CitiCorp Investment Bank (Singapore) pays Rs 36 lakh to settle allegations of violations of FPI norms

There was also a delay on the part of the bank in depositing the regulatory fee collected from the subscriber of the ODI, noted the settlement order, when listed the findings.

CitiCorp Investment Bank (Singapore) Ltd has paid Rs 36 lakh to settle allegations of violations of the SEBI (Foreign Portfolio Investors)  Regulations (FPI Regulations). The allegations included issuing offshore derivative instruments (ODIs) to Symmetry Master Fund Ltd without completing the KYC norms.

In a settlement order issued on March 6, the Securities and Exchange Board of India (SEBI) gave the facts of the case involving the entity as below:

1. The investment bank issued an Offshore Derivative Instrument (ODI) to Symmetry Master Fund Limited (SMFL) on December 19, 2023 without complying with the ‘Know your client’ (KYC) norms as required under the Regulation 21(1)(c) of the FPI Regulations. By issuing ODI to SMFL without completing fresh KYC checks, the bank violated provisions of Regulation 21(1)(c) of the FPI Regulations read with Paragraph 2 of Part D of the Master Circular.

2. In its settlement application, the bank mentioned that the onboarding and KYC checks with respect to the ODI subscriber i.e. SMFL was completed on January 10, 2024.

3. There was also a delay on the part of the bank in depositing the regulatory fee collected from the subscriber of the ODI. The regulatory fee of $800 corresponding to the ODI issued to SMFL on December 19, 2023 should have been deposited immediately with SEBI by the Applicant. Instead, it was deposited with SEBI on February 26, 2024 i.e. with a delay of 69 days. The order said that the bank had therefore violated Regulation 21(4) of the FPI Regulations read with Clause 1 of Part C of the II Schedule of the FPI Regulations.

4. Since the bank issued the ODI without completing KYC checks, the bank was alleged to have failed to put in place necessary systems, controls and procedures with respect to the issuance of ODIs and KYC requirements and thus violated Paragraph 3(iii) of Part D of the Master Circular.