Overseas investors from Mauritius eligible for FPI registration with enhanced monitoring: SEBI

The announcement comes after the tax haven was put on the ‘grey list’ of FATF

Market regulator Securities and Exchange Board of India (SEBI) on Tuesday said foreign investors from Mauritius will continue to be eligible for Foreign portfolio investment (FPI) registration with increased monitoring as per international norms.

The announcement comes after the tax haven was put on the ‘grey list’ of Financial Action Task Force (FATF), an inter-governmental policy making body that sets anti-money laundering standards.

A significant percentage of FPIs investing in the Indian market is registered in Mauritius.

The island nation is the second largest source after the United States from which foreign portfolio investments come into the country.

As per January NSDL data, assets under custody of US FPIs are worth ₹11,62,579 crore and those from Mauritius stood at ₹4,36,745 crore.

Following the FATF notice, some fund managers knocked on SEBI’s door overnight, raising concerns over validity of FPI registration done through the tax haven.

Also read | SEBI redefines ‘pledge’ to protect client securities

The regulator on Tuesday said, “Foreign investors from Mauritius will continue to be eligible for FPI registration with increased monitoring as per FATF norms.”

“It is noted from FATF website that when a jurisdiction is placed under increased monitoring, it construes that the country has committed to resolve swiftly the identified strategic deficiencies within agreed timeframes and is subject to increased monitoring,” SEBI said.

In a detailed statement, SEBI said that FATF does not call for the application of enhanced due diligence to be applied to these jurisdictions, but encourages its members to take into account this information in their risk analysis.

Referring to the above, SEBI said that intermediaries should take note of it.

FATF identifies jurisdictions that have significant strategic deficiencies in their regimes to counter money laundering, terrorist financing, and financing of proliferation.

Jurisdictions under the ‘grey list’ face increased monitoring.

Currently, there are 18 jurisdictions identified as having “strategic deficiencies”, including Mauritius and Pakistan, as per the FATF.

For several years, there have been apprehensions about Mauritius being a money laundering route for FPIs due to its limited regulatory oversight. But, the Indian Ocean island nation has been taking several steps in recent years to address the concerns.

Equity benchmark BSE Sensex was trading 118.15 points higher at 40,481.38, and the broader NSE Nifty was up 32.70 points at 11,862.10.

On a net basis, FPIs sold equities worth ₹1,160.90 crore on Monday, data available with stock exchanges showed.

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Printable version | Apr 4, 2020 8:42:27 AM |

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