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More money laundering curbs

June 25, 2005 11:30 IST

After Reserve Bank of India, two other regulators -- the Securities and Exchange Board of India and the Insurance Regulatory and Development Authority -- are planning to come out with anti-money laundering norms for brokers and insurance companies.

The new norms will be in line with the recommendations of the Financial Action Task Force on money laundering, which had proposed 40 guidelines for countries across the globe on the basis of the United Nations convention against illicit traffic in narcotic drugs and psychotropic substances 1988 and the UN convention against transnational organised crime 2000.

According to market sources, the AML guidelines of Sebi will cover stock exchanges, broking companies and mutual funds while the IRDA will cover the insurance sector.

These AML guidelines will run parallel to the KYC (know your customer) norms laid down for the market earlier.

The broking companies and stock exchanges will have to monitor high-value transactions and unusual volumes in any specific client's account or any company's counter for tracking unusual flow of funds.

Mutual funds, on the other hand, will track high-value subscriptions to any scheme and credentials of companies or individual clients, among other things.

Similarly, the IRDA will lay down guidelines, which will require insurance companies to track high-premium policies taken by any client, be it an individual or a company. They could also track the financial background of the client and the monetary value of policy taken.
Anindita Dey in Mumbai