With reference to the Supreme Court's observation on AIFs and FPIs, consider the following statements: 1. The Court directed SEBI to immediately ban all Foreign Portfolio Investments. 2. The petition argued that lack of disclosure poses risks of money laundering. 3. The Court refused to mandate public disclosure of ultimate beneficial owners. Which of the statements given above is/are correct?

The Supreme Court refused to direct SEBI to mandate public disclosure of ultimate beneficial

GS3Economy · S&T · Environment · Security· Capital markets & SEBI· Prelims + Mains· 29 October 2026

Regulatory framework vs. transparency: a GS3 and Ethics case study on money laundering and capital markets.

Why in news

The Supreme Court refused to direct SEBI to mandate public disclosure of ultimate beneficial owners for AIFs and FPIs, instead directing the Union government and SEBI to create a regulatory framework.

Background

A three-judge Bench led by Justice B.V. Nagarathna heard a petition filed by Mahua Moitra. The petition argued that lack of disclosure poses risks of money laundering in Alternative Investment Funds (AIFs) and Foreign Portfolio Investments (FPIs).

Facts for Prelims

PostJustice B.V. Nagarathna: Presiding judge of the three-judge Bench

Prelims practice question

With reference to the Supreme Court's observation on AIFs and FPIs, consider the following statements:

The Court directed SEBI to immediately ban all Foreign Portfolio Investments.
The petition argued that lack of disclosure poses risks of money laundering.
The Court refused to mandate public disclosure of ultimate beneficial owners.

Which of the statements given above is/are correct?

(a)1 only
(b)2 only
(c)3 only
(d)2 and 3 only

Show answer

Answer: (d) 2 and 3 only — Statements 2 and 3 are correct. Statement 1 is incorrect: The Court directed the Union government and SEBI to create a regulatory framework instead.

For Mains

Q. Discuss the challenges in balancing investor privacy with the need for transparency in capital markets to prevent money laundering.

Dimensions to cover in your answer

Regulatory gap: Absence of a mandatory public disclosure framework for ultimate beneficial ownership in AIFs and FPIs
Financial integrity: Risks of illicit fund flows and money laundering through opaque investment vehicles
Policy trade-off: Balancing individual investor confidentiality against systemic financial oversight requirements

Keywords: Beneficial Ownership · Money Laundering · Regulatory Framework · Capital Market Transparency · Alternative Investment Funds

Read the full news →Report a mistake in this note How notes are made Source: The Hindu ↗Also: GS2 · Transparency, accountability & RTI Also: GS3 · Money laundering & organised crime

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