2002 (PMLA).

The members of commodity exchanges will now have to keep records of each transaction. A circular posted on NCDEX website said, “The members will be operating with different legal status and will have different profiles of customers, ownership and organisation structures. Due to the variedness of the market participants, the guidelines prepared by the FMC may be adopted according to the nature of participation in the markets by these members. The standards adopted should be such that they adhere in letter and spirit to the requirements as listed out in detail by the PMLA. Members are requested to take note of the guidelines as annexed and ensure compliance thereof.”

Members have to designate a senior management officer as the principal officer in corporate office, who will be responsible for monitoring and reporting of all transactions and information sharing. The officer will maintain close liaison with enforcement agencies, banks and other institutions which are involved in preventing money laundering and combating financing of terrorism. FMC clarified that its basic objective was to ensure that clients have adequate control and procedures in place so that they know the customers with whom they are dealing. Adequate diligence on new and existing customers is a key part of this control.

Members should ensure that a record of transactions should be maintained for a period of ten years and that any transaction of suspicious nature must be reported to the appropriate regulatory authority. It was emphasised that the reporting of suspicious transaction should be taken up with utmost care and seriousness. They should have appropriate internal procedures for reporting of suspicious transactions.