One of the key responsibilities on the mutual fund managers is to comply with anti money laundering programs. There are severe monetary penalties for non compliance of these programs.
The main things that the anti money laundering programs should cover are:
- Internal controls, policies and procedures that can detect money laundering activities.
- The appointment of a chief compliance officer who is responsible to develop and enforce appropriate policies and procedures for anti money laundering
- The fund managers should also arrange for ongoing training programs that provide general awareness of job responsibilities with regards to anti money laundering activities.
Apart from this, the fund managers should follow general practices such as seeking the identity of a person who wishes to open an account and to keep records of such information for verification.
The mutual funds are liable to have a due diligence program that is designed to detect or report any known or suspected money laundering activity specifically in case of foreign financial institutions. It is mandatory for mutual funds to conduct additional due diligence for foreign accounts.
The mutual fund may seek the service of service providers for compliance of anti money laundering programs. But in the event of non compliance it will be the mutual fund managers that will be held responsible. It is also advisable for these companies to do an internal check of the compliance rather than waiting for the annual compliance review so that whatever lapses if any can be checked at the earliest and not as late as once a year.
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