Watch out for suspicious funds, SEBI tells exchanges
26 October 2009
The Securities and Exchange Board of India has directed all stock exchanges and other market intermediaries to alert the home ministry about any suspicious clients making investments in the stock market.
The regulator has also asked exchanges to keep strict vigil over entities that have been listed by the United Nations Security Council Committee as ''organisations funding terror'', and to inform the officials concerned within 24 hours. They should also ''prevent the designated persons from conducting financial transactions under intimation to the ministry of home affairs.''
The list contains the name of notorious underworld don Dawood Ibrahim, who has been accused of funding the activities of banned terror outfit Al Qaeda. He is also said to have masterminded the 1992 bomb blasts in Mumbai.
According to rules, on receipt of particulars, the home ministry would initiate a verification of the identity by the state police and the central agencies. The verification would be completed within five days.
On confirmation that the properties are owned by or held for the benefit of the designated individuals/entities, an order to freeze the assets would be issued within 24 hours without prior notice to the entity concerned, SEBI said.
In case the person is not designated, SEBI said he would have to apply for unfreezing of funds with requisite evidence on which the home ministry would initiate a verification and pass an order for unfreezing within 15 working days.
Under UN Security Council resolution 1373, on getting requests from foreign countries, nations are obliged to freeze without delay the funds or other assets of persons who commit, or attempt to commit, terrorist acts.
''To give effect to the requests of foreign countries under the UN Security Council resolution 1373, the ministry of external affairs shall examine the requests made by the foreign countries and forward it electronically, with their comments ... (to home ministry) for freezing of funds or other assets,'' SEBI said.