To check mis-selling of MFs by bank staff and employees of other financial services firms, the market regulator has made it mandatory for such persons to get an ‘Employee Unique Identification Number’ (EUIN) for sale of MF schemes. The decision has been taken by the mutual fund industry body and self-regulatory organisation Association of Mutual Funds in India (AMFI) in consultation with capital markets regulator SEBI. As per the notifications issued by fund houses, the EUIN would be mandatory for all kinds of MF transactions with effect from 1st August.
It would be applicable for transactions such as purchases, switches, registrations of various MF schemes, payments of instalments under any plans, as also for dividend re-investments, bonus units and redemption.
The Securities and Exchange Board of India (SEBI) is finalising anti-money laundering guidelines for brokers and mutual funds (MFs) to put in place stronger checks against possible cleansing of funds through capital markets. The guidelines require brokers, MFs, merchant bankers, depositories, depository participants, portfolio managers and investment advisors, to adhere to specified client-servicing procedures and maintain records for regulatory or investigative references. Market entities are also required to seek disclosures from their clients to address the concerns of money laundering and suspicious transactions. Some steps taken to check money laundering activities in the capital market include: a strict KYC (know your client) regime, mandatory requirement of PAN (permanent account number) and in-person verification of clients.