ICAI URGES SEBI TO REVIEW PROPOSALS ON P-NOTE

The Institute of Chartered Accountants of India (ICAI) has stressed on strict compliance of Know Your Client (KYC) norms and Prevention Of Money Laundering (PML) regulations for Offshore Derivative Instruments (ODI). It has also urged SEBI to reconsider some of the proposals on participatory notes. According to ICAI, the proposal to limit non derivative participatory notes to 40% of the asset under custody of Foreign Institutional Investor (FII) in India, may not be appropriate. The institute is fearing that the move would require a large number of investors to get themselves directly registered with SEBI and create complications. This is because most of the investors may not have necessary infrastructure, time and energy to meet various regulatory requirements in India. However, it viewed that the investors should meet all necessary regulatory requirements in the host country. The Corporate and Allied Laws Committee (CALC) of the institute has submitted its recommendation on the SEBI’s paper wherein it said that it is not in favour of a complete ban on FIIs sub accounts which conform to KYC and PML guidelines. Also the appropriate undertaking from the investors and regular track of Financial Action Task Force should ensure that only clean money enters the system. ICAI has also offered its assistance to SEBI to draft KYC and PML guidelines.