The Securities and Exchange Board of India (SEBI) has proposed making Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) certification compulsory for principal officers of all SEBI-registered market intermediaries. The proposal, announced in a consultation paper on November 6, 2026, aims to strengthen professional expertise and improve the implementation of financial crime prevention requirements across India's securities market.
Under the proposed framework, principal officers would need to demonstrate adequate knowledge of anti-money laundering regulations, suspicious transaction identification, customer verification procedures and reporting obligations. SEBI believes that formal certification could help establish a more consistent level of compliance expertise across regulated entities.
The regulator has invited public comments on the proposal until November 27, 2026.
Why SEBI Wants Mandatory AML/CFT Certification
Principal officers play a central role in ensuring that market intermediaries follow applicable anti-money laundering and counter-terror financing requirements.
These officials are responsible for identifying potentially suspicious transactions, maintaining relevant records and ensuring that required reports are submitted to the Financial Intelligence Unit-India (FIU-IND).
At present, SEBI's regulatory framework requires registered intermediaries to appoint a principal officer at the management level. However, the existing framework does not prescribe a specific AML/CFT certification requirement for these officials.
According to SEBI, this can result in differences in the level of knowledge and professional expertise available across intermediaries. A mandatory certification framework is intended to address this gap by establishing a common standard of specialised knowledge.
The proposed requirement would apply to principal officers across the regulator's registered intermediary framework.
Key Subjects Covered Under the Proposed Certification
SEBI's proposal focuses on the practical regulatory knowledge required to identify and manage money-laundering and terrorism-financing risks.
The certification is expected to cover several important areas:
Prevention of Money Laundering Act (PMLA): Understanding the legal framework and responsibilities applicable to regulated intermediaries.
Customer Due Diligence (CDD): Verification of customer identities and assessment of relevant customer information.
Beneficial Ownership: Identifying the individuals who ultimately own or control a customer or legal entity.
Risk-Based Client Classification: Assessing customers according to their potential exposure to money-laundering and related risks.
Enhanced Due Diligence (EDD): Applying additional scrutiny where customer or transaction risk warrants it.
Transaction Monitoring: Recognising unusual activity and identifying transactions that may require further examination.
Targeted Financial Sanctions: Understanding applicable obligations relating to designated individuals and entities.
Reporting and Record Maintenance: Meeting regulatory reporting requirements and maintaining appropriate documentation.
Emerging Risks: Understanding financial crime risks associated with new products, services and technologies.
The proposed curriculum is intended to give principal officers a stronger understanding of both regulatory requirements and the processes needed to implement them.
Six-Month Compliance Timeline Proposed
SEBI has proposed a six-month period for completing the certification requirement.
According to the consultation paper, the proposed timeline would apply to both existing principal officers and individuals appointed to the position in the future.
If the proposal is adopted, registered intermediaries would need to ensure that their designated principal officers obtain the required certification within the prescribed period.
This could require firms to review their existing compliance arrangements, identify training requirements and plan certification schedules for relevant personnel.
The final implementation details will depend on the outcome of the consultation process and SEBI's subsequent regulatory decision.
NISM to Conduct AML/CFT Certification Examination
SEBI has worked with the National Institute of Securities Markets (NISM) to develop a certification examination covering AML/CFT requirements in the securities market.
NISM launched its Series-XXIV AML/CFT certification examination in February 2025. The proposed framework seeks to use this specialised examination as part of the effort to strengthen professional standards among principal officers.
The certification is intended to improve familiarity with the regulatory responsibilities associated with financial crime prevention and help ensure that designated officials can recognise potential compliance concerns.
For market intermediaries, the proposal may also make formal AML/CFT training and certification an important part of their internal compliance planning.
Public Consultation Open Until November 27
SEBI has invited stakeholders and members of the public to submit comments on the proposed certification requirement by November 27, 2026.
The consultation process gives market participants an opportunity to provide feedback on the proposed examination, implementation timeline and compliance expectations.
The proposal could have implications for stockbrokers, investment intermediaries and other entities registered with SEBI. Organisations may need to assess their existing compliance teams, training arrangements and documentation practices if the requirement is finalised.
Strong anti-money laundering controls are also important for businesses that handle complex financial transactions and customer funds. Appropriate financial investigation and compliance support from Shunyatax can help organisations understand the importance of transaction reviews, financial documentation and internal control systems.
For now, the mandatory certification requirement remains a proposal rather than a final regulatory obligation. SEBI's decision following the consultation will determine the final scope, implementation requirements and applicable timeline.