SEBI directs stock exchanges, depositories and registered intermediaries to implement the UAPA (Unlawful Activities (Prevention) Act, 1967) Order

The Unlawful Activities (Prevention) Act, 1967 (UAPA) was enacted for the prevention of certain unlawful activities of individuals and associations and for matters connected therewith. UAPA has been amended by the Unlawful Activities (Prevention) Amendment Act, 2008. The Government issued an Order dated August 27, 2009 detailing the procedure for implementation of Section 51A of the UAPA, relating to the purpose of prevention of, and for coping with terrorist activities. In terms of Section 51A, the Central Government is empowered to freeze, seize or attach funds and other financial assets or economic resources held by, on behalf of or at the direction of the individuals or entities Listed in the Schedule to the Order, or any other person engaged in or suspected to be engaged in terrorism and prohibit any individual or entity from making any funds, financial assets or economic resources or related services available for the benefit of the individuals or entities listed in the Schedule to the Order or any other person engaged in or suspected to be engaged in terrorism.

SEBI vide circular ISD/AML/CIR-2/2009 dated October 23, 2009 has directed stock exchanges, depositories and registered intermediaries to ensure expeditious and effective implementation of the procedure laid down in the UAPA Order dated August 27, 2009.

The procedure to be followed by Stock Exchanges and Intermediaries

(1) Ministry of External Affairs will sent the updated list of individuals/ entities (designated individuals/ entities) subject to UN sanction measures to SEBI.

(2) SEBI will forward the same to stock exchanges, depositories and registered intermediaries.

(3) Stock exchanges, depositories and registered intermediaries will have to maintain an updated list of designated individuals/ entities in electronic form based on the list sent by SEBI. They should run a check on the given parameters on a regular basis to verify whether designated individuals/ entities are holding any funds, financial assets or economic resources or related services held in the form of securities with them.

(4) If the particulars of any of customer/s match with the particulars of designated individuals/entities, stock exchanges, depositories and intermediaries should immediately, not later than 24 hours from the time of finding out such customer, inform full particulars of the funds, financial assets or economic resources or related services held in the form of securities, held by such customer on their books to the Joint Secretary (IS.I), Ministry of Home Affairs, at Fax No.011-23092569 and also convey over telephone on 011-23092736. The particulars apart from being sent by post should necessarily be conveyed through e-mail at jsis@nic.in. Stock exchanges, depositories and registered intermediaries should also file a Suspicious Transaction Report (STR) with FIU-IND covering all transactions in these accounts. In case the details of any of the customers match the particulars of designated individuals/entities beyond doubt, stock exchanges, depositories and registered intermediaries should prevent designated persons from conducting financial transactions, under intimation to Joint Secretary (IS.I), Ministry of Home Affairs, at Fax No. 011-23092569 and also convey over telephone on 011-23092736. The particulars apart from being sent by post should necessarily be conveyed through e-mail at jsis@nic.in.

(5) Stock exchanges, depositories and registered intermediaries should send the particulars of the communication through post/fax and through e-mail (sebi_uapa@sebi.gov.in) to the UAPA nodal officer of SEBI, Officer on Special Duty, Integrated Surveillance Department, Securities and Exchange Board of India, SEBI Bhavan, Plot No. C4-A, “G” Block, Bandra Kurla Complex, Bandra (E), Mumbai 400 051 as well as the UAPA nodal officer of the state/UT where the account is held, as the case may be, and to FIU-IND.

Earlier, SEBI had issued a Master Circular on Anti-Money Laundering (covered in this blog here) and an updated list of individuals and entities (covered in this blog here) which are subject to various sanction measures such as freezing of assets/accounts, denial of financial services etc., as approved by UN Security Council Committee.

A copy of the circular is available here.