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.
With regard to listed companies, it is feared that companies may divert funds from their business for funding elections without the knowledge of investors, while scrupulous entities may also use certain market intermediaries to generate funds illegally for polls.
SEBI has tightened its corporate disclosure norms requiring listed companies and stock exchanges to be more vigilant about companies informing their shareholders about any key business developments. While market intermediaries, including brokers, are not allowed to divert their clients’ money without authorisation, listed firms are also supposed to utilise the money collected from investors for their specified business purposes. Besides, companies are also required to inform the investors for any utilisation of funds generated by running their respective businesses and any digression from these regulatory requirements would be dealt with appropriately. Any business transaction that raises suspicion of investors being taken for a ride or funds being diverted to related entity would also be under scanner, the official said. Through its regular inspections, SEBI is keeping a watch on compliance of norms regarding Anti-money Laundering, settlement of accounts of clients on timely basis, segregation of clients and proprietary funds/securities and KYC norms. (PTI)