MFs to start monitoring investments by politicians and their close associates from January 1, 2011
Mumbai: SEBI is likely to soon start monitoring investments by politicians and bureaucrats in mutual funds, according to newspaper reports.
Mutual funds are required to track investments by politicians under the know-your-customer (KYC) norms that SEBI has mandated with effect from January 1, 2011. KYC norms are implemented as part of the broader regulations on prevention of money laundering.
Business Standard reported quoting news agencies that SEBI has asked mutual fund houses to strengthen their KYC implementation to include tracking of investments by members of parliament and members of state legislative assemblies and legislative councils.
Under anti-money laundering guidelines, politicians are referred to as politically-exposed persons (PEPs). The definition of PEPs includes family members of a PEP and close associates of a PEP.
Banks have implemented anti-money laundering regulations for several years now. Opening of accounts of PEPs is required to be vetted by senior officials. There are databases available of high-risk categories of people, who are required to be monitored under anti-money laundering regulations.
