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SEBI seeks more information from Trustees of AIFs about fund participants.

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CNBC moneycontrol.com has featured a detailed story on how SEBI has asked trustees of alternative investment funds (AIFs) to share more information about fund participants, with concerns mounting around money laundering and round tripping.

This comes in the background of increased scrutiny and surveillance of AIFs by SEBI and certain orders passed by SEBI against AIFs (Read More: https://lnkd.in/diNXRfrC) and in some cases its trustees.

In this background, Mr. Sumit Agrawal, Founder of Regstreet Law Advisors and former SEBI officer was quoted by CNBC moneycontrol.com saying that “SEBI wishes to ascertain the potential risk of these funds to the Indian financial system. Various categories of AIFs may be required to different types of information based on the risks they pose” he added.

Mr. Sumit Agrawal further viewed that Trustees may have to invest significant effort and resources to track this information. Penalties for failure to comply could include fines, suspension of registration, or other regulatory action, with the severity of the penalty depending on the nature and extent of the non-compliance. To ensure compliance with all applicable regulations and guidelines, AIF trustees should establish clear reporting protocols, conduct regular internal audits, and seek legal and regulatory advice as necessary… They should also stay up-to-date on regulatory developments and best practices in the AIF sector.

The article also quoted Mr. Yashojit Mitra, a partner at Economic Laws Practice (ELP) viewing this as a larger exercise by the SEBI to figure out how the country is being funded and, more importantly, who is in control of the money. This will also help when the government is trying to stop or manage the flow from funds from certain geographical locations.

Readers are welcome to share their views with Regstreet Law Advisors on info@regstreetlaw.com

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