The circulars containing 'United Nations Security Council's Taliban and Al-Qaeda sanctions list' have been issued by the Securities and Exchange Board of India (Sebi) to depositories and the stock exchanges, which in turn have asked other market entities, including brokers, to take note of these updated lists and "ensure compliance with the same".
When contacted, 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 the Indian markets in recent past but the regulations and global standards require a constant vigil for such cases.
The latest circular in this regard was issued by Sebi to the National Stock Exchange (NSE) last week on July 7, wherein the regulator has "informed the exchange about changes that have been made to the Taliban and Al-Qaeda sanctions lists".
Similar circulars have been issued to the BSE, as also to the two depositories NSDL and CDSL, recently.
The first list comprise of individuals, as also entities and other groups and undertakings associated with Taliban, while the second list consists of those associated with Al-Qaeda. These lists were last updated on June 26, 2014, as per these circulars, and consequently various market intermediaries have been now informed about the updated lists.
Among others, the Al-Qaeda list includes the name of Dawood Ibrahim, the fugitive underworld don and India's most wanted person.
Those on these lists also include Harkat-ul Jihad Islami (HuJI) and Global Relief Foundation.
Under the Combating Financing of Terrorism (CFT) 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 registered 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.
On receipt from the government of the updated lists of individuals and entities subject to the UN sanction measures, Sebi is required to forward the same to stock exchanges, depositories and registered intermediaries.
These market entities are consequently required to maintain updated designated lists in electronic form and run a check on the given parameters on a regular basis to verify whether individuals or entities listed in these lists are holding any funds, financial assets or economic resources or related services held in the form of securities with them.
In the event of particulars of any customer matching the particulars of those mentioned in sanction lists, the market entities are required to immediately (not later than 24 hours from the time of finding out such customer) inform full details to Sebi and the Home Ministry for further action.
In case of particulars of any customer matching 'beyond doubt', the market entities are required to immediately prevent such designated persons from conducting any financial transaction and inform the same to Sebi and the Home Ministry.
The stock exchanges, depositories and registered intermediaries are also required to file a Suspicious Transaction Report with FIU-IND covering all transactions in such accounts.