Summary: The Securities and Exchange Board of India (SEBI), through its consultation paper issued on 6 November 2026, has proposed introducing mandatory Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) certification for Principal Officers of all intermediaries registered under Section 12 of the SEBI Act, 1992. The proposal seeks to strengthen the knowledge, competence and professional capacity of officers responsible for ensuring compliance with the Prevention of Money Laundering Act, 2002, the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005 and SEBI’s AML/CFT regulatory framework. Although SEBI’s existing Master Circular dated 6 June 2024 requires intermediaries to appoint Principal Officers at the management level, it does not prescribe a specific AML/CFT certification, resulting in potential differences in expertise across intermediaries. SEBI has proposed that every Principal Officer should obtain the NISM-Series-XXIV: Anti-Money Laundering and Combating the Financing of Terrorism Provisions in Securities Markets Certification, developed by SEBI in collaboration with the National Institute of Securities Markets. The examination covers statutory AML/CFT requirements, customer due diligence, beneficial ownership, suspicious transaction reporting, proliferation financing, sanctions, record maintenance and related compliance obligations. SEBI proposes that existing Principal Officers complete the certification within six months from issuance of the proposed requirement, while newly appointed officers would have six months from their appointment. Officers would also be required to maintain valid certification throughout their tenure. The consultation seeks stakeholder responses on three principal questions: whether certification should be mandatory for all Principal Officers, whether NISM-Series-XXIV should be prescribed as the qualifying examination, and whether the proposed six-month compliance period is appropriate. SEBI has included a draft circular in Annexure-A setting out the proposed regulatory requirements. Stakeholders must submit comments through SEBI’s prescribed online public consultation form by 27 November 2026. The proposed certification requirement has not been brought into force merely by publication of this consultation paper.
SECURITIES AND EXCHANGE BOARD OF INDIA
Consultation paper on Introduction of Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Certification requirement for Principal Officer
SEBI- Nov 06, 2026 | Reports : Reports for Public Comments
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1. Objective
1.1. The objective of this consultation paper is to seek comments/suggestions from the public and stakeholders on the proposal relating to introduction of Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) certification requirement for Principal Officer of all intermediaries registered with SEBI under Section 12 of the SEBI Act, 1992.
1.2. The proposed certification is intended to strengthen the knowledge, competence and professional capacity of Principal Officers responsible for implementation of AML/CFT compliances in the securities market.
2. Background
2.1. The Prevention of Money Laundering Act, 2002 (“PMLA”) and the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005 (“PML Rules”), inter-alia prescribe obligations for reporting entities, including intermediaries registered with SEBI.
2.2. As per Rule 2(f) of the PML Rules, the ‘Principal Officer’ has been defined as ‘an officer designated by a registered intermediary; provided that such officer shall be an officer at the management level’.
2.3. SEBI has issued the Master Circular dated June 06, 2024 on ‘Guidelines on Anti-Money Laundering Standards and Combating the Financing of Terrorism / Obligations of Securities Market Intermediaries under the PMLA and Rules framed thereunder’. The Master Circular inter-alia provides for appointment of a ‘Principal Officer’ by registered intermediaries, including the following responsibilities of a Principal Officer:
2.3.1. To timely report suspicious transactions to the authorities (FIU-IND);
2.3.2. To record reasons for treating any transaction or a series of transactions as suspicious
2.3.3. To act as a central reference point in facilitating onward reporting of suspicious transactions;
2.3.4. To play an active role in the identification and assessment of potentially suspicious transactions.
2.4. Further, the Master Circular provides that registered intermediaries should give due regard to risk of money laundering and terrorist financing while hiring and ensuring existing personnel taking up key positions are fully suitable and competent to perform their duties. Additionally, registered intermediaries should conduct ongoing employee training programmes covering AML/CFT procedures and sensitizing their clients about regulatory requirements under AML/CFT framework.
3. Proposals for consideration
3.1. Proposal 1: Certification for Principal Officer: The role and responsibilities of the Principal Officer include overseeing and ensuring overall compliance with the regulatory guidelines on AML/CFT framework. The Principal Officer is expected to have adequate understanding of :
3.1.1. the provisions of the PMLA, 2002 and PML Rules, 2005;
3.1.2. SEBI’s AML/CFT framework;
3.1.3. Customer due diligence and Beneficial ownership requirements;
3.1.4. Risk-based classification of clients;
3.1.5. Enhanced due diligence;
3.1.6. Identification and assessment of suspicious transactions;
3.1.7. Reporting requirements to FIU-IND;
3.1.8. Confidentiality and prohibition against tipping-off;
3.1.9. Targeted financial sanctions under UAPA;
3.1.10. Requirements relating to proliferation financing under the WMD Act;
3.1.11. FATF high-risk jurisdictions;
3.1.12. Transaction monitoring systems;
3.1.13. Maintenance and retrieval of records; and
3.1.14. Emerging ML/TF risks, including risks arising from new products, technologies and delivery mechanisms.
3.2. The effective implementation of the AML/CFT framework depends on Principal Officer possessing adequate knowledge and competence to discharge their responsibilities.
3.3. At present, the Master Circular issued by SEBI provides for mandatory appointment of the Principal Officer at the management level. However, the said Circular does not prescribe any AML/CFT related certification requirement for the Principal Officer.
3.4. So, the level of AML/CFT knowledge/expertise of Principal Officers may vary across intermediaries.
3.5. SEBI prescribes various NISM certifications for persons engaged or employed by securities market intermediaries under Regulation 3(1) of the SEBI (Certification of Associated Persons in the Securities Markets) Regulations, 2007. Currently, there are a total of 28 NISM certifications mandated for different categories of persons engaged or employed by intermediaries. A few of these certifications are listed below:
| Sl. No. | NISM certification | Certificate Mandated For |
|---|---|---|
| 1 | NISM-Series-III-A: Securities Intermediaries Compliance (Non-Fund) | Compliance officer of an Intermediaries registered with SEBI as stockbrokers, depository participants, merchant bankers, underwriters, bankers to the issue, debenture trustees, or credit rating agencies. |
| 2 | NISM-Series-V-A: Mutual Fund Distributors | Mutual fund Distributor: Persons engaged in the sale and/or distribution of mutual fund products. |
| 3 | NISM-Series-VII: Securities Operations and Risk Management | Associated persons of a registered stock broker involved in activities related to investor funds, the redressal of investor grievances, and internal control or risk management. |
| 4 | NISM-Series-X-A: Investment Adviser (Level 1) and NISM-Series-X-B: Investment Adviser (Level 2) | Investment adviser: Offering investment advisory services. |
| 5 | NISM-Series-XV: Research Analyst | Research Analyst: Engaged in the preparation and/or publication of research reports or research analysis. |
| 6 | NISM-Series-II-A: Registrars to an Issue and Share Transfer Agents – Corporate and NISM-Series-II-B: Registrars to an Issue and Share Transfer Agents – Mutual Fund | RTA: A person performing functions for listed companies or mutual funds at an RTA. |
3.6. Considering the central role performed by Principal Officers in ensuring compliance with AML/CFT framework, it is proposed that AML/CFT related certification may be introduced for the Principal Officers.
Proposal 1
Whether AML/CFT certification be made mandatory for every Principal Officer of a SEBI-registered intermediary?
