P-Notes introduced by PC are a convenient means for money laundering to convert Indian loot into foreign currency and route it back to the stock market. The KYC (Know Your Client) principle of financial propriety being touted by SEBI do NOT apply to P-Notes. As the former National Security Advisor noted, P-Notes could be a route for terror financing.
GOI should ban P-Notes forthwith as recommended by the RBI Tarapore Committee.
Sebi probes 35 brokers for money laundering
Agencies | Sep 10, 2012, 04.31AM IST
As many as 35 stock brokers have been probed by capital market regulator Securities and Exchange Board of India (Sebi) for possible lapses in controls related to money laundering and terror financing, and further action may be taken soon in these cases.
MUMBAI: As many as 35 stock brokers have been probed by capital market regulator Securities and Exchange Board of India (Sebi) for possible lapses in controls related to money laundering and terror financing, and further action may be taken soon in these cases.
The inspections by Sebi follow actions taken by stock exchanges and depositories against more than 300 market entities for violations and discrepancies related to Anti-Money Laundering and Combating Financing of Terrorism (AML and CFT) regulations in the 2011-12 fiscal.
The brokers have been probed for their compliance with KYC (know your client) rules, their due diligence procedures and their compliance to various AML- and CFT-related regulations, while action has been taken by exchanges and depositories after similar inspections of various market entities.
In its latest annual report for 2011-12, Sebi said that it conducted “35 specific purpose inspections of stock brokers to check their KYC process, the extent of due-diligence and compliance level with current regulatory and statutory framework in this regard. Action with regard to these cases is in progress”. The regulator said money laundering has been globally recognized as one of the largest threats posed to the financial system of a country, while “fight against terrorist financing is another such emerging threat”.