PR No.274/2010

Clarification on a news item appearing in a section of the press

A section of the press has published a news item today that "SEBI is to keep tab on bureaucrats, politicians on Mutual Fund investments". In this regard, it is clarified as follows:

The news item seems to suggest that SEBI has issued new guidelines to mutual funds to keep tab on bureaucrats and politicians. This 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, e.g., 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 January 18, 2006 had issued broad guidelines on this subject and the guidelines on PEP have existed since then.

From time to time, including its most recent circular of February 12, 2010, SEBI has updated and reinforced its requirement on securities market intermediaries.

All these circulars are available on SEBI website, www.sebi.gov.in

Mumbai

December 14, 2010