SEBI clarifies on `keeping tabs on bureaucrats and politicians'
14 December 2010
The Securities and Exchange Board of India (SEBI) has clarified that the news item `SEBI is to keep tabs on bureaucrats, politicians on mutual fund investments', published by certain sections of the media today, give a wrong impression that is factually not correct.
"Under the Prevention of Money Laundering Act (PMLA) and Rules thereunder, and in adherence with global standards of the Financial Action Task Force (FATF), certain category of individuals are indicated as 'clients of special category' and inter alia includes:
Politically exposed persons (PEP) which are defined as individuals who are or have been entrusted with prominent public functions in a foreign country, eg, heads of states or of governments, senior politicians, senior government/judicial/ military officers, senior executives of state-owned corporations, important political party officials, etc.
The above guidelines form part of the KYC process and are applicable to all securities market intermediaries. Similar guidelines exists for clients in other financial sectors - namely, banking and insurance.
SEBI vide its circular dated 18 January 2006 had issued broad guidelines on this subject and the guidelines on PEP have existed since then, the release noted.
SEBI had updated and reinforced its requirement on securities market intermediaries from time to time, including its most recent circular of 12 February 2010, it said.