Sebi ups vigil for poll-related redemptions, money laundering
Mar 09 2014 , New Delhi
The elections are scheduled to begin next month and concerns are being raised that huge sums of money could be spent by political parties and their leaders to lure voters.
According to a senior official, there are also indications that many entities running illicit money-pooling schemes have lined up huge redemptions from fictitious investor accounts for coming weeks and this money could also find their way into electioneering activities.
The capital market regulator Sebi itself has initiated action against more than 500 companies that have allegedly garnered funds from investors through illicit money collection schemes. In many such cases, a large number of fictitious accounts are also created for money laundering purposes.
While robust surveillance and intelligence systems are already in place for detection and prevention of any kinds of money laundering activities in capital markets, regulators are being extra watchful because of elections being typically known as periods of increased illicit fund flows.
Foreign funds coming through capital markets is also being monitored closely to check any possible laundering for political purposes, the official said, while adding that the dealings of various market entities with PEPs (Politically Exposed Persons) are also being placed under greater scrutiny.
Sebi regulations mandate that market entities deploy a "high risk" approach towards their clients who could be PEPs, who include individuals entrusted with prominent public functions, heads of governments, senior politicians, senior government/judicial/military officers, senior executives of state-owned corporations, important political party officials.
Similar approach needs to be followed for accounts of the family members or close relatives of PEPs.