SEBI has floated a consultation paper headed "Consultation paper on Introduction of Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Certification requirement for Principal Officer", issued on 6 November 2026. It proposes that every Principal Officer of an intermediary registered with SEBI under Section 12 of the SEBI Act, 1992 must hold a valid NISM Series-XXIV Anti-Money Laundering and Combating the Financing of Terrorism certification — within six months of the requirement coming into force for existing officers, and within six months of appointment for newly appointed officers. Public comments are open until 27 November 2026, and must be sent through SEBI's web-based form only.
In plain business-owner language: the person at your firm who is responsible for spotting and reporting suspicious transactions would soon have to prove, with an exam certificate, that they actually know the anti-money-laundering rules. Today, no certificate is required at all — and SEBI says that is exactly the gap it wants to close.
Quick Answer: SEBI's consultation paper of 6 November 2026 proposes that every Principal Officer of an intermediary registered under Section 12 of the SEBI Act, 1992 must hold a valid NISM Series-XXIV AML/CFT certification — within 6 months of the requirement being issued, or 6 months from appointment for new officers. Public comments close on 27 November 2026.
One important correction before the detail: this is a consultation paper, not a final rule. Some syndicated headlines have described it as though SEBI has already made the certification mandatory. It has not — SEBI has proposed it, published a draft circular, and asked for comments. Nothing changes for any intermediary until SEBI issues the final circular, and the final version may differ from the draft.
What SEBI is proposing
The consultation paper puts three questions to the public and to stakeholders. They are, in SEBI's own framing:
Proposal 1 — Should AML/CFT certification be made mandatory for every Principal Officer of a SEBI-registered intermediary? SEBI's reasoning is that the Principal Officer oversees and ensures overall compliance with the AML/CFT framework. The paper lists fourteen areas in which a Principal Officer is expected to have adequate understanding: the PMLA, 2002 and the PML Rules, 2005; SEBI's AML/CFT framework; customer due diligence and beneficial ownership requirements; risk-based classification of clients; enhanced due diligence; identification and assessment of suspicious transactions; reporting requirements to FIU-IND; confidentiality and the prohibition against tipping-off; targeted financial sanctions under UAPA; proliferation-financing requirements under the WMD Act; FATF high-risk jurisdictions; transaction monitoring systems; maintenance and retrieval of records; and emerging money-laundering and terror-financing risks, including risks from new products, technologies and delivery mechanisms.
Proposal 2 — Should the NISM Series-XXIV examination be the mandated certification? The examination is the "NISM Series XXIV: Anti-Money Laundering and Combating the Financing of Terrorism Provisions (AML and CFT) in Securities Markets Certification Examination", conducted by the National Institute of Securities Markets (NISM). SEBI developed the course in collaboration with NISM, and NISM announced its launch through a communique dated 7 February 2025, with the examination available with effect from 28 February 2025. It covers anti-money laundering, combating the financing of terrorism and proliferation financing, the requirements under the PMLA and the PML Rules, scheduled offences, SEBI's AML and CFT guidelines, KYC guidelines and PMLA-related cases. SEBI says the examination is intended to create a common minimum knowledge benchmark for employees of securities market intermediaries on AML/CFT provisions.
Proposal 3 — Should the six-month timeline apply to both existing and newly appointed Principal Officers? Existing Principal Officers would have a maximum of six months from the date of issuance of the requirement. Newly appointed Principal Officers would have a maximum of six months from the date of their official appointment. A Principal Officer would also have to continuously hold and maintain the validity of the certification at all times throughout their tenure while discharging their duties under the AML/CFT guidelines. The draft circular annexed to the paper adds that, apart from the Principal Officer, other employees handling AML/CFT-related activities may also be encouraged to take the examination.
Why SEBI thinks a certificate is needed now
The background is in the Prevention of Money Laundering Act, 2002 (PMLA) and the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005 (PML Rules), which prescribe obligations for reporting entities, including intermediaries registered with SEBI. Rule 2(f) of the PML Rules defines the "Principal Officer" as an officer designated by a registered intermediary — provided that such officer shall be an officer at the management level.
SEBI's Master Circular dated 6 June 2024 on Guidelines on Anti-Money Laundering Standards and Combating the Financing of Terrorism — Master Circular No. SEBI/HO/MIRSD/MIRSDSECFATF/P/CIR/2024/78 — already requires every registered intermediary to appoint a Principal Officer at the management level. The Master Circular gives the Principal Officer four core responsibilities: to report suspicious transactions to the authorities (FIU-IND) in a timely manner; to record reasons for treating any transaction or series of transactions as suspicious; to act as a central reference point in facilitating onward reporting of suspicious transactions; and to play an active role in the identification and assessment of potentially suspicious transactions. It also requires intermediaries to give due regard to the risk of money laundering and terrorist financing while hiring, to ensure personnel taking up key positions are fully suitable and competent, and to run ongoing employee training programmes on AML/CFT procedures.
What the Master Circular does not do — and this is the gap the consultation paper identifies — is prescribe any certification requirement for the Principal Officer. SEBI's own words in the paper are that, at present, the circular "does not prescribe any related certification requirement for the Principal Officer", and that as a result "the level of AML/CFT knowledge/expertise of Principal Officers may vary across intermediaries". The certification proposal is designed to remove that variation with a single, verifiable benchmark.
It also fits a pattern SEBI has followed for years. Under Regulation 3(1) of the SEBI (Certification of Associated Persons in the Securities Markets) Regulations, 2007, SEBI prescribes NISM certifications for persons engaged or employed by securities market intermediaries. The paper notes there are currently 28 NISM certifications mandated for different categories of persons — for example, NISM-Series-III-A (Securities Intermediaries Compliance) for compliance officers of stockbrokers, depository participants, merchant bankers and others; NISM-Series-V-A for mutual fund distributors; NISM-Series-VII (Securities Operations and Risk Management) for associated persons of stockbrokers handling investor funds and grievances; NISM-Series-X-A and X-B for investment advisers; NISM-Series-XV for research analysts; and NISM-Series-II-A and II-B for registrars to an issue and share transfer agents. The Principal Officer, despite sitting at the centre of a firm's AML/CFT compliance, has so far been the notable exception with no certification attached to the role.
Old vs new: what changes
Who is affected
The proposal covers all intermediaries registered with SEBI under Section 12 of the SEBI Act, 1992 — that is the full sweep of the securities market: stockbrokers, depository participants, merchant bankers, underwriters, bankers to an issue, debenture trustees, credit rating agencies, registrars to an issue and share transfer agents, mutual funds and their distributors, investment advisers, research analysts, portfolio managers, custodians, and every other SEBI-registered intermediary. The draft circular is addressed to all such intermediaries and to the stock exchanges. In practice, the person directly affected at each firm is the designated Principal Officer — the management-level officer who is the firm's central reference point for suspicious-transaction reporting to FIU-IND.
For a small intermediary, the practical impact is concentrated on one person: the firm must identify its Principal Officer, get that person through the NISM Series-XXIV examination within the six-month window, and then keep the certification valid for as long as they hold the role. For a large intermediary with a dedicated AML team, the direct obligation still falls on the Principal Officer alone, though the draft circular encourages other AML/CFT staff to take the same examination voluntarily.
What this is not: this paper does not change who must be appointed as Principal Officer, does not change the suspicious-transaction reporting duties themselves, and does not impose the exam on compliance officers, dealers, distributors or other associated persons — those roles already have their own NISM certifications under the 2007 Regulations. It adds one new certification, for one role.
What the NISM Series-XXIV exam covers
The examination already exists — it is not being created by this paper. NISM announced its launch through a communique dated 7 February 2025, and it has been available with effect from 28 February 2025. The consultation paper describes it as covering anti-money laundering, combating the financing of terrorism and proliferation financing, the requirements under the PMLA and the PML Rules, scheduled offences, SEBI's AML and CFT guidelines, KYC guidelines and PMLA-related cases.
That matters for planning: because the examination is already live, an intermediary whose Principal Officer wants to get ahead of the final circular does not have to wait for SEBI to build anything. The exam can be taken now. What the paper does not state — and readers should not assume — is the examination fee, the pass mark, or the validity period of the certificate. None of those figures appears in the consultation paper, so they are not stated here. Anyone quoting a fee or a pass percentage for this proposal is going beyond the official document.
What to do next
If you are a SEBI-registered intermediary, here is the sequence:
- Confirm who your Principal Officer is. Check that the designation is held by a management-level officer, as Rule 2(f) of the PML Rules requires, and that the appointment is recorded as the Master Circular requires. If the role is vacant or informally held, fix that first — the certification proposal assumes a properly designated officer.
- Check whether your Principal Officer already holds NISM Series-XXIV. The examination has been available since 28 February 2025, so some officers may already have taken it. If they have, keep the certificate safely on record; if not, plan the attempt inside the proposed six-month window.
- Do not wait for the final circular to start preparing. The proposal gives six months from issuance of the requirement. Six months is generous for one examination, but it is short if the officer needs study time alongside a full-time compliance role — and if SEBI receives comments that push it to shorten the window, early movers will be glad they started. The draft circular also says certification must be kept valid continuously throughout tenure, so treat this as a recurring obligation, not a one-time exam.
- Consider the wider AML team. The draft circular encourages — but does not require — other employees handling AML/CFT work to take the same examination. Firms that certify the wider team will find it easier to cover leave, attrition and a change of Principal Officer without a compliance gap.
- Submit comments if you have a view — before 27 November 2026. SEBI has asked for comments on all three proposals and on the draft circular. Comments must be submitted through SEBI's web-based public comments form, and comments sent through any other mode may not be considered. If the six-month timeline is too tight for your firm's circumstances, or if you think a different certification should be recognised, this is the window to say so with reasons.
- Watch for the final circular. Nothing in this paper is enforceable yet. The final circular — which may change the timeline, the certification, or the scope — will appear on SEBI's website under Legal → Circulars. We will cover it when it is issued.
How to submit comments to SEBI
Comments and suggestions, along with rationale, should be submitted no later than 27 November 2026 through SEBI's web-based public comments form at sebi.gov.in (Public Comments section). SEBI states that comments must be submitted through the web-based form and that comments submitted through any other mode may not be considered. If you face a technical issue with the form, SEBI asks you to write to [email protected] with the subject line "Consultation paper on Introduction of Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Certification requirement for Principal Officer".
Frequently asked questions
Is NISM Series-XXIV certification already mandatory for Principal Officers?
No. As of 6 November 2026, it is a proposal in a SEBI consultation paper. The Master Circular of 6 June 2024 requires the appointment of a Principal Officer but prescribes no certification. The certification becomes mandatory only if SEBI issues a final circular to that effect.
Who would have to take the NISM Series-XXIV exam under the proposal?
Every Principal Officer of an intermediary registered with SEBI under Section 12 of the SEBI Act, 1992. The proposal covers all such intermediaries, and the draft circular is also addressed to the stock exchanges. Other employees handling AML/CFT work would only be encouraged, not required, to take it.
How much time would Principal Officers get to pass the exam?
Six months. Existing Principal Officers would have a maximum of six months from the date of issuance of the requirement, and newly appointed Principal Officers a maximum of six months from the date of their appointment. The certification must then be held and kept valid continuously throughout the officer's tenure.
What is the last date to send comments to SEBI on this proposal?
27 November 2026. Comments must be submitted through SEBI's web-based public comments form; comments sent through any other mode may not be considered by SEBI.
What does the NISM Series-XXIV exam cover?
Anti-money laundering, combating the financing of terrorism and proliferation financing, the PMLA and PML Rules, scheduled offences, SEBI's AML and CFT guidelines, KYC guidelines and PMLA-related cases. NISM launched the examination with effect from 28 February 2025.
What is a Principal Officer under the PMLA framework?
Under Rule 2(f) of the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005, the Principal Officer is an officer designated by a registered intermediary, provided that such officer is an officer at the management level. Their duties include reporting suspicious transactions to FIU-IND, recording reasons for treating transactions as suspicious, and acting as the central reference point for onward reporting.
Does this proposal change suspicious-transaction reporting duties?
No. The reporting duties under the PMLA, the PML Rules and SEBI's Master Circular of 6 June 2024 are unchanged. The proposal adds a certification requirement for the person who performs those duties; it does not alter the duties themselves.
Sources
- Primary source: SEBI, "Consultation paper on Introduction of Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Certification requirement for Principal Officer", issued 6 November 2026 (PDF) — sebi.gov.in/sebi_data/attachdocs/nov-2026/1793961147070.pdf
- SEBI consultation paper webpage: Consultation paper on Introduction of Anti-Money Laundering and Countering the Financing of Terrorism Certification requirement for Principal Officers (SEBI, 6 November 2026)
- Background instrument: SEBI Master Circular No. SEBI/HO/MIRSD/MIRSDSECFATF/P/CIR/2024/78 dated 6 June 2024, "Guidelines on Anti-Money Laundering Standards and Combating the Financing of Terrorism / Obligations of Securities Market Intermediaries under the PMLA and Rules framed thereunder"
