Notification of PF, TF and Money Laundering risks to private sector entities

BSE Notice No – 20250814-39 dated August 14, 2025

Applicable Act/Rule – Prevention of Money Laundering Rules, 2005

The Financial Action Task Force (FATF) released a report titled “Complex Proliferation Financing and Sanctions Evasion Schemes (CPFSES)” on June 20, 2025. The report, prepared by the Risk, Trends and Methods Group, consolidates global insights, strategies, typologies, and lessons on proliferation financing and sanctions evasion practices. SEBI, via BSE communication, has circulated this update for compliance reference.

While the findings of the FATF report may not all directly apply to India, SEBI has emphasised that intermediaries should pay special attention to jurisdictions highlighted as high-risk from a proliferation financing (PF) perspective. These include:

  • Democratic People’s Republic of Korea (DPRK) – identified in line with United Nations Security Council sanctions.
  • Pakistan – flagged based on findings from Indian PF-linked investigations and a case study (Box 34) on sanctions evasion by a state-owned enterprise.

Intermediaries are advised to update their Institutional Risk Assessments under Rule 9(13) of the PML Rules, strengthen compliance mechanisms, and revise their internal risk policies accordingly.

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