BSE, NSE warn market entities on Iran money in stocks

MDT/PTI 06 August 2012

The Indian bourses have asked members to ensure compliance with the FATF statement about Iran’s persisting failure to address the risk of terrorist financing and money laundering

New Delhi: The Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) have asked market participants to exercise caution in dealing with entities linked to Iran, pursuant to a fresh warning from market regulator Securities and Exchange Board of India (SEBI) about possible money laundering and terror financing risks from that country, reports PTI.

In a circular issued on Monday, BSE told its member brokers that the exchange has been informed by SEBI about a Financial Action Task Force (FATF) public statement against the jurisdictions having strategic anti-money laundering/combating financing of terrorism (AML/CFT) deficiencies.

FATF is a global inter-governmental body for making policies for combating money laundering, terrorist financing and other related threats to the international financial system.

The BSE has asked its members to ensure compliance with the FATF statement about Iran’s persistent failure to address the risk of terrorist financing and money laundering. The NSE has also issued a similar circular to its members.

SEBI’s direction to the stock exchanges follows an FATF warning, dated 22nd June, on Iran and North Korea in its tri-annual compliance status of various countries to its AML/CFT standards.

FATF reviews the status of various jurisdictions in complying with these standards thrice a year—February, June and October—and accordingly issues warnings to all the member countries, including India, about dealings with jurisdictions with deficiencies in mechanism to check money laundering and terror funding risks.

As per an established process, the FATF warning on Iran and North Korea is forwarded by the Indian government to its key financial sector regulators, including SEBI and the Reserve Bank of India (RBI), which subsequently advise the institutions in their respective areas to apply caution in dealings with the entities and funds from the FATF-identified high-risk jurisdictions.

Earlier this year, the 36-member FATF had appreciated the Indian government’s efforts to combat money laundering and financing of terrorism.

India became a member of FATF in June 2010, while its other member countries include the US, UK, Russia, South Korea, Japan, China, Brazil, Argentina, Italy, Germany and Australia.

In its latest warning, the FATF has asked India and other countries to “apply counter-measures to protect the international financial system from the on-going and substantial money laundering and terrorist financing (ML/TF) risks” emanating from Iran and North Korea.

It has said that the “FATF remains particularly and exceptionally concerned about Iran's failure to address the risk of terrorist financing and the serious threat this poses to the integrity of the international financial system”.

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