SEC mulls launching of KYC, access to bank accounts of investors

October 31, 2013

The securities regulator has plans to introduce measures including KYC (Know-Your-Client) criteria for share investors, getting access to their bank accounts by the regulator and establishing a Clearing and Settlement Organisation to comply with the international best practices.
The planned move, despite being sensitive in nature and application, would be enforced in phases taking into account the overall stability in the capital market, a top Securities and Exchange Commission (SEC) official told New Age on Wednesday.
The future plan of the SEC has been included in its draft Annual Report for 2012-13 fiscal year, and placed it to the Ministry of Finance (MoF) for approval before it is published, the official added.
‘The Report highlighted entire activities of the SEC that took place last fiscal year while focusing on its future course of actions in terms of policy measures
to establish transparency in the stock business and comply with the global standards and conditions of international watchdog organisations,’ the official in the SEC, preferring not to be identified, told New Age.
‘KYC’ was supposed to be introduced before one year as Bangladesh had already committed in international forum including to Financial Action Task Force (FATF) and Asia Pacific Group (APG) on Money Laundering after the watchdog bodies threatened to blacklist Bangladesh in case of failure to implement the planned actions, a finance ministry official said.
The proposed ‘KYC’ provision is similar to that of bank clients to restrict easy entry of tainted money into the capital market.
Stock brokers, stock dealers or any suspected share investor and other capital market intermediaries, under the proposed criteria, will have to report to the Financial Intelligence Unit of BB regularly in the event of suspicious transactions in the share market, a SEC official said.
It is now largely believed that the country’s share market is a safe haven for money earned through corruption, bribery and tax evasion. No reporting system or ‘KYC’ is now mandatory either for individual or institutional investors or brokerage firms.
Besides, International Organisation of Securities Commission (IOSCO) has long been pressing the SEC to have the authority to get access to bank account information of stock investors while conducting probe against any for misdeeds, sources said.
However, finance officials said only Bangladesh Bank (BB) and National Board of Revenue (NBR) are currently empowered with the authorities to seek bank statements of any suspected clients or tax evaders.
In case of SEC to be empowered with the similar authority a new act would be necessary to be enacted or current provision be amended, they said.
Furthermore, according to the plan, an independent Clearing and Settlement Organisation will be established under the jurisdiction of SEC.
The draft Annual Report also vowed to introduce system of paying cash dividend to stock investors through Central Depository of Bangladesh (CDBL).

-With New Age input

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