SEBI cracks down on MF investments by politicos
14 Dec 2010
In an effort to curb money laundering, the Securities and Exchange Board of India has decided to start keeping tabs on mutual fund investments made by bureaucrats and politicians, including former and current state heads.
Starting 1 January, all new and existing MF investors would need to disclose if they are or have been a head of state (both at central and state governments) under the revised ''know your customer'' (KYC) requirements. This will also apply to members of Parliament, state legislative assemblies and legislative councils.
According to a release from the stock market regulator, the compliance regime is being implemented by fund houses at its direction.
The measures come against the backdrop over allegations of corruption in the allocation of mobile spectrum and preparations for the Commonwealth Games, among others, in which the government is caught.
KYC norms currently only require investors to disclose broader occupation details such as whether they are in public or private sector service, involved in business or agriculture, or if they are professionals, retired or housewives. The new KYC norms are being implemented to meet prevention of money laundering regulations.
Recently, the Reserve Bank of India (RBI) asked banks to be extra careful while dealing with customers who could be ''politically exposed persons''.
