Capital markets regulator SEBI on Friday tweaked the framework for on-boarding investors by alternative investment funds.
This came in view of amendments to the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005.
The Regulation 10(a) of AIF norms laid down the criteria for on-boarding investors whereby AIFs are allowed to garner funds from any type of investor — Indian, foreign, or non-resident Indians — through the issuance of units.
However, when on-boarding investors, the AIF manager must ensure that the investor or its beneficial owner is not listed in the sanctions list by the United Nations Security Council, Sebi said in its circular on Friday.
Additionally, the investor should not be a resident in a country identified by the Financial Action Task Force (FATF) as having strategic anti-money laundering or combating the financing of terrorism deficiencies, subject to countermeasures, or a jurisdiction making insufficient progress in addressing these deficiencies, it added.
If an investor, who has previously joined the AIF, no longer meets these conditions, the AIF manager is prohibited from drawing further capital contributions from that investor for making investments until the investor complies with the specified conditions, SEBI said.
The move is aimed at compliance with international sanctions and anti-money laundering measures in the context of AIF investments.
The new framework will come into force with immediate effect.
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