Anti-money laundering policy: Sebi slaps Rs 1.1 mn fine on A C Choksi firm

Markets regulator Sebi on Wednesday imposed a penalty of Rs 1.1 million (Rs 11 lakh) on A C Choksi Share Brokers for non-compliance with anti-money laundering policy, segregation of funds and settlement of running account of clients.

Sebi had conducted an inspection of books of accounts of A C Choksi during February-March 2015 to examine the compliance of certain requirements in respect of anti-money laundering compliance, segregation of funds and securities among others.

The probe found that the brokerage house updated its anti-money laundering policy with respect to identification of beneficial ownership after a delay of 20 months.

Further, it noted that A C Choksi despite having a separate proprietary account for its own trading obligations, had mixed own securities with those of its clients by crediting in and debiting them from the clients' beneficiary accounts, which is in violation of the regulatory guidelines.

Sebi observed that the brokerage house had failed to settle the running account of its clients from April 2012 to December 2013. Also, it had retained the amount in excess of Rs 10,000 on 164 instances without taking written consent of the client.

By indulging in such activities, A C Choksi has violated provisions of stockbrokers' norm.

Noting that the compliance of AML Policy, segregation of funds and settlement of running account of clients are very important, Sebi said that a justifiable penalty needs to be imposed upon the brokerage house to meet the ends of justice and accordingly slapped a fine of Rs 11 lakh on it.