Besides, regulators are being extra watchful because of elections and the dealings of market entities with politically exposed persons are under greater scrutiny.
SEBI mandates that market entities deploy a "high risk" approach towards such clients, including individuals entrusted with prominent public functions, heads of governments, senior politicians, senior government/judicial/military officers, senior executives of state-owned corporations and important political party officials.
A similar approach is needed for accounts of the family members or close relatives of politically exposed persons.
SEBI said registered intermediaries will have to "identify, assess and take effective measures to mitigate its money laundering and terrorist financing risk with respect to its clients, countries or geographical areas, nature and volume of transactions, payment methods used by clients, etc."
The risk assessment would include, among others, any country-specific information circulated by the government and SEBI as well as an updated list of individuals and entities facing sanctions.
In a circular today, SEBI asked market intermediaries to "maintain and preserve" for five years records related to transactions, attempted or executed, that are reported to the FIU-IND (Financial Intelligence Unit - India).
As per the new norms, a company can designate its managing director or a whole-time director to ensure compliance with the regulations. A partnership firm can appoint its managing partner, while a trust can place its managing trustee as the designated director.
The director of the FIU-IND can take appropriate action, including levying a monetary penalty, on the designated director for failure of the intermediary to comply with any of the obligations, SEBI said.
The market regulator asked bourses and depositories to amend the bye-laws, rules and regulations in this regard to monitor compliance with these norms through half-yearly internal audits and inspections.
In the case of mutual funds, SEBI said compliance would be monitored by the boards of the asset management companies and the trustees.
