Swadha Shareholding Limited, is a company incorporated under the Companies Act and functioned as a clearing house for BSE Ltd. and having its own depository participant services. SEBI conducted an inspection of the Compa

The facts mentioned are similar to a case between BOI Shareholding Limited (Appellant) and the SEBI (Respondent) filed before the Securities Appellate Tribunal (SAT). In the case, an appeal was filed challenging the order of the Adjudicating Officer ('AO') of SEBI whereby a penalty of ₹40 Lakh has been imposed on the appellant under Section 15HB of the SEBI Act read with Section 19G of the Depositories Act, 1996 for delayed implementation of the SEBI Circulars / Guidelines relating to anti-money laundering (AML) policy. The submission of the SAT was that they have perused the records produced before it. In the Master Circular on Anti-Money Laundering (AML)/Combating the Financing of Terrorism (CFT) dated December 31, 2010 issued by SEBI, it was noted by SAT that all the registered intermediaries were directed to comply with the requirements contained therein on an immediate basis. Similarly, subsequent amendments made on January 24, 2013 also required adoption on immediate basis though the Circular dated March 12, 2014 does not specify the implementation time schedule. However, following the spirit of the basic policy, the SAT was of view that implementation has to be done at the earliest. From the evidence produced before SAT it was made clear that the appellant has implemented all the requirements of the AML/CFT policy as specified in the SEBI Circulars though belatedly. The SAT also noted that for delayed implementation/violation, the SEBI has imposed varying penalty including no penalty in some cases. However, under the Section 15HB of the SEBI Act read with Section 19G of the Depositories Act, 1996 the penalty imposable for each violation shall not be less than ₹1 Lakh which may extend to ₹1 Crore rupees. Accordingly, the minimum penalty imposable in case of six violations committed by the appellant should be in tune with the statutory provisions relating to the penalty. Given the fact that, though belatedly, the appellant has implemented all the required policies and procedures on AML/CFT policy as stipulated under the various circulars of SEBI and by the penalty precedent set by SEBI itself, SAT was of the view that the penalty of ₹40 Lakh imposed on the appellant is excessive. SAT, therefore, reduced the amount of penalty imposed on the appellant to ₹6 Lakh. Keeping in mind the outcome of the SAT in the above case, it can be established that though the delay in implementation is violation of the provisions of the SEBI Act, 1992, however, on justified submission by Swadha Shareholding Limited to the SEBI, the quantum of penalty can be reduced or waived-off.