ISIS in fresh SEBI missive on caution against terror outfits

Mumbai, Oct 13: In a fresh list of terror outfits circulated by regulator SEBI to the stock exchanges, market entities have been asked to stay cautious about any funds or entities linked to the infamous ISIS (Islamic State in Iraq and Syria) finding their way to Indian capital markets.

While no instance of any ISIS-linked activities in the Indian markets has come to the fore so far, the regulator has informed the stock exchanges about the updated Al-Qaida sanctions list of the United Nations Security Council, which has named various ISIS-linked entities in its new list.

The stock exchanges have, in turn, informed their trading members about the updated sanctions list.

In one such circular dated October 7, leading bourse BSE said: "SEBI has informed the Exchange about the amendments/addition to UNSC's Al-Qaida Sanctions List."

"Members are advised to take note of the above and ensure compliance with the same," BSE said while enclosing the updated lists of sanctions-hit entities.

In a separate circular dated October 1, NSE said that SEBI has informed it "about changes that have been made to the Taliban and Al-Qaida Sanctions List and UN Security Council 1988 Sanctions List."

Asking the trading members to take note of the updated lists and ensure compliance, NSE also drew the attention of its members to the provisions of a SEBI circular in this regard.

As per this circular issued under the Combating Financing of Terrorism obligations, SEBI has directed all registered market entities that before opening any new account it will be ensured that the name/s of the proposed customer does not appear in the updated sanctions lists of the UN Security Council.

Further, it has been directed that market intermediaries shall continuously scan all existing accounts to ensure that no account is held by or linked to any of the entities.

Full details of accounts bearing resemblance with any of the individuals/entities in the list are required to be intimated to SEBI and the FIU-IND (Financial Intelligence Unit of India), as per a SEBI circular in this regard.

Those figuring in these lists are required to be subjected to various sanction measures such as freezing of assets/accounts and denial of financial services.

Senior officials and top market executives said that there have been no major instance of any entities linked to these groups having found to be trading in Indian markets in the recent past, but regulations and global standards require a constant vigil for such cases.

The updated list now includes many entities and individuals linked to ISIS, which is also known as IS (Islamic State), such as ISIL (Islamic State in Iraq and the Levant), Al-Qaida in Iraw, as also those associated with Abu Bakr al-Baghdadi.

These include an Official spokesman of ISIL, emir of ISIL in Syria, a Kuwait-based financier, recruiter and facilitator for ISIL, an Iraq-based senior ISIL representative and a French terrorist fighter who travelled to Syria and joined ISIL and is active in propagating ISIL ideology on Internet.

The sanctions list already includes the name of fugitive underworld don Dawood Ibrahim, Hafiz Saeed, Harkat-ul Jihad Islami and Global Relief Foundation.

ISIS started as an Al-Qaida splinter group and reportedly it engages in mass-killing, public executions, crucifixions and other terror acts.

The group reportedly controls hundreds of square miles, while ignoring international borders with a presence from Syria to Iraq. Its top leaders is Abu Bakr al-Baghdadi and ISIS have posted videos on internet showing execution of hostages and journalists among others.

Earlier this year, SEBI updated its Anti-Money Laundering/Countering Financing of Terrorism (AML/CFT) framework for market intermediaries incorporate the amendments made in the PML Act and Rules.

The major changes to the framework are with regard to record keeping requirements, appointment of designated director to oversee compliance with AML/CFT obligations, reliance on third party for carrying out client due diligence and risk assessment to be carried out by intermediaries.

"Money laundering is globally recognized as one of the largest threats posed to the financial system of a country. The fight against terrorist financing is another such emerging threat with grave consequences for both the political and economic standing of a jurisdiction.

"Rapid developments and greater integration of the financial markets together with improvements in technology and communication channels continue to pose serious challenges to the authorities and institutions dealing with Anti-Money Laundering and Combating Financing of Terrorism (AML/CFT)," SEBI said in its latest annual report for 2013-14.

During 2013-14, with respect to stock brokers, SEBI carried out 62 special purpose inspections to check their compliance with the AML/CFT and KYC norms. In case of depository participants, 53 inspections were carried out in this regard, while 21 inspections were carried out with respect to mutual funds to review compliance with AML/CFT and KYC related norms.

Stock exchange and depositories also conduct inspections of stock brokers and depository participants and also at the time of half yearly internal audits by independent professionals to verify compliance to AML/CFT norms.


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