Brokers asked to name designated director for PMLA compliance

To safeguard Indian markets from money laundering risks, brokers and other intermediaries would need to have designated director for PMLA (Prevention of Money Laundering Act) compliance by the end of this month.
In a circular issued to all their trading members, the stock exchanges have asked them to provide the name, address and other details of such designated directors to the Financial Intelligence Unit-India (FIU-IND) by August 1.
Similar steps are being taken for mutual funds and other market participants under capital markets regulator Sebi's guidance.
This new requirement was proposed by Sebi earlier this year and is part of efforts to ensure greater compliance with the Anti-Money Laundering and Countering Financing of Terrorism regulations.

However, FIU-IND informed Sebi last month that many brokers have not yet appointed and intimated details of designated director to them.
Subsequently, a fresh circular has been issued by the stock exchanges to remind them about submitting details of such directors to FIU-IND.

In a circular issued last night, the National Stock Exchange directed its "members to provide details of the designated director, such as name, designation and address to the office of the Director to FIU-IND."
As per the norms, a company can designate its managing director or a whole-time director as the designated director to ensure compliance with the regulations.

Besides, a partnership firm can appoint its managing partner, while a trust can place its managing trustee as the designated director.
The FIU-IND can take appropriate action, including levying a monetary penalty, on the designated director for failure of the intermediary to comply with any of the obligations.