The market intermediaries will have to submit the data, along with a slew of other information, to the regulator by November 30, an official with a large asset manager told ET.
They have to also share the number of offshore clients, investors who had been pulled up by the regulator in the past two years, and those against whom orders have been issued by other agencies or were in the news for any financial scam.
Financial market regulators have been extra vigilant over the last 18 months, assessing the type of investors and colour of money, in the wake of the review (after a long gap) by the Financial Action Task Force (FATF), the international organisation to combat money-laundering.
In the communique from SEBI, sent a few weeks ago, the companies have been asked about the frequency at which their know-your-customer and anti-money laundering regime is audited, and whether the findings are placed before the audit committee.
High-risk investors are ‘politically exposed persons’ — like senior politicians, senior executives of state-owned corporations, and important officials of political parties among others — as well as investors figuring in the alert lists of international agencies.Against this backdrop, SEBI has asked the asset management and portfolio management companies to explain how they ensure the implementation of the resolutions of the United Nations, orders under the local law Unlawful Activities (Prevention) Act, and FATF public statements. In this context, the institutions have to state how fast they could freeze accounts after they came to know about the risks such investors pose.”Most companies use AML software that cull out names and information from various sources to throw up alerts. There were some points on which we need a little more clarity — for instance, we have been asked to state parameters used for risk categorisation, and whether ML and terror finance risk are captured in risk categorisation,” said another industry official.
Some of the other information sought by the regulator are: the number of alerts and suspicious transactions generated; the mechanism, if any, to detect attempted transactions that are suspicious; are non-profit organisations (putting in money) subjected to ‘enhanced due diligence’; the number of years for which records and preserved, and whether they can be used to reconstruct individual transaction trail that could serve as evidence in a criminal prosecution proceeding; whether the task of alert monitoring and closure of alerts has been given to anyone who is not an employee of the asset manager, etc.