The Ministry of Justice is seeking
feedback on the proposed Ministerial exemption for
"managing intermediaries" (reporting entities who
transact with other reporting entities) under the Anti-Money
Laundering and Countering Financing of Terrorism Act 2009
The deadline for submissions is 22 August
The proposed exemption
previously signalled by AML/CFT supervisors, is aimed at
resolving the issues arising from the obligation to conduct
customer due diligence (CDD) on the underlying clients of
other reporting entities. It will allow reporting entities to
conduct simplified CDD on licensed managing intermediaries and
relieve the requirement to conduct CDD on beneficial owners of
other specified financial institutions.
The proposed exemption is in fact two separate exemptions
a reporting entity has a customer who is one of a list of
licensed financial institutions, and
a reporting entity has a customer who is an other
specified financial institution.
If a customer is a licensed financial institution (authorised
futures dealer, non-bank deposit-taker, FMCA market service
licensee, securities trustee or statutory supervisor) the reporting
entity in question is exempted from the obligation to conduct
standard due diligence (simplified due diligence will apply
Similarly, if a customer is an other specified financial
institution (itself a financial institution under the Act, a
foreign financial institution in a country which has sufficient AML
measures or an exempted superannuation scheme) the reporting entity
in question is exempted from the obligation to conduct CDD on some
of the beneficial owners of that customer.
The exemptions are very welcome and will assist in removing some
considerable duplication in the AML requirements for financial
The Ministry of Justice also proposes to conduct further
targeted consultation to understand whether different conditions
would be required for a reporting entity which has a clearing house
as its customer in relation to exchange-traded securities.
Released in November 2013, the Joint Response also acknowledged
the need to clarify the obligation to undertake CDD on the
customers of other reporting entities in certain circumstances, in
the next update of the AML/CFT Act.
Reporting entities should turn a keen eye to the proposed
exemption, in particular the proposed list of financial
institutions covered, to understand how the exemption will affect
Chapman Tripp has closely monitored developments in this area,
having applied on behalf of clients for some of the proposed
exemptions, and submitted on both the draft Factsheet and the Joint
The information in this article is for informative purposes
only and should not be relied on as legal advice. Please contact
Chapman Tripp for advice tailored to your situation.
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The NPP states that India is located on a strategically important location and is well connected to several international trade and commerce routes.
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