Mumbai : Market regulator Sebi asked depositories to keep a strict vigil on client information, including checks to prevent possible money laundering activities, while carrying out inspection of their agents, reports PTI.
The directions from the Securities and Exchange Board of India (Sebi) are part of efforts to ring fence the capital market from possible money laundering as well as other illicit activities and protect the interest of investors.
The market watchdog has asked the depositories to keep a close tab on Know Your Client (KYC) information.
Further, Sebi said that depositories would have to share the risk rating of common depository participants (DPs), who are agents of depositories, with each other.
“For the purpose of determining sample size and frequency of the joint inspection of such common DPs, the higher risk categorisation assigned by any of the depository shall prevail,” the regulator said in a circular.
Sebi has also suggested a methodology for determining sample size pertaining to risk assessment.
These measures are suggested by Depository System Review Committee (DSRC), which was formed by the Securities and Exchange Board of India (Sebi) in December 2012, to review the country’s depository system.